Although loyalty program is very popular in the marketplace, little research has examined the customer value perception of loyalty program. This study shows how consumers perceive the value of loyalty program and how the requirement levels and reward types of these programs affect consumers’ value perception of the loyalty program.
In an experiment, this research finds that under high requirement levels in loyalty program, consumers perceive the program’s benefits lower and its costs higher than under low requirement levels. However, when hedonic rewards are provided, theses rewards improve the attractiveness of the program and therefore offset the disadvantages of high program requirement levels. In addition, when consumers’ involvement in loyalty program is high, consumers are more reactive to the losses caused by higher program requirement levels. Finally, this research finds that higher program benefits perception and lower program costs perception lead to higher program value perception, resulting in higher program attitude and higher consumers’ intention to participate in the program.
Therefore, theses findings have implications for designing loyalty programs’ reward type and scheme, managing it on the basis of customer segmentation, and shaping consumer loyalty among loyalty program participants.
