Seema GUPTA, Tanvi GUPTA, Shainesh G
One of the emerging marketing techniques of building customer loyalty is through loyalty programmes. Yi & Jeon (2003) suggest that customers can exhibit attitudinal loyalty towards the brand (company loyalty) and/or towards the loyalty programme (programme loyalty). Programme loyalty sans company loyalty can involve latent financial risk for the firm. To help understand how programme loyalty translates to company loyalty, this study illustrates three routes that connect programme loyalty to company loyalty. The first path is of perceived functional value which is driven by economic benefits. The second path is through involvement with experience which is driven by positive experiences and special treatment given to loyalty programme members. The third path is through perceived communication effectiveness driven by personalised communication and source credibility.
We conducted structural equation modelling (SEM) to test the model. Our findings strongly support all hypotheses. The first and second hypotheses state that programme loyalty significantly influences perceived functional value (H1), which in turn significantly impacts loyalty intention (H2). The findings indicate that programme loyalty significantly influences perceived functional value (β=0.271, p<0.001), and perceived functional value significantly influences company loyalty (β=0.648, p<0.001). Findings support the hypotheses (H3 and H4) that programme loyalty significantly influences involvement with experience (β=0.147, p<0.001), which in turn significantly impacts company loyalty (β=0.266, p<0.001). As hypothesised (H5 and H6), program loyalty significantly influences communication effectiveness (β=0.552, p<0.001), which in turn significantly impacts company loyalty (β=0.049, p<0.01).
This study has managerial implications for marketing managers who can design and track the performance of their loyalty programmes in a strategic manner to indirectly fuel company loyalty via programme loyalty. From an academic perspective, this study makes a contribution to the literature on loyalty programmes, customer relationship management, and communication research.
