Retail loyalty programmes : relationship quality and customer loyalty between the card-holder and the retailer in South Africa

Abstract

Loyalty programmes have become a popular marketing tool in marketplaces that are highly competitive and where differentiation is difficult. Although they are not new anymore, they continue to grow in popularity, particularly in South Africa where numbers are steadily increasing. The main aim of this study was to determine the influence of various types of perceived benefits from loyalty programmes in the South African fast moving consumer goods (FMCG) market with respect to their impact on relationship quality and loyalty towards the retailer concerned. The study reveals three forms of perceived benefits which are named as consumeristic, altruistic and egoistic benefits. In addition, the influence of socio-demographic characteristics are examined to ascertain any differences that might occur in the results.

The study design was based on an exploratory sequential mixed methods approach and began with qualitative research before proceeding to quantitative data collection and analysis. The qualitative section of the research involved two in-depth interviews with managers of loyalty programmes at major retailers and two focus groups aimed at loyalty programme members. These assisted in the design of the quantitative data collection instrument. The quantitative data collection was aimed at a consumer database which incorporated those who were actively employed in the economy, resulting in a sample of 559 respondents.

The initial findings of the study, revealed by means of regression analysis, were that all three forms of perceived benefits lead towards the three constructs that make up relationship quality, namely trust, satisfaction, and commitment with the retailer concerned. In addition, the same benefits were found to contribute towards customer loyalty. However, once structural equation modelling was employed, the results evolved. Firstly, the constructs of trust and satisfaction cross loaded onto each other and were therefore treated as a single construct named trust/satisfaction. Secondly, egoistic benefits were absorbed into consumeristic benefits and were therefore no longer featured as a separate item. Explanations are offered for this phenomenon. Consumeristic benefits still had a positive and significant relationship with trust/satisfaction, as did altruistic benefits. However, it was found that although altruistic benefits still enjoy a significant relationship with commitment, consumeristic benefits did not. A suggestion for this is that the perception of altruistic benefits has a greater attitudinal impact than consumeristic benefits do. Finally, neither altruistic nor consumeristic benefits showed a direct relationship with loyalty. The introduction of demographic variables established that only age affects the results, with older consumers being more receptive than others to altruistic benefits.

However, findings revealed that a pathway to loyalty remains through the constructs of trust/satisfaction and commitment. This emphasises the importance of achieving trust and satisfaction first by means of the benefits offered. Finally, a new structural model is developed in line with the results of the structural equation model.

The results from this study add to the body of research in the field, yielding both significant theoretical and practical contributions to the field of loyalty programmes, relationship quality and loyalty research, particularly in the South African FMCG retail marketplace. Retailers are advised to continue offering both altruistic and consumeristic benefits to customers, despite consumeristic benefits not necessarily creating a direct route towards loyalty. This is because once trust and satisfaction is achieved, loyalty will follow. In addition, loyalty programme providers should ensure that offerings provide both simplicity and transparency in order to create a positive relationship with trust and satisfaction.