On the impact of loyalty cards on store loyalty: Does customers' satisfaction towards rewards matter?

Most customers hold several loyalty cards of competing retailers. Past studies looking into the impact of card ownership on store loyalty showed mixed results. We postulate that loyalty cards are effective only when customers value the rewards associated with them. We investigated to what extent the satisfaction with loyalty card rewards affects the effectiveness of loyalty card programmes in the food retail sector. From the analyses of survey data within the framework of store choice models, we confirm that loyalty card owners are more store loyal. More precisely, we show that when holders are satisfied with the reward scheme of the loyalty card programme, they are more loyal and less price sensitive than unsatisfied card holders.