Understanding What Matters to Customers: The Case of Loyalty Programs in the Indian Context

Abstract Though customer loyalty programs have become popular across all businesses, building an effective loyalty program still remains a mystery for most. Since the use of Loyalty Programs amongst Indian customers is not very high, the particular objective of this research was to advance a practical model relating customer-perceived benefits to satisfaction derived and importance attached, which will help companies in more effective formulation of their loyalty programs. The study extends Yi and Jeon’s work, integrated with the varied benefits structure recommended by Mimouni-Chaabane and Volle in the context of departmental stores in India, and derives a loyalty scale in the Indian context. The study validated the scale of perceived benefits from loyalty programs in the context of customers in India and a structural model was tested and derived that studied the impact of perceived benefits on satisfaction derived and importance attached.