do customers’ perceived benefits with loyalty programs ... · do perceived benefits influence...
TRANSCRIPT
Do customers’ perceived benefits with loyalty programs influence their
store loyalty? The case of hierarchical loyalty programs
Nathalie T. M. Demoulin*
Associate professor of marketing
IÉSEG – School of Management
Pietro Zidda*
Professor of marketing
University of Namur (FUNDP)
Center on Consumers & Marketing Strategy (CCMS)
**Faculty of Economics, Social Sciences and Business Administration, 8, Rempart de la
Vierge, B-5000 Namur, Belgium, +32 81 724883, [email protected]
Do customers’ perceived benefits with loyalty programs influence their store loyalty?
The case of hierarchical loyalty programs
Abstract:
This research investigates how the benefits customers perceive from their participation in a
store loyalty program (LP) impact on their satisfaction towards the program and on store
loyalty. We explore the context of a hierarchical LP in the apparel industry. Our results show
that perceived benefits and symbolic ones in particular are strong determinants of LP
satisfaction and substantially drive store loyalty. We provide insights about the effectiveness
of hierarchical LPs and suggest some recommendations in designing LPs in a more effective
way.
Keywords: store loyalty, satisfaction, hierarchical loyalty program, perceived benefits
Les bénéfices perçus d’une participation à un programme de fidélité influencent-ils la
fidélité des clients à l’enseigne ? Le cas des programmes de fidélité multi-segments
Résumé :
Cette recherche étudie comment les bénéfices perçus par les clients d’une enseigne, à travers
leur participation à un programme de fidélité (PF), influencent leur satisfaction par rapport au
PF et leur fidélité à l’enseigne. Nous explorons le contexte des programmes multi-segments
dans le secteur de l’habillement. Les résultats montrent que les bénéfices perçus en général et
symboliques en particulier, sont des déterminants de la satisfaction envers les PF et
influencent la fidélité à l’enseigne. Nous discutons également de l’intérêt des PF multi-
segments et suggérons quelques recommandations pratiques quant à une conception plus
effective des PF.
Mots-clés : fidélité, satisfaction, programme de fidélité multi-segments, bénéfices perçus
1
Do perceived benefits influence customers’ satisfaction towards loyalty programs and
their store loyalty? The case of hierarchical loyalty programs
Introduction
Customer loyalty issues have been on the hedge for more than ten years now and they are still
nowadays (see Lichtlé and Pichlon (2008) and Dorotic et al. (2012) for a thorough review).
From a managerial perspective, defensive strategies such as retention, satisfaction and more
broadly customer relationship or loyalty programs have demonstrated to be crucial to retailers
or service providers and especially when competition is intense. From an academic point-of-
view, researchers are interested in understanding not only the performance of these defensive
strategies and in particular the performance of loyalty programs (referred to as LPs hereafter)
but also in better grasping the underlying mechanisms that lead customers to be loyal to the
store.
Among the numerous customer relationship tools, loyalty card programs (referred to LCPs
hereafter) are probably the most spread one among retail firms from various industries. Let us
recall that retailers undertake LCPs to identify loyal customers and to reward them for their
loyalty, to acquire knowledge about them and to (try to) develop a long lasting relationship
with them. Though several studies have questioned the effectiveness of LPs (e.g., Dowling
and Uncles, 1997; Meyer-Waarden and Benavent, 2003; Sharp and Sharp, 1997; Shugan,
2005), recent research shows evidence of the capacity of LPs to increase customer loyalty, at
least behaviorally (e.g., Lewis, 2004; Liu, 2007; Meyer-Waarden, 2007). In addition,
researchers have pointed out that the customer satisfaction towards LPs matters a lot. The
design of LPs and in particular of LCPs seems to substantially impact customers’ perceived
value of the program (Bridson et al., 2008; Yi and Jeon, 2006) and has a major impact on LP
enrolment as well as its effectiveness (Demoulin and Zidda, 2008; 2009; Dorotic et al., 2012).
2
In the continuation of previous research, in particular the one of Mimouni-Chaabane and
Volle (2010), this study looks at what are the drivers of customers’ satisfaction towards LPs.
We investigate the benefits customers perceived from their participation in a store LP and we
assess how the perceived benefits (i.e., utilitarian, hedonic and symbolic) impact on the
satisfaction towards the program and finally on store loyalty. We develop and test a broad
model of store loyalty including several dimensions of loyalty as well as moderating variables
such as customer involvement in the product category. Though there have been several
studies on how customer’s evaluation of the LP reward schemes and benefits impact loyalty
variables, to the best our knowledge, no study has fully investigated the LP perceived benefits
– LP satisfaction – store loyalty relationship.
In addition, we explore the context of a hierarchical or multi-tier LP in the apparel industry in
order to study a wide range of incentives and marketing actions. More and more retailers use
hierarchical LPs, i.e. LPs that recognize different classes or tiers of customers according to
their purchase behavior (e.g., bronze, silver and gold). Though the literature shows some
starting interest in hierarchical LPs (e.g., Drèze and Nunes, 2009; Wagner et al., 2009), no
study has evaluated their effectiveness yet. Our contribution is thus twofold. First of all, we
provide an empirical test of the link between the perceived benefits, LP satisfaction and store
loyalty and a better understanding of the role played by the different categories of benefits.
