Designing for loyalty programme effectiveness in the financial services industry

Abstract

This study extends and tests a model determining how customer perceived benefits affect perceived relationship investment and brand relationship quality as mediators to behavioural and attitudinal loyalty with type and timing of rewards as moderators. A quantitative methodology and survey approach was applied using randomly selected stratified sampling resulting in 277 financial services loyalty programme member respondents. The hypotheses were tested using structural equation modelling. The results highlight social and exploration benefits to be much stronger determinants of customer loyalty than monetary and entertainment benefits, with recognition having no effect and timing of rewards moderating the influence of monetary and exploratory benefits. The type of reward moderated the influence of entertainment and exploratory rewards. The study’s theoretical contribution provides for an empirically validated comprehensive conceptual model of loyalty programme effectiveness for the financial services industry and very important loyalty programme design findings for practitioners.