There is no doubt that loyalty programs are still popular. But are they still effective? Marketers continue to put more and more time and money into their programs, but are they getting the kind of payoffs they expect in customer relationships and engagement? Taking this issue as a starting point, this doctoral dissertation assesses the effectiveness of loyalty programs in building customer engagement and loyalty. Specifically, the first essay shows what engagement with loyalty programs is, develops a valid scale for it and assesses its link with company engagement. In addition, this essay shows that traditionally used measures of loyalty program engagement such as card usage or point redemption do not reflect effectively customer engagement with the company. The second essay identifies what reward types and communication should be used to make members more engaged in loyalty programs. The third essay identifies the behavioural patterns that reduce the gap between program loyalty and company loyalty. In addition, this essay investigates the impact of loyalty program related communication on this gap.