Customer loyalty programs: Strategic value to relationship marketing

Despite the wide proliferation of customer loyalty programs and the billions of dollars being invested in them, scholars have largely ignored them. Completion of this study marks one of only a few empirical studies of customer relationships devoted to relationship marketing implementation and is believed to be the most comprehensive scholarly study of customer loyalty programs as a relationship marketing strategy. Drawing from the customer loyalty and relationship marketing literature, a customer loyalty model was developed that examined loyalty at the level of the individual customer and identified the drivers and manifestations of customer loyalty. Empirical support for the linkages of the customer loyalty model was established in three different contextual settings: national department store chain (n = 2,620), international restaurant chain (n = 639), and international chemical manufacturer (n = 248). Findings across multiple contexts found empirical support for customer loyalty program membership as having significantly positive effects on customer commitment and trust, as well as on the antecedents and consequences of customer loyalty. The results of the study provide evidence that contradicts an emerging view that loyalty programs are largely comprised of customers who are not truly committed to the firm. The findings also lend support to those researchers who argue that it takes more than economic value for customers to become strongly committed to maintaining a marketing relationship. Other variables beyond repurchase metrics were included to more fully capture the potential contribution of customer loyalty programs. Findings and analyses provided in this study potentially may impact how firms presently allocate their finite corporate resources to support relationship marketing strategies.