Second, we provide some insights about the effectiveness of hierarchical LPs in enhancing LP
satisfaction and store loyalty. From a managerial standpoint, we make some practical
recommendations in designing LPs in a more effective way.
1. Background and hypotheses
On the LP perceived benefits–LP satisfaction–store loyalty relationship
According to previous research, the loyalty program membership per se does not necessarily
3
improve customers’ loyalty to the store. Past studies have shown that to be effective, LPs and
the associated rewards must improve the perceived value of the company’s offer (Dowling
and Uncles, 1997; O’Brien and Jones, 1995; Yi and Jeon, 2003) and that the customer
satisfaction (Demoulin and Zidda, 2008) and loyalty (Yi and Leon, 2003) toward LPs are
important drivers of store loyalty. Customers will enroll all the more if they perceive the value
of the LP (Demoulin and Zidda, 2009).
Value can be defined as “an interactive relativistic preference experience … characterizing a
subject’s experience of interacting with some object. The object may be anything or event”
(Holbrook and Corfman, 1985, p. 40). Value is thus associated with the benefits customers
retrieve from their experience with an object or event, for instance shopping activities. The
customers’ participation in a LP (e.g., collecting and redeeming points) can also be considered
from an experiential perspective. Customers benefit in various ways from their experience
with the LP. The benefits are not limited to monetary gains such as discounts, exclusive offers
or gifts. LP members can also benefit from additional and preferential services (e.g., priority
check-in in the airline industry), from invitations to special events (e.g., fashion shows in the
apparel industry), from new product trials (e.g., make-up sessions in the HBC industry or new
car drive in the automobile industry) or from exclusive product information (e.g.,
newsletters). Several categorizations of benefits have been proposed in the literature. Three
broad categories of benefits emerge. The utilitarian benefits, which are primarily instrumental,
functional and cognitive, are mostly related to the completion of the product/service
acquisition task (Babin et al., 1994). The hedonic benefits are non-instrumental, experiential,
emotional, and personally gratifying benefits (Arnold and Reynolds, 2003; Hirschman and
Holbrook, 1982). Symbolic benefits define the third category. They are extrinsic advantages
that products/services provide in relation to the need for personal expression, self-esteem, and
social approval (Keller, 2003).
4
Very recently, Mimouni-Chaabane and Volle (2010) adapted to LPs the benefits associated
with shopping experiences. They consider as utilitarian benefits all the monetary rewards LP
members receive from their participation in the program (e.g., saving money through
coupons, cash-back offers, shopping cost reductions). Regarding hedonic benefits, they retain
exploration benefits (e.g., new product trial, information search) as well as entertainment
benefits (e.g., unique experiences, pleasure associated with collecting and redeeming points).
Finally, as symbolic benefits they consider recognition (e.g., have a special status, feel
distinguished and better treated) as well as social benefits (e.g., belong to a group or
community that shares the same values).
A few studies have shown that shopping benefits positively impact on retail outcome
variables (e.g., Babin et al., 1994; Jones et al., 2006). Relying on several theories such as the
general attitude theory and environmental psychology, Jones et al. (2006) proved that
perceived shopping value or benefits positively impact on store satisfaction, store attitudinal
loyalty, store behavioral loyalty (i.e., repatronage intention) or word of mouth (WOM). In the
context of LPs, Yi and Jeon (2003) showed that the perceived value of the LP reward scheme
positively influence brand loyalty under the high customer involvement condition. In line
with previous research and in particular with the theory of learning behavior (Rothschild and
Gaidis, 1981), we thus hypothesize that LP perceived benefits will positively influence retail
outcome variables such as behavioral and attitudinal store loyalty as well as word of mouth.
Though for the clarity sake of this paper, we posit hereafter an overall positive impact, we of
course expect differential effects across benefits. For instance, since hedonic and symbolic
benefits are in essence more emotional benefits, we foresee a greater impact on WOM (i.e., a
consequence of emotional responses to consumption situations according to Swan and Oliver
(1989)) and on attitudinal loyalty than utilitarian benefits do.
H1. Customers’ perception of the benefits provided by their participation in a LP –utilitarian
5
benefits (i.e., monetary savings), hedonic benefits (i.e., exploration and entertainment) and
symbolic benefits (recognition and social)– increase their store loyalty (i.e., behavioral and
attitudinal loyalty, word of mouth).
Satisfaction and loyalty towards the LP have been shown to impact on brand (Yi and Jeon,
2006) and on store loyalty (Demoulin and Zidda, 2008). Previous research has also
demonstrated that satisfaction and loyalty towards LPs are driven by the perceived value
customers retrieve from their participation in the LP (Meyer-Waarden and Benavent, 2007;
Mimouni-Chaabane and Volle, 2010) or by their evaluation of the LP reward scheme
(Bridson et al., 2008; Meyer-Waarden, 2006; Yi and Jeon, 2003). When testing the
nomological validity of the scales they developed, Mimouni-Chaabane and Volle (2010)
found that utilitarian and hedonic benefits were mainly driving LP satisfaction but they did
not found any impact for the symbolic benefits. We believe this might be due to the fact that
80% of their sample concern the grocery retail industry where symbolic benefits from
participating in a LP are less likely to be found. In line with Yi and Jeon’s (2006) framework
and findings, we thus hypothesize a direct route for the impact of LP perceived benefits and
store loyalty and an indirect route throughout LP satisfaction.
