Loyalty programs benefits and customer loyalty: The mediating role of customer satisfaction

Abstract

The purpose of this study was to develop an original framework to explore the direct effect of customer loyalty programs benefits on customer loyalty and to discuss the mediating role of customer. This study applies two original concepts – loyalty programs benefits and customer satisfaction to develop an integral model that enhances customer loyalty. In addition, this research employs an empirical study by means of the questionnaire survey method to verify the hypotheses and to explore their managerial and theoretical implications. Hayes’ (2013) PROCESS macro and the four steps mediation process (Mackinnon, 2008) has been applied to verify the research framework. The empirical results showed that loyalty programs benefits and customer satisfaction significantly affect customer loyalty. Furthermore, this study demonstrates that the indirect relationship between loyalty programs benefits and customer loyalty is mediated by customer satisfaction. The indirect path presents partial mediation; hence, the need for hotels to establish other factors that indirectly influence the relationship between loyalty program benefits and customer loyalty as well as they enhance the antecedents of customer satisfaction during the service delivery process to increase customer loyalty. This study summarizes the literature on loyalty program benefits and customer satisfaction into a new managerial ramework of customer loyalty. It utilizes new arrangement of two constructs; loyalty programs benefits and customer satisfaction, to develop an original framework that enhances customer loyalty. Although past research has highlighted the relevant issues about customer loyalty, none explores it within hospitality industry Sub-Saharan context to the best of our knowledge. Therefore, this paper develops the research framework of customer loyalty to fill the research gap specifically in Kenya hospitality industry context.