Loyalty programmes as predictors of customer satisfaction, loyalty and advocacy in retail banking

Abstract

Introduction Loyalty programmes have become significantly popular in retail industries globally and studies show that companies are spending billions of rands annually on these programmes. Despite their popularity, their effectiveness remains a widely debated topic and there is also no consensus on the design elements that differentiate successful loyalty programmes from unsuccessful ones. Purpose This study’s purpose is to determine whether loyalty programme satisfaction predicts overall customer satisfaction, and in turn, whether customer satisfaction predicts customer loyalty and customer advocacy, in the retail banking sector in South Africa, as well as to determine whether two loyalty programme design elements, loyalty programme structure and reward type, are predictors of loyalty programme satisfaction. Research Methodology The study followed a descripto-explanatory research approach, where data was collected through electronic surveys. 420 of the survey responses were deemed valid for use and regression and ANOVA analysis techniques were used to test the hypotheses. Findings The study found that the relationship between loyalty programme structure and reward type, and loyalty programme satisfaction to not be significant. However, the relationships between loyalty programme satisfaction and customer satisfaction, customer satisfaction and customer loyalty, as well as customer satisfaction and customer advocacy, were found to be significant.