H2. The LP satisfaction mediates the LP perceived benefits–store loyalty relationship.
To complete our model, we consider the moderating effect of the customer personal
involvement towards the product category. Laaksonen (1999, p. 344) defines personal
involvement as “the perceived personal importance of an object to an individual” and states
that “involvement is supposed to be positively correlated with activities such as the extent of
ongoing search information, money spent in that type of product category and frequency of
product/service usage” (p. 345). According to past research, involvement may influence
customers’ perception of LP rewards (e.g., Dowling and Uncles, 1997; Melancon et al., 2011;
Meyer-Waarden, 2006; Yi and Jeon, 2003). For instance, Yi and Jeon (2003) shows that it
6
moderates the effect of the type and timing of rewards on the value perception. Under low
involvement, the value perception of rewards impact on brand loyalty throughout program
loyalty whereas under high involvement, the value perception of rewards positively influence
brand loyalty both directly and indirectly via program loyalty. We thus foresee that the
customer involvement will moderate the impact of LP perceived benefits on LP satisfaction as
well as on store loyalty. Again, though we posit hereafter an overall impact, we expect
differential effect of customer personal involvement, particularly regarding the link between
entertainment/symbolic benefits and LP satisfaction. Entertainment benefits are not related to
the company’s offer. They are rather linked to the point collection and redemption process.
They will distract the involved customers from the company’s core offer. We thus expect that
a greater involvement will decrease the positive effect of perceived entertainment benefits on
LP satisfaction. Symbolic benefits are likely to have a higher effect on LP satisfaction for
highly involved customers. Indeed, being fascinated by the product category, it is really
important for them to share the brand values and to be recognized as special customers.
H3. Customers’ involvement towards the product category moderates the relationship
between LP perceived benefits and LP satisfaction.
On the impact of LP hierarchies on the LP perceived benefits–LP satisfaction–store loyalty
relationship
A lack of differentiation between LPs is often pointed out as a potential reason for the
observed ineffectiveness of LPs. Hierarchical LPs enable companies to offer non-linear
incentives or rewards that are expected to increase customer loyalty more than linear ones.
They thus enable these companies to better differentiate their LPs. Although the grocery retail
industry has not been using this possibility yet, many other industries offer hierarchical LPs
(e.g., airline, credit card, apparel, hotel, etc.). The usual bronze, silver, gold and sometimes
platinum are used to refer to the different customer classes or tiers. The belonging to a higher
7
tier requires more spending from the customers but gives more valuable rewards. If
hierarchical LPs allow retailer to achieve more differentiation by offering quantitatively more
and qualitatively better rewards to higher-tier members, then the latter customers should
perceive more benefits than customers in lower tiers. Drèze and Nunes (2009) investigated the
relationship between the hierarchical structure of LPs (i.e., the hierarchy among customer
classes) and consumers’ perception of status, that is the feeling of being socially recognized
and of being superior in terms of prestige, power, or entitlement. They show using the theory
of social comparison that the number of tiers (customer classes or segments) as well as the
relative size of each tier have an impact on status perceptions. The greater the number of tiers
(or the smaller the tier), the more special the customers feel. In other words, customers in the
top tier feel superior if the size of their tier is small compared to other tiers and/or if there
exists another immediate lower tier (in addition to the no-status tier). In addition, they show
that a 3-tier LP works better than a 2-tier LP in enhancing status feeling. In a choice
experiment, they also show that consumers prefer 3-tier LPs even though they do not qualify
for upper tiers.
Throughout communication and the reward scheme, companies enhance the higher-tier
members’ feeling of status. They emphasize the exclusiveness and/or personalization of the
rewards and benefits (e.g., VIP offers, newsletters and coupons) leading high-tier members to
consider that they receive more than other customers and that what they receive is more
valuable than what others get. In addition, given H2 and the expected positive relationship
between LP perceived benefits and satisfaction and between LP satisfaction and store loyalty,
higher-tier members should be more satisfied with the LP and finally more loyal to the store.
We thus expect that:
H4. In a hierarchical LP, higher-tier members perceive higher benefits than lower-tier
members, are more satisfied with the LP and more loyal to the store than lower-tier members.
8
However, the LP perceived benefits–LP satisfaction relationship is unlikely to be similar
across LP tiers. We indeed believe that the impact various LP benefits have on LP satisfaction
will vary with tier membership. Higher-tier members may be more sensitive to symbolic
benefits than their lower-tier counterparts. Given that they are part of an upper-level group,
they might expect more attention from the retailer and express the desire to be recognized as
good customers. Being part of a privileged group, close to the heart of the brand, they might
better feel the benefits of belonging to the community. We thus hypothesize that:
H5. Customers’ position in the LP hierarchy moderates the LP perceived benefits–LP
satisfaction relationship.
