Perceived benefits of loyalty programs: Scale development and implications for relational strategies

Abstract

Positive outcomes of loyalty programs are clear for firms, yet little research examines customer perceptions. To address this gap, this article investigates various perceived benefits of loyalty programs using a multi-benefit framework based on utilitarian, hedonic, and relationship literature. Two quantitative studies, involving 658 French members of loyalty programs, provide a 16-item scale that measures five types of perceived benefits: monetary savings, exploration, entertainment, recognition, and social benefits. The five dimensions have different impacts on satisfaction with the program, loyalty to the program, and perceived relationship investment of the firm. This article offers a discussion of the theoretical and managerial implications of these findings for relationship marketing strategies.

Customer–company identification and the effectiveness of loyalty programs

“…Thus loyalty programs feature financial benefits (Bolton, Lemon, & Verhoef, 2004), such as customer discounts, cash-back offers, and coupons (Mimouni-Chaabane & Volle, 2010). Customers also attain social benefits, such as fraternization, development of friendships, and personal recognition, from participating (Gwinner, Gremler, & Bitner, 1998).…”

Loyalty Programs: Generalizations on Their Adoption, Effectiveness and Design

“…Members of LPs likely perceive multiple advantages, including utilitarian (e.g., economic savings, convenience, gifts), hedonic (e.g., personalized treatment, exploration of new products, entertainment), and symbolic (e.g., recognition by firm, social status, belonging) benefits. Most consumers attach more importance to the utilitarian benefits of LP participation (Bridson et al, 2008;Furinto et al, 2009;Gable et al, 2008;Mimouni-Chaabane and Volle, 2010;Steyn et al, 2010;Wright and Sparks, 1999), possibly because utilitarian benefits are tangible and easier to evaluate than hedonic and symbolic benefits. The preference for utilitarian benefits reflects the tendency of customers with an economic shopping orientation to enroll in LPs (Demoulin and Zidda, 2009;Leenheer et al, 2007;Magi, 2003).…”

“…In contrast, psychological incentives to stay develop through attitudinal loyalty, perceived recognition, reciprocity, and a sense of belonging (Bolton et al, 2000;Mimouni-Chaabane and Volle, 2010;Palmatier et al, 2009). Psychological switching barriers are hard to quantify, but their effects drive attitudinal and behavioral responses, particularly in the long run (Hallberg, 2004;Kim et al, 2009;Steyn et al, 2010).…”

“…Indicatively, Whyte (2004) finds that 28% of frequent fliers among Australian business executives feel more tied to LP rewards than to an airline. In contrast, if customers are prone to relationship building, LP participation may boost their emotional benefits, giving them a sense of gratitude, belonging, elevated status, prestige, or recognition (Daams et al, 2008;Dholakia, 2006;Drèze and Nunes, 2009;Evanschitzky and Wunderlich, 2006;Gruen, 1994;Lacey et al, 2007;Kim et al, 2009;Mimouni-Chaabane and Volle, 2010;Palmatier et al, 2009;Rosenbaum et al, 2005). A firm can increase attitudinal loyalty by enhancing the perceived attractiveness of the LP and its rewards (Demoulin and Zidda, 2008;Furinto et al, 2009;Keh and Lee, 2006;Steyn et al, 2010;Wirtz et al, 2007).…”

Customer Relationship Marketing: Customer-Centric Processes for Engendering Customer- Firm Bonds and Optimizing Long-Term Customer Value

“…Capizzi and Ferguson (2005) recommend that creativity, innovation, and imagination augment the ubiquitous and largely indistinguishable programs that are developed around financial incentives. Recently, loyalty programs have indeed evolved to include benefits that go well beyond those that are merely economic and utilitarian in nature (e.g., preferential treatment given to Ralph Lauren priority VIP customers, and to frequent fliers within American Airline's AAdvantage program; Mimouni-Chaabane & Volle, 2010).…”