Loyalty Programs Building Customer-Retailer Relationships: Role of Identity Salience

Abstract

Customer loyalty programs are prevalently used by retailers as a means of attracting consumers for repeated patronage. The initial goal of loyalty programs is to “establish a higher level of customer retention in profitable segments by providing increased satisfaction and value to certain customers” (Bolton, Kannan, and Bramlett 2000, page 95). In doing so, it is suggested that when a consumer feels connected with a loyalty program, he/she will feel benefits of the loyalty program more, and engage in more participation in the program. However, empirical research on loyalty programs from a consumer’s membership identity perspective is lacking. Therefore, a few questions arise: Does a retailer’s loyalty program elicit a consumer-retailer relationship? And, what factors of a loyalty program can make a consumer feel connected with the retailer? To answer these questions, this study focuses on the role of salience of the identity (the activation of an identity as a patronage shopper of the store) as a member of the loyalty program in consumer-retailer relationship formation. More specifically, this study examines (1) the effects of two identity-inducing factors of a loyalty program (self-expression and distinctiveness) on the salience of identity as a member of a certain loyalty program and (2) the effects of identity salience on satisfaction, trust, and loyalty intention toward the retailer offering the loyalty program.