2. Methodology
2.1. Survey
To test our conceptual model, we surveyed the customers of a non-food retailer offering a
hierarchical LP. We decided on ESPRIT which is active in the apparel industry and which
provides its customers with a 3-tier LCP: a non-status tier (no LC associated), a basic or lower
tier (associated with the red LC) and an upper tier (associated with the platinum LC). The LP
offers rewards that can be classified into the five categories of benefits identified by
Mimouni-Chaabane and Volle (2010). The platinum card holders receive more benefits than
the red card holders. These additional benefits are VIP invitations to special events (i.e.,
monetary savings, exploration, recognition and social benefits), free alteration service (i.e.,
monetary benefit) and an exclusive hotline (i.e., recognition benefit). Red card holders access
to the upper level once they spend more than 600 euros within a year. We surveyed 400
cardholders at the exit of 4 ESPRIT stores located in 3 Belgian cities (Brussels, Liège and
Namur). The final sample includes 371 respondents from the two status tiers: 67% hold the
red card (lower tier) and 33% hold the platinum one (higher tier). 87% are women. The age
9
distribution is as follows: 51%, 26.5%, 17% and 5.5% belong to the ‘18-26’, ‘27-40’, ‘41-55’
and ‘56 and more’ categories, respectively.
2.2 Measurement scales
In order to measure the constructs, we used the usual 7-point agreement scale with a French-
adaptation of the items proposed in the literature. We measured the five dimensions of the LP
perceived benefits with 16 items (monetary saving (MS), exploration (EX), entertainment
(EN), recognition (RE) and social (SO) benefits) and LP satisfaction (LPSAT) with 4 items
(Mimouni-Chaabane and Volle, 2010). We measured the behavioral (BL) and attitudinal (AL)
loyalty respectively with 4 and 3 items (Bruner et al., 2005; Bridson et al., 2008). The word of
mouth (WOM) was measured with 4 items (Bridson et al., 2008). For the personal
involvement in fashion clothing (INVOL), we adapted the items proposed by O’Cass (2001).
The scales and items are presented in Appendix A.
3. Results
The data were analyzed using SmartPLS version 2.0.M3 (Ringle et al., 2005) in two stages:
the measurement model and the structural model. SmartPLS is a structural equation modeling
technique that is recommended when the model is complex, the sample size is quite small or
the assumptions of normality are not satisfied (Chin and Newstead, 1999).
3.1. Measurement model
We tested the measurement model by performing a validity and reliability analysis for each
measure of the structural model using SmartPLS. Appendix B shows the results as well as
descriptive statistics about the constructs. All items loadings were satisfactory and the t-
values were significant. The composite reliabilities (CR) and coefficient alpha’s for each
10
construct are over the recommended 0.7 (Fornell and Larcker, 1981). The convergent validity
was tested with the average variance extracted (AVE) and is higher than 0.5 for all constructs.
The discriminant validity of each construct is supported by the square root of AVE being
greater than the correlation of any pair of constructs (Fornell and Larcker, 1981).
Consequently, the scales can be considered as reliable and valid.
3.2. Hypotheses testing
Secondly, we used SmartPLS to test our hypotheses. We obtained the statistical significance
of each path coefficient by using the bootstrapping resampling technique. In order to test H1
and H2, we look at the effect of perceived benefits on customers’ store loyalty mediated by
LP satisfaction. We used the Baron and Kenny’s (1986) procedure revisited by Zhao et al.
(2010) as well as Sobel’s test. Firstly, the effects of independent variables (perceived benefits)
on the mediator (LPSAT) have been tested (see Table 1). All perceived benefits increase
LPSAT except for recognition benefits. Secondly, we estimate the effect of the mediator
(LPSAT) on the dependent variables (measures of store loyalty). All parameters presented in
Table 2 are positive and significant. Thirdly, we test direct effects of perceived benefits on
store loyalty measures. Only significant effects are presented in Table 3. Finally, we test
mediations by using Sobel’s test. Table 4 presents the results of Sobel’s tests as well as total
effects (a×b+c according to Baron and Kenny (1986)). Our results demonstrate that we have
indirect-only mediations1 for the following links: EN LPSAT BL, MS LPSAT
WOM, EN LPSAT WOM, EN LPSAT AL. Total effects for these indirect only-
mediations are rather low. Total effects for complementary mediations (all the other
mediations) are much higher. Mediations with highest total effects are SO LPSAT AL,
1 The mediation (Sobel’s test) is significant and the direct effect is not.
11
SO LPSAT WOM and EX LPSAT WOM. We have a direct-only nonmediation
for the effect of recognition on behavioral loyalty (c=0.1847).
