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To cite this document:
Blanca Garca Gmez Ana Gutirrez Arranz Jess Gutirrez Cilln, (2006),"The role of loyalty programs in behavioral and
affective loyalty", Journal of Consumer Marketing, Vol. 23 Iss 7 pp. 387 - 396
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http://dx.doi.org/10.1108/07363760610712920
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Department of Management and Marketing, Faculty of Business and Economics, University of Valladolid, Valladolid, Spain
Abstract
Purpose The aim of this paper is to analyze the behavioral and affective loyalty of retailer customers in order to establish the role played by loyalty
programs in the development of these variables.
Design/methodology/approach Research data were taken from a survey carried out on 750 customers from a Spanish supermarket chain. Several
ANOVAs are employed to compare the two loyalty dimensions among participants and non participants in loyalty programs.
Findings The results show that participants in loyalty programs are more behavioral and affectively loyal than non participants. Nevertheless, most
customers do not change purchase behavior after joining a loyalty program. The strategy is therefore to retain loyal customers and to achieve the
reinforcement of affective bonds linking the customer to the retailer.
Practical implications Companies should focus their efforts on developing a reward plan as adapted as possible to concrete needs of each
participant in the program to achieve true loyalty.
Originality/value The main contribution of this paper is the completion of an exhaustive analysis of customer loyalty. On the one hand, it is a
pioneer in the study of the influence of loyalty programs on affective loyalty and, on the other hand, it confirms results from other researches on
behavioral loyalty of program participants. In addition, this is one of the few papers developed in this field using the survey as a source of information.
Keywords Loyalty schemes, Consumer behaviour, Customer retention, Customer loyalty, Supermarkets, Spain
Paper type Research paper
Introduction
Loyalty programs are a marketing strategy based on offering
an incentive with the aim of securing customer loyalty to a
retailer. Achieving rewards is related with purchasing
frequency, so this type of programs are also called frequent
purchase programs (Shoemaker and Lewis, 1999; Long and
Schiffman, 2000; Bell and Lall, 2002) or reward programs
(Kopalle et al., 1999; Kim et al., 2001).
Lately, large-scale loyalty programs have been implemented
by firms in different industries around the world. In the case
of retailers, on whom this paper is focused, an extended use
between most of them has led these programs to become one
more element in their offer. In fact this can be seen in the way
that companies set part of their communication budget aside
to promote these programs, especially loyalty cards, as they
are another product offered by the company.
However, not all countries show the same level of
development regarding to implementation of this tool. For
example, in Germany, there are over 100 different programs
and the percentage of families taking part in at least one of
them exceeds 40 percent (Kunzel, 2002). In the USA, the
number of programs surpasses 400 with more than 80 percent
of families taking part (Colloquy, 2003). Regarding to Spanish
data of use of these programs, consumers participate on
average in 1.74 loyalty programs in the USA, this figure
rises to 3.34 and there are more than 40 national
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387
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Methodology
Data collection
Collection of data was made through personal surveys carried
out at the exit of several retailers belonging to a supermarket
chain located in a medium-size Spanish city.
A stratified selection by simple affixing was used. The
sample consists of 720 people from whom 180 were
participants in the retailer frequent shopper program that
was in force at that moment, 180 in the card program and 360
not participant in any loyalty program at that retailer. The
makeup of this sample allows a comparison between
participants and non participants in loyalty programs and
the analysis of possible differences between the effectiveness
of the two types of programs used.
Technical data relating with the sample can be found in
Table I.
Measurement of variables
In order to draw up the questionnaire, we completed an
exhaustive review of research from different study areas
supplying the measurement scales of variables used in this
paper. In this way, we aim to fulfill the requirements of
reliability and validity of scales as far as possible.
Nevertheless, the items obtained needed to be corrected in
order to adapt them to our specific context. Furthermore, we
created new items from theoretical concepts found in relevant
literature.
Before reaching the final design and in parallel with tasks of
concreting and defining the questionnaire, we conducted a
series of detailed interviews with managers of some companies
belonging to the national grocery retailing. Finally, the initial
questionnaire was cleaned up using a pretest. The
measurement scales employed in the research are shown in
Table II.
