Understanding the Effects of Perceived Financial Benefits and Status on Customer-Company Identification and Its Effects on Positive Word-of-Mouth in a Loyalty Program Context

Abstract

Customer loyalty and its associated behavioral outcomes have become focal points for firms looking to drive a deeper, identity-based relationship with their customers. Yet, few studies have examined how loyalty program mechanics can be used to create these relationships and whether they can result in the outcomes firms seek, such as positive word-of-mouth (PWOM). The purpose of this research is to better understand whether the financial benefits of a loyalty program and the feelings of status a program can invoke lead to the formation of customer-company identification (CCI), defined as a “consumer’s psychological attachment to a company based on a substantial overlap between their perceptions of themselves and their perceptions of the company” (Du et al., 2007, p. 227). Further, most studies focused on CCI examine identification primarily from a cognitive perspective (Wolter & Cronin, 2016), however this study explored how both cognitive CCI and affective CCI are influenced by loyalty program mechanics and whether each of these types of CCI lead to PWOM behaviors. The findings support that perceptions of financial benefits and feelings of status are strongly related to affective CCI in loyalty program members, which in turn, is related strongly to PWOM. Feelings of status had a positive effect on cognitive CCI, and cognitive CCI had a significant, positive effect on PWOM. Perceptions of financial benefits had no significant effect on cognitive CCI. An additional discussion of these findings is provided that includes the theoretical and practical implications of the model for those who study and execute customer loyalty programs as well as study limitations and avenues for further research.

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Keywords

customer-company idetnficiation, status, loyalty programs, financial benefits, positive word-of-mouth

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