Effects of Loyalty Programs on Value Perception, Program Loyalty, and Brand Loyalty (original) (raw)

The authors investigate how reward schemes of a loyalty program influence perceived value of the program and how value perception of the loyalty program affects customer loyalty. The results show that involvement moderates the effects of loyalty programs on customer loyalty. In high-involvement situations, direct rewards are preferable to indirect rewards. In low-involvement situations, immediate rewards are more effective in building a program's value than delayed rewards. Under high-involvement conditions, value perception of the loyalty program influences brand loyalty both directly and indirectly through program loyalty. Under low-involvement conditions, there is no direct effect of value perception on brand loyalty. is relatively little empirical research concerning the mechanisms by which the loyalty program operates (for an exception, see Bolton et al. 2000). The overall purpose of this study is to identify factors affecting the perceived value of a loyalty program and to investigate underlying mechanisms between the loyalty program and customer loyalty. This study draws on Dowling and Uncles's (1997) conceptual framework of loyalty programs that is based on