Relationship
Parameter
Estimate t-ratio p-value
MS LPSAT 0.2458 5.7929 0.0000
EX LPSAT 0.1002 1.9779 0.0244
EN LPSAT 0.3199 6.8133 0.0000
RE LPSAT 0.0594 1.2228 0.1111
SO LPSAT 0.0873 1.6073 0.0544
INVOL LPSAT 0.0018 0.0375 0.4851
LPTIER LPSAT 0.1197 3.0740 0.0011
EN × INVOL LPSAT -0.1190 2.1763 0.0151
RE × LPTIER LPSAT 0.0938 1.7376 0.0416
SO × INVOL LPSAT 0.1485 3.1661 0.0008
SO × LPTIER LPSAT -0.1179 1.8130 0.0353
Table 1. Parameter estimates for the LP perceived benefits–LP satisfaction relationship
Relationship
Parameter
estimate t-ratio p-value
LPSAT BL 0.1467 2.6769 0.0039
LPSAT AL 0.3175 5.1031 0.0000
LPSAT WOM 0.2011 3.3725 0.0004
Table 2. Parameter estimates for the LP satisfaction–store loyalty relationship
12
Relationship
Parameter
Estimate t-ratio p-value
MS BL 0.1174 2.2729 0.0118
EX BL 0.1218 2.1865 0.0147
RE BL 0.1755 2.7085 0.0035
SO BL 0.1658 2.7112 0.0035
LPTIER BL 0.2002 4.655 0.0000
EX WOM 0.2362 4.4744 0.0000
SO WOM 0.3174 4.7568 0.0000
LPTIER WOM 0.0840 2.2930 0.0112
MS AL 0.0854 1.8312 0.0340
EX AL 0.0867 1.7409 0.0413
SO AL 0.3285 5.6056 0.0000
LPTIER AL 0.1216 3.2105 0.0007
Table 3. Direct effects of perceived benefits and LPTIER on store loyalty
To test H3 and H5, we look at the moderating effects of the involvement with the product
category and of membership levels. We only report significant moderations in Table 1. The
results demonstrate that involvement significantly influences the relationship between
entertainment and LP satisfaction (β=-0.119, p=0.0151). Indeed, the perceived entertainment
has a lower impact on LP satisfaction for highly involved customers than for lowly involved
customers. However, for highly involved customers, social benefits increase more the LP
satisfaction than for weakly involved customers (β=-0.1485, p=0.0008). For higher tier
members, recognition benefits enhance LP satisfaction (β=0.0938, p=0.0416) whereas
13
perceived social benefits do not increase their LP satisfaction (β=-0.1179, p=0.0353). H3 and
H5 are partially supported.
Relationship
Sobel’s
Z test p-value
Total
effects
MS LPSAT BL 2.4430 0.0075 0.1566
EX LPSAT BL 1.4664 0.0717 0.1362
EN LPSAT BL 2.4509 0.0074 0.0664
SO LPSAT BL 1.4016 0.0810 0.1799
LPLEVEL LPSAT BL 2.0916 0.0186 0.219
MS LPSAT WOM 2.9380 0.0018 0.0583
EX LPSAT WOM 1.5554 0.0604 0.2559
EN LPSAT WOM 2.9518 0.0017 0.1117
SO LPSAT WOM 1.4787 0.0701 0.3367
LPLEVEL LPSAT WOM 2.3777 0.0090 0.1097
MS LPSAT AL 3.8844 0.0001 0.1691
EX LPSAT AL 1.6581 0.0491 0.1174
EN LPSAT AL 3.9165 0.0001 0.0642
SO LPSAT AL 1.5661 0.0591 0.3587
LPLEVEL LPSAT AL 2.8026 0.0027 0.1617
Table 4. Sobel’s test results
Finally, in order to test H4, we first look at the effect of LP tier membership on perceived
benefits. We performed an analysis of variance to assess the significance of the mean
differences between the lower tier (LPTIER=0) and the higher tier (LPTIER=1). Higher-tier
members perceive higher monetary saving (p=0.0326), exploration (p=0.0238), entertainment
(p=0.0003) and recognition benefits (p=0.0008). However, they do not perceive higher social
14
benefits (p=0.1073). Secondly, we test the effect of LP tiers on customer satisfaction with the
program and on store loyalty. The results presented in Tables 1, 2 and 4 demonstrate that
higher-tier customers are more satisfied with the LP (β=0.1197, p=0.0011) and more loyal to
the store than lower-tier ones. We have complementary mediations through LP satisfaction for
the three measures of customer loyalty. Indeed, mediations tested with the Sobel test (see
Table 4) are significant as well as direct effects (βBL=0.2002, p=0.0000; βAL=0.1216,
p=0.0007; βWOM=0.0840, p=0.0112 in Table 3). Except for social benefits, H4 is supported.
4. Conclusion
Hierarchical LPs enable retailers to better reward their most loyal customers. As expected,
higher-tier members perceive more benefits than their lower-tier counterparts, except for
social benefits. Furthermore, perceived benefits increase customers’ satisfaction with the LP.
However, recognition only improves the satisfaction of higher-tier members. Although
higher-tier members receive more rewards because they spend more, we believe that the
higher status provided by their belonging to the top-tier magnifies their perception of the
benefits and their evaluation of the LP throughout the idiosyncratic fit heuristic effect
suggested by Kivetz and Simonson (2003). Indeed, higher-tier members need to provide more
efforts than other customers to obtain and maintain their status. Thus, receiving more
increases their overall perceived value of the program because it better fits with the efforts
they provide. This effect is even more important for those who mostly perceive the status
feeling (higher perceived recognition benefits).