Table I Sampling technical data
390
Characteristics
Survey
Sample element
Sample procedure
Sample size
Sampling error
Trust level
Time
Scope
Source of information
Retailer consumers
Random stratified. Same affixing
720 people
2 3.6% for p q 50%
95%
October-November 2005
Valladolid (Spain)
Personal survey
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Satisfaction
Reflective scales
I like shopping in the retailer
Its a nice, comfortable and friendly retailer
In general, I consider it as a good retailer
I think that the retailer acts in my best interest
The retailer is concerned with my welfare, not only with
obtaining profit
The retailer is honest with their customers, it does what it
promises
The retailer makes an effort to know its customers
The retailer staff are competent and professional
The retailer staff are friendly and helpful
I trust the retailer and its staff
I like the relationship I have with retailer staff
I usually recommend the retailer to my friends and family
I intend to purchase in the future in the retailer
I consider myself as loyal to the retailer
Formative scales
Times you go usually to the retailer in one month
Types of products purchased in the retailer
Average amount earmarked for purchasing drug retailer and
food products
Percentage of money for purchasing drug retailer and food
products that you spend in the retailer
Average amount spent per visit to the retailer
Number of competitors retailers of the same type you visit
regularly
Other types of retailer where you purchase:
Hypermarket
Fruit shops
Butchers
Fish shops
Drug retailers
Retailer has good prices
Retailer has a large variety of products
Section distribution in the retailer is comfortable
Parking and access are easy
Retailer responds to any product problem
I feel comfortable when I go to the retailer
Opening hours are adjusted to my needs
In general, I am satisfied with the retailer
Stopping purchasing in other retailers (Loyalty card)
Stopping purchasing in other retailers (Frequency program)
Increased purchase frequency at the retailer (Loyalty card)
Increased purchase frequency at the retailer (Frequency
program)
Five-point Likert
Five-point Likert
3.34 (1.12)
3.08 (1.14)
4.09 (1.01)
4.10 (1.03)
3.85 (1.03)
3.59 (1.10)
2.50 (1.37)
3.56 (1.17)
2.89 (1.34)
Five-point Likert
Five-point Likert
2.65 (1.18)
2.28 (0.79)
3.13 (0.93)
1 to 4
1 to 3
1 to 4
2.20 (2.06)
1 to 4
2.3 (1.01)
1.41 (0.85)
1 to 4
Ratio (open)
1.81 (0.64)
1.92 (0.69)
1.90 (0.76)
1.98 (0.76)
1.72 (0.61)
3.24 (1.11)
3.67 (1.03)
3.96 (0.95)
3.46 (1.42)
4.00 (1.74)
4.00 (0.97)
4.34 (0.90)
3.97 (0.95)
1.83 (0.39)
1.79 (0.40)
2.33 (1.28)
2.37 (1.32)
1 (never) to 3 (always)
Five-point Likert
Five-point Likert
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
into which behavioral loyalty has been divided for the two
groups of retailer consumers. That is to say that participants
in loyalty programs, independently of the type of program,
demonstrate greater behavioral loyalty towards the retailer
and lesser behavioral loyalty to competitors than customers
who do not take part in any program. According the above,
we can accept hypotheses H1 and H2.
In order to contrast the hypotheses relating to affective
loyalty of participants in loyalty programs, we completed an
analysis similar to the previous one: an ANOVA test for the
difference of averages. In this case we try to determine the
existence of different values for the different constructs of
affective loyalty between participants and non participants in
the retailer loyalty programs.
The values of dependent variables are obtained in different
ways, depending on the type of measurement of these variables:
formative or reflective scales. Satisfaction was measured
through the formative scale. In the same way as in the case of
behavioral loyalty, for satisfaction we created an average variable
from responses given by consumers to the seven items designed
to measure the different aspects of individual satisfaction with
the retailer. In the case of the other aspects of affective loyalty
attitude, trust and commitment and since we are dealing with
reflective scales, in order to carry out the analysis we used the
consumer marks in the factors obtained in the factor analysis of
key components previously carried out.
The ANOVA results (see Table IV) coincide in showing
significant differences between the average values obtained
from the dimensions into which affective loyalty has been
divided in both samples participants and non participants in
loyalty programs. These facts lead us to accept H3, H4, H5 and
H6, i.e. it can be asserted that participants in loyalty plans show
a more positive attitude, and greater satisfaction, trust and
commitment towards the retailer than non participants.
The last proposed hypothesis (H7) analyzes whether
participation in a loyalty program can modify the consumer
behavior in the retailer implementing the program. The analysis
of frequency distribution made for variables employed to
measure change in consumer behavior (see Tables V and VI)
shows that a high percentage of participants in retailer loyalty
programs claim not to have changed their purchase behavior,
that is, they affirm that they do not shop more frequently at the
retailer. Furthermore, they state that they do not stop
purchasing in competitor retailers as a result of their
participation in the loyalty program implemented by one retailer.
In order to statistically contrast the results obtained with the
contingency tables, we propose proportion tests for each of
them. The aim is to check if most consumers taking part in one
loyalty program in one retailer, that is, more than 50 percent,
do not give up purchasing in other selling points as a result of
Results
In order to contrast the hypotheses we divided the sample into
two independent sub-samples: on the one hand, the set of
people taking part in one loyalty program, whether frequent
shopper or card programs, and, on the other hand, the group
of consumers who do not take part in any retailer loyalty
program.
In order to contrast H1 with H2, that is, the hypotheses
comparing the behavioral dimension of loyalty between
participants and non participants, we use an ANOVA model.
