Determinants of loyalty programmes and their impact on store patronage

Abstract

Purpose The purpose of this study is to measure the impact of perceived benefits offered by loyalty programmes on store patronage behaviour and repeat purchase behaviour of customers. Another purpose of this study is to assess the impact of mediating and influencing factors on patronage behaviour and customer loyalty. Design/methodology/approach The convenience sampling method was adopted for the sample selection. Structured questionnaire instruments were distributed to subscribers who are enrolled or subscribed to any loyalty programme and asked them to mark their opinions about subscriptions to a loyalty programme and the benefits or perceived values that customers get from the subscribed loyalty program. To determine respondent responses, closed-end questions and Likert scales were used. A SmartPLS statistical programme was used to analyse the coefficient and p-value of the perceived value of the loyalty programme and its relation with patronage behaviour. Findings The study finds a significant impact of various loyalty programme determinants on store patronage behaviour, supported by hypothesis testing. Researchers have used variable commitment to the test with satisfaction and trust and found it supportive. Another hypothesis tested for the impact of satisfaction on trust shows a significant relationship. They found a significant relationship between the perceived benefits of a loyalty programme and satisfaction with the store and trust. Another hypothesis tested for the impact of satisfaction on trust shows a similar relationship. The impact of commitment on loyalty behaviour (store patronage) was analysed and found to be significant. Originality/value To the best of the authors’ knowledge, to date, this methodology has not been used to measure the influence of loyalty programme values on patronage behaviour in the present context. Based on the understanding that the measurement of the impact of perceived values of loyalty programmes on repeat purchase behaviour could be very useful in providing guidance for decision-making in consumer retention strategy, this paper contributes to the literature on the evaluation of store patronage behaviour with its influencing variables.

Loyalty program benefits and their effect on relationship quality and loyalty to the retailer

“…A loyalty program is a relationship management strategy that gives customers incentives or rewards to ensure loyalty to a business or a current store (Kolte et al, 2022). Oliver and Burnstone (2014:3) described an LP as a "structured marketing intervention that rewards and encourages specific customer behavior (transaction value, purchase frequency, basket spread/product cross-holding and tenure) which is beneficial to the program owner or sponsor".…”

“…Therefore, LPs can be described as retailer-linked programs where the customer is rewarded for participating in transactions that the retailer desires. In response to the perception of gaining attractive benefits, the preferred behavior is reinforced, culminating in relationships that both retailer and customer enjoy (Corbishley et al, 2020;Kolte et al, 2022). However, it should be noted that not all LPs are met with equal enthusiasm.…”

“…Trust is described as one party believing the other will continue to meet their needs to their satisfaction (Liu et al 2011;Aurier & Séréde Lanauze 2012). Thus, when one party has faith in the other, that party is more likely to have positive behavioral intentions for the other party (Kolte et al, 2022). Trust in a relationship contributes to a need for additional interaction in the future, which builds a relationship (Wu et al, 2015).…”

“…Globally, the retail industry is expanding (Kolte et al, 2021). As the retail business is so competitive, retailers must keep their current customers (Kolte et al, 2022). Loyal customers are a valued asset in the retail marketplace, as consumers who remain and repeatpurchase with a retailer tend to buy more and are often happy to pay higher prices.…”

“…Although individual LPs differ in structures and components, the intended goals are similar -improving the quality of consumer relationships (Henderson et al, 2011) and creating more significant profits. Relationships with consumers and providing them with service are the foundation of customer loyalty (Kolte et al, 2022). Previous studies have examined the nature of relationships in various contexts and aspects, including those between salespeople and customers (Liu et al, 2011), between businesses (Chumpitaz, Caceres & Paparoidamis, 2007;Nyaga & Whipple, 2011), and between consumers and companies (Aurier & Séréde Lanauze, 2012).…”