Loyalty programs have become a well-spread marketing tool that enterprises implement in order to retain customers and stimulate product or service usage. To have the well-designed loyalty program is the critical factor to the successful of the program, however, little is known about the factors that customers use to evaluate the loyalty program.
To study the factors that influence customers’ evaluation of the loyalty program, this study investigated three independent variables which are Type of Reward, Business Longevity and Involvement. Type of reward is one important factor that marketers need to concern in designing the loyalty program. Also in previous studies, it is shown that Involvement has the effect on the customer satisfaction and evaluation of the loyalty program. Moreover, Business Longevity which works as the extrinsic cue is another variable that was examined in this study. Perceived Value, Perceived Risk, Attitude toward the Loyalty Program and Behavioral Intentions were investigated in the study.
The 2x2x2 between-subject factorial design was conducted with undergraduate and graduate students as the subjects. The 2 (business longevity: long vs. short) x 2 (type of reward: direct vs. indirect) x 2 (involvement: high vs. low) between - subject factorial design was conducted to validate the proposed research hypotheses. The result shows that direct type of reward, long business longevity and low involvement will make the loyalty program least risky and most valuable. Also, the consumers’ perceived risk has significant negative relationship toward the attitude toward the loyalty program and behavioral intentions whereas the perceived value has positive relationship toward attitude and behavioral intention to the loyalty program. Hence, the results of the study can be a reference for academic use and also be useful for marketers to plan the loyalty program as well as predict consumers’ response toward the different reward programs in different conditions.
 

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