It should be recalled that, in this case, we are working with
formative scales; so, the values of dependent variables are built
up from the average of punctuation of polled individuals for
behavioral loyalty variables. We work specifically with two
scales, one used to obtain the average loyalty through the
purchase behavior of people in the retailer and other measuring
the purchase behavior in competitor retailers.
The ANOVA analysis results, shown in Table III, are clear,
since they reflect significant differences in the two dimensions
Table III ANOVA analysis results for behavioral loyalty
Average Average
part.
non part.
Addition of
squares
df
Square
average
Intergroups
Intragroups
76.317
290.123
1
636
76.317
0.456
167.300 0.000
2.86
2.17
6.674
118.484
1
639
6.674
0.185
35.996 0.000
1.70
1.90
392
Sig.
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
General satisfaction
Addition of squares
df
Square average
Sig.
Average part.
33.599
198.814
11.086
517.914
43.267
485.733
41.805
487.195
15.788
513.212
1
490
1
528
1
528
1
528
1
528
33.599
0.406
11.086
0.981
43.267
0.920
41.805
0.923
15.788
0.972
82.808
0.000
4.06
11.302
0.001
0.146
2 0.142
47.032
0.000
0.290
2 0.281
45.306
0.000
0.285
2 0.276
16.243
0.000
0.175
2 0.170
Intergroups
Intragroups
Intergroups
Intragroups
Intergroups
Intragroups
Intergroups
Intragroups
Intergroups
Intragroups
Loyalty card
Absolute frequency
Frequency program
32
148
180
Total
69
291
360
19.16
80.84
100
37
143
180
Loyalty card
Absolute frequency
Frequency program
67
30
50
17
14
178
69
28
44
25
14
180
Total
136
58
94
42
28
358
37.99
16.20
26.25
11.73
7.83
100
Conclusions
The mass implementation of loyalty programs is a reality,
strengthened over time. Our paper is focused on grocery
retailing companies, one of the industries with the largest
number of current loyalty programs around the world.
393
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
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Managerial implications
Loyalty programs are not able to modify the behavior of
consumers towards retailers running them. Their main role is
retaining customers already showing loyalty to the company.
The strategy is also useful as a means of reinforcing the
emotional bonds that link the customer to the point of sale.
Therefore, when a retailer is chosen by a consumer as the
point of sale at which he will make most of his purchases; loyalty
programs play a secondary role. Other services such as variety,
prices, location or employees are more important, and the
retailer must be focused on these in order to attract potential
consumers and, after that, maintain a base of loyal customers.
Once this goal is achieved, it is necessary to take into account
that loyalty seen through a mere repetitive behavior is weak.
True loyalty needs the existence of a feeling consistent with this
behavior. True loyalty based on emotional bonds is really a
source of competitive advantage and is very hard to copy.
The implementation of a loyalty program with a proper
reward plan is crucially important in retaining loyal customers
and reinforcing emotional bonds with the retailer. Rewards
are obtained by participants in the program as a prize for their
purchase behavior and they contribute to strengthen the
relationship with the retailer not just from a behavioral point
of view, but also from an affective one. The defensive role of
this strategy therefore becomes evident, supported by a
significant part of literature.
Since some programs, like shopping cards, supply plenty of
data about customers, it is possible to adapt the rewards to the
customers needs. These are very varied and can include, for
example, offers on products, reductions on prices or a special
bonus. In this process of strategy customization according to
the needs of each group of consumers, some supermarket
chains have begun to implement loyalty programs that differ
from one used until that time (loyalty card or frequent shopper
programs). These new schemes are customers clubs, a type of
program only available for the retailers best customers.
Members of customers clubs are subject to a special
treatment in terms of the type of rewards they receive in
comparison with other customers. (Even the card identifying
them inside the program has a yellow color similar to gold that
symbolizes the value that the customer has for the retailer).
We do not wish to close this paper without suggesting a future
field of research that is closely related to our objective and that
has not yet been developed; the analysis of the influence of
different types of loyalty programs (for example, loyalty card,
frequent shopper programs or customers clubs) on behavioral
and affective loyalty. Each of these tools shows significant
394
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Blanca Garca Gomez, Ana Gutierrez Arranz and Jesus Gutierrez Cillan
Further reading
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(Ed.), Principles of Marketing Research, Blackwell
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Castan eda, J.A. (2005), La fidelidad en Internet,
in Gutierrez, A.M. and Sanchez, M.J. (Eds), Marketing en
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Drawkins, J. and Reichheld, F.F. (1990), Customer
retention as a competitive weapon, Directors and Boards,
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Jones, T.O. and Sasser, W.E. (1995), Why satisfied
customers defect, Harvard Business Review, Vol. 73 No. 6,
pp. 89-99.
Meyer-Waarden, L. and Benavent, C. (2002), Loyalty
programs and their impact on repeat purchase behavior:
a replication and extension on the Behaviorscan Panel,
available at: http//christophe.benavent.free.fr/article.
php3?id_article=161
Uncles, M.D., Dowling, G.R. and Hammond, K. (2003),
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