For highly involved customers, social benefits have a higher influence on the LP satisfaction
whereas entertainment benefits have a lower impact. Customers with a high involvement
attach a greater value to the belonging to a group of people who share the brand’s value
whereas customers with a lower involvement prefer to be entertained by the collection of
15
points. This is in line with past research (e.g., Meyer-Waarden, 2006; Yi and Jeon, 2003)
which shows that highly involved customers tend to prefer direct (i.e., product category-
related rewards) than indirect (here, the pleasure obtained via point accumulation and
redemption) rewards. Though greater social benefits increase LP satisfaction among lower-
tier members, they have quite no impact for higher-tier members. The collection of points
leading to monetary savings and entertainment are the main determinants of LP satisfaction.
These results are in line with Mimouni-Chaabane and Volle’s (2010) findings. However, if
we consider the impact of the benefits on customers’ loyalty, the picture is very different.
Indeed, symbolic benefits mostly enhance customers’ loyalty. Though it is not directly linked
to attitudinal loyalty and word of mouth, recognition has a direct impact on behavioral
loyalty. Social benefits are an important determinant of the three loyalty measures considered.
Thus, symbolic benefits really matter in this particular industry. Regarding the determinants
of behavioral and attitudinal loyalty, monetary and exploration benefits come after social
benefits whereas exploration is the second most important determinant of word of mouth.
Entertainment has a small effect on store loyalty, through an indirect-only mediation.
Since they are the most important determinants of LP satisfaction, retailers should put forward
the economic advantages of their LP as well as the entertainment linked to the point collection
in order to increase their customers’ loyalty card usage. However, to retain their best
customers and make them even more loyal, retailers should carefully design their LP in order
to make their customers feel that they belong to a community of people who share the value
of the brand and are close to it (social benefits). Retailers should for instance provide their
customers with exclusive offers targeted to privileged customers, create special events such as
brand’s anniversary to share the value of their brand (e.g., by reminding the origin of the
brand) and offer special gifts to their best customers. They can also use monetary and
exploration benefits to make their customers more behaviorally and attitudinally loyal.
16
Exploration can particularly be exploited to increase the word-of-mouth process. Indeed,
receiving newsletters enables customers to discover the retailer’s offers and induces
customers to talk to their family and friends about the brand and its new merchandise.
Building on Drèze and Nunes (2009) as well as on Kivetz and Simonson’s (2003)
recommendations, hierarchical LPs seem to be a tremendous way of increasing customers’
perception of benefits. The benefit-based categories of actions combined with a hierarchical
LP thus offer retailers a true mean to enhance their customers’ loyalty and to differentiate
their LP from competitors’ LPs.
Regarding limitations, in order to make our results more generalizable, we believe this study
should be undertaken in other industries where hierarchical LPs have been in operations for
many years (e.g., airline and hotel industries). To complete the model, other mediators of the
LP satisfaction – loyalty measures relationship should be investigated such as the customers’
satisfaction towards the store.
PS. This is an ongoing research. The next version of the paper will include a theoretical
refinement of our hypotheses as well as a more thoughtful discussion of our results.
References
Arnold M.J. and Reynolds K.E. (2003), Hedonic shopping motivations, Journal of Retailing,
79, 2, 77–95.
Babin B.J., Darden W. and Griffin M. (1994), Work and/or fun: measuring hedonic and
utilitarian shopping value, Journal of Consumer Research, 20, 4, 644–657.
Baron R.M. and Kenny D.A. (1986), The moderator-mediator variable distinction in social
psychological research: conceptual, strategic and statistical considerations, Journal of
Personality and Social Psychology, 51, 6, 1173–1182.
17
Bridson K., Evans J. and Hickman M. (2008), Assessing the relationship between loyalty
program attributes, store satisfaction and store loyalty, Journal of Retailing and Consumer
Services, 15, 5, 364–374.
Bruner G.C., James K E. and Hensel P J. (2005), Marketing scales handbook: a compilation
of multi-item measures for consumer behavior and advertising 1998-2001, Texere Publishing.
Chin W.W. and Newstead P.R. (1999), Statistical strategies for small sample research, in R.
H. Hoyle (Ed.), Structural Equation Modelling, SAGE Publications, London, UK.
Demoulin N.T.M. and Zidda P. (2008), On the impact of loyalty cards on store loyalty: does
the customers’ satisfaction with the reward scheme matter?, Journal of Retailing and
Consumer Services, 15, 5, 386–398.
Demoulin N.T.M. and Zidda P. (2009), Drivers of customers’ adoption and adoption timing
of a new loyalty card in the grocery retail market, Journal of Retailing, 85, 3, 391–405.
Dorotic M., Bijmolt T.H.A. and Verhoef P.C. (2012), Loyalty programmes: current
knowledge and research directions, International Journal of Management Reviews, 1–21,
forthcoming.
