The enhanced loyalty drivers of customers acquired through referral reward programs

Abstract

Purpose

The purpose of this paper is to extend prior research on referral reward programs (RRPs) by examining if and how the mode of customer acquisition (RRP-acquired customers vs non-RRP-acquired new customers) moderates the relationships between customer satisfaction and attitudinal loyalty, perceived switching costs and attitudinal loyalty, and attitudinal loyalty and behavioral loyalty (i.e. recommendations, cross-buying, and total spend).

Design/methodology/approach

Set in a banking context, this study is the first in an RRP context to link survey data with actual purchase data from a bank’s CRM records. Specifically, the survey captured customers’ satisfaction, perceived switching costs and attitudinal loyalty, whereas the CRM data provided actual loyalty behaviors (cross-buying and total spend).

Findings

The findings show that the effect of satisfaction on attitudinal loyalty, and the effects of attitudinal loyalty on recommendations, cross-buying, and total spend were stronger for RRP-acquired customers than for non-RRP-acquired new customers. Furthermore, perceived switching costs had a lower effect on attitudinal loyalty for RRP-acquired customers than for non-RRP-acquired new customers.

Practical implications

The findings offer managers a better understanding of how RRP-acquired customers differ from non-RRP-acquired new customers with regard to their satisfaction, perceived switching costs, and attitudinal and behavioral loyalty, thus enabling effective management of RRPs.

Originality/value

This is the first empirical study that explores the differences between RRP-acquired customers and non-RRP-acquired new customers with regard to the effects of satisfaction and perceived switching costs on attitudinal loyalty, and the effect of attitudinal loyalty on behavioral loyalty.

Citation

Ramaseshan, B., Wirtz, J. and Georgi, D. (2017), "The enhanced loyalty drivers of customers acquired through referral reward programs", Journal of Service Management, Vol. 28 No. 4, pp. 687-706. https://doi.org/10.1108/JOSM-07-2016-0190