The effects of loyalty programs on customer loyalty: The mediating role of customer value and the moderating role of relationship benefits

Abstract

Since the prevalence of loyalty programs worldwide, one of the urgent issues in retailing is whether loyalty programs really enhance customer loyalty. This paper proposes a conceptual framework that utilizes the construct of customer value to explain the link between loyalty programs and customer loyalty in retail context. Based on 450 respondents from members of several large department stores, the results posit that loyalty programs have indirect positive impact on behavioral loyalty, affective loyalty via utilitarian value, hedonic value. This mediating progress is moderated by relationship benefits derived from the long-term relationship between retailers and their customers. The results also show that the role of utilitarian value playing in promoting customer loyalty is more significant, which has certain reference for retailers to design effective loyalty programs. Key words: Loyalty programs, customer value, relationship benefits, customer loyalty.