Soft and Hard Benefits of Loyalty Programs and Loyalty Outcomes

Abstract

The task of differentiating services becomes increasingly difficult when those services begin to be perceived as easily imitable and fairly standard. The perspective offered by service dominant logic (SDL) suggests that when marketers face such a prospect, they should proceed by moving from tangible to intangible service attributes and to co-create value with their customers, making the process of imitation much more difficult. In the credit card industry, the creation and execution of effective rewards programs has been the primary way credit cards differentiate their offerings. This paper examines how hard and soft benefits of credit card loyalty programs are perceived, and how they influence attitudinal and behavioral loyalty. In line with the SDL perspective, the importance of soft benefits is emphasized. The results show that attitudinal loyalty is a key mediator of the relationships between both hard and soft benefits of loyalty programs and behavioral loyalty. The results and implications for future research are discussed.