Dowling G.R. and Uncles M. (1997), Do customer loyalty programs really work?, Sloan
Management Review, 38, 4, 71–82.
Drèze X. and Nunes J.C. (2009), Feeling superior: the impact of loyalty program structures on
consumers’ perceptions of status, Journal of Consumer Research, 35, 6, 890–905.
Fornell C. and Larcker D.F. (1981), Evaluating structural equation models with unobservable
variables and measurement error, Journal of Marketing Research, 18, 1, 39–50.
Hirschman E. and Holbrook M. (1982), Hedonic consumption: emerging concepts methods
and propositions. Journal of Marketing, 46, 3, 92–102.
Holbrook M.B. and Corfman K.P. (1985), Quality and value in the consumption experience:
Phaedrus rides again, in J. Jacoby and J. C. Olson (Eds.), Perceived quality: how consumers
18
view stores and merchandise, Lexington, Massachusetts: Lexington Books, 31–57.
Jones M.A., Reynolds K.E. and Arnold M.J. (2006), Hedonic and utilitarian shopping value:
Investigating differential effects on retail outcomes, Journal of Business Research, 59, 9,
974–981.
Kivetz R. & Simonson I. (2003), The idiosyncratic fit heuristic: effort advantage as a
determinant of consumer response to loyalty programs, Journal of Marketing Research, 40, 4,
454–467.
Keller K.L. (1993), Conceptualizing, measuring and managing customer-based brand equity,
Journal of Marketing, 57, 1, 1–22.
Lichtlé M.-C. and Pichlon V. (2008), Mieux comprendre la fidélité, Recherche et Applications
en Marketing, 23, 4, 121–141.
Lewis M. (2004), The influence of loyalty programs and short-term promotions on customer
retention, Journal of Marketing Research, 41 (August), 281–292.
Liu Y. (2007), The long-term impact of loyalty programs on consumer purchase behavior and
loyalty, Journal of Marketing, 71 (October), 19–35.
Melancon J., Noble S. and Noble C. (2011), Managing rewards to enhance relational worth,
Journal of the Academy of Marketing Science, 39, 3, 341–362.
Meyer-Waarden L. (2006), Effects of gratifications on loyalty programs, Proceedings of the
35th
European Marketing Academy conference, Athens.
Meyer-Waarden L. (2007), The effects of loyalty programs on customer lifetime duration and
share of wallet, Journal of Retailing, 83, 2, 223-226.
Meyer-Waarden L. and Benavent C. (2003), Les cartes de fidélité comme outils de
segmentation et de ciblage: le cas d’une enseigne de distribution, Décision Marketing, 32
(October–December), 19-30.
Meyer-Waarden L. and Benavent C. (2007), L’impact différencié des gratifications des
19
programmes de fidélisation sur le comportement d’achat en fonction des orientations d’achat,
Actes du XXIIIème Congrès International de l’AFM, Aix-les-Bains.
Mimouni-Chaabane A. and Volle P. (2010), Perceived benefits of loyalty programs: scale
development and implications for relational strategies, Journal of Business Research, 63, 1,
32-37.
O’Brien L. and Jones C. (1995), Do rewards really create loyalty? Harvard Business Review,
73 (May-June), 75–82.
O’Cass A. (2001), An exploration study of the influence of personal values on purchase
decision and advertising involvement, in P. M. Tidwell and T. E. Muller (Eds.), Asia Pacific
Advances in Consumer Research, Vol. 4, Provo, UT: Association for Consumer Research,
67–72.
Ringle C.M., Wende S. and Will A. (2005), SmartPLS 2.0., University of Hamburg,
Germany.
Rothschild M.L. and Gaidis, W.C. (1981), Behavioral learning theory: its relevance to
marketing and promotions, Journal of Marketing, 45 (Spring), 70–78.
Sharp B. and Sharp A. (1997), Loyalty programs and their impact on repeat-purchase loyalty
patterns, International Journal of Research in Marketing, 14, 5, 473–486.
Shugan S.M. (2005), Brand loyalty programs: Are they shams?, Marketing Science, 24, 2,
185–193.
Swan J.E and Oliver, R.L. (1989), Postpurchase communications by consumers, Journal of
Retailing, 65 (Winter), 516–533.
Wagner T., Hennig-Thurau T. and Rudolph T.Y. (2009), Does customer demotion jeopardize
loyalty?, Journal of Marketing, 73, 3, 69–85.
Yi Y. and Jeon H. (2003), Effects of loyalty programs on value perception, program loyalty,
and brand loyalty, Journal of the Academy of Marketing Science, 31, 3, 229–240.
20
Zhao X., Lynch J.G. Jr. and Chen Q. (2010), Reconsidering Baron and Kenny: Myths and
truths about mediation analysis, Journal of Consumer Research, 37, 2, 197–206.
21
Appendix A. Construct measurement items [in French]
Scale (variable name) (adapted from)
Monetary savings (MS) (Mimouni-Chaabane and Volle, 2010)
Avec ce programme de fidélité, …
je fais mes achats à moindre coût financier.
je fais des économies.
j’économise de l’argent.
