An Individual Difference Approach to Understanding Loyalty Program Effects: Customer Loyalty Program Involvement

Abstract

Although retailers continue to devote scarce resources to customer loyalty programs as a means to build customer loyalty, controversy over their effectiveness exists. Based on identity congruency concept (Sirgy 1982) and Bhattacharya and Sen’s customer-company identification model (2003) built on social identity theories, this study proposes and tests a model describing how characteristics of a loyalty program (i.e., loyalty program – identity congruency and distinctiveness) influence a consumer’s identification with his/her loyalty program membership and attitude toward the focal retailer. Additionally, the moderating impact of loyalty program involvement on the evaluation of the loyalty program is examined. Using data collected from a web-based experiment, this study provides overall support for the model. Implications for retailers and researchers are discussed and suggestions for future research are provided.