Exploration benefits (EX) (Mimouni-Chaabane and Volle, 2010)
Avec ce programme de fidélité, …
je découvre de nouveaux produits.
je découvre des produits que je n’aurais pas pu découvrir autrement.
j’essaie de nouveaux produits.
Entertainment benefits (EN) (Mimouni-Chaabane and Volle, 2010)
Avec ce programme de fidélité, …
je trouve que c'est agréable de collecter des points.
je trouve que c’est sympa d’échanger ses points.
je me fais plaisir quand j’échange mes points.
Recognition benefits (RE) (Mimouni-Chaabane and Volle, 2010)
Avec ce programme de fidélité, …
on s’occupe mieux de moi.
je suis mieux traité que les autres clients.
je suis traité avec plus de respect.
je me sens privilégié par rapport aux autres clients.
Social benefits (SO) (Mimouni-Chaabane and Volle, 2010)
Avec ce programme de fidélité, …
22
je fais partie d’une communauté de gens qui partagent les mêmes valeurs.
je me sens proche de la marque.
j’ai le sentiment de partager les mêmes valeurs que la marque.
Satisfaction towards the LP (LPSAT) (Mimouni-Chaabane and Volle, 2010)
Dans l’ensemble, les avantages que je reçois grâce à ce programme correspondent à ce
que je cherche.
Je suis globalement satisfait par ce programme.
J’ai fait le bon choix en adhérant à ce programme.
Mon évaluation globale de ce programme est très bonne.
Behavioral loyalty (AL) (Bruner et al., 2005; Bridson et al., 2008)
Dans l’ensemble, les avantages que je reçois avec ce programme de fidélité,…
m’incitent à être un client régulier de ce magasin.
m’incitent à acheter plus souvent dans ce magasin.
m’incitent à acheter une plus grande variété de produits dans ce magasin.
m’incitent à fréquenter moins souvent les magasins des concurrents.
Attitudinal loyalty (AL) (Bruner et al., 2005; Bridson et al., 2008)
Grâce à ce programme de fidélité, …
je me sens fidèle à ce magasin.
même si ce magasin est plus difficile à atteindre, je continuerai à acheter chez eux.
je suis prêt à faire d’avantages de kilomètres pour rester client de ce magasin.
Word of mouth (WOM) (Bridson et al., 2008)
Ce programme de fidélité, …
m’incite souvent à parler à d’autres personnes de mes expériences positives dans ce
magasin.
m’incite à parler positivement du magasin à mes amis.
23
m’incite à recommander ce magasin aux personnes me demandant conseil.
m’incite à encourager mes amis à aller dans ce magasin faire leurs achats.
Involvement (INVOL) (O’Cass, 2001)
La mode vestimentaire compte beaucoup pour moi.
La mode vestimentaire est un élément important de ma vie.
Je considère la mode vestimentaire comme une partie centrale de ma vie.
Personnellement, j’estime que la mode vestimentaire représente une catégorie de produit
importante.
Je suis très intéressé par la mode vestimentaire.
Je suis très concerné par la mode vestimentaire.
24
Appendix B. Constructs’ reliability, validity and descriptive statistics
Constructs AVE
Composite
Reliability
Cronbach’s
Alphas
LP Perceived
Benefits
Monetary savings (MS) 0.8915 0.9610 0.9390
Exploration (EX) 0.8237 0.9334 0.8933
Entertainment (EN) 0.8155 0.9298 0.8868
Recognition (RE) 0.8536 0.9589 0.9425
Social (SO) 0.7726 0.9104 0.8527
Mediator LP satisfaction (LPSAT) 0.7971 0.9402 0.9151
Behavioral loyalty (BL) 0.6583 0.8844 0.8241
Store loyalty Attitudinal loyalty (AL) 0.6811 0.8649 0.7688
Word-of-mouth (WOM) 0.8744 0.9653 0.9519
Moderator Involvement (INVOL) 0.7897 0.9575 0.9467
Table A.1. Confirmatory analysis, reliability and validity (n=371)
25
Mean Std AL BL EN EX INVOL LPSAT MS RE SO WOM
AL 3.91 1.52 0.83
BL 3.55 1.42 0.67 0.81
EN 5.18 1.64 0.30 0.30 0.90
EX 3.57 1.64 0.39 0.39 0.28 0.91
INVOL 4.02 1.55 0.24 0.18 0.17 0.30 0.89
LPSAT 4.72 1.24 0.52 0.42 0.49 0.34 0.17 0.89
MS 3.52 1.59 0.36 0.32 0.26 0.25 0.17 0.42 0.94
RE 2.83 1.58 0.38 0.43 0.31 0.45 0.29 0.33 0.17 0.92
SO 3.04 1.54 0.53 0.45 0.33 0.49 0.33 0.38 0.33 0.62 0.88
WOM 3.96 1.78 0.53 0.54 0.33 0.49 0.24 0.45 0.27 0.40 0.54 0.94
Table A.2. Descriptive statistics and the latent variable correlation matrix: discriminant
validity (n=371) 2
2 Bold numbers on diagonal show the square root of AVE