Understanding the relationships between loyalty program membership duration, perceived program benefits and behavioural loyalty of Gen Y customers

In early 21st century, many retailers launched loyalty programs as an important component of customer relationship management strategy with an aim to build and manage long-term relationship with their existing customers. This was based on the concept of rewarding existing customers for continuing patronage through a combination of tangible and intangible rewards. Since then, there has been widespread use of loyalty programs in retail sector with an aim of building and enhancing customer loyalty. But despite the prevalent use of loyalty programs, there is limited evidence on the effects of such programs on the Gen Y customers. This market segment is quite important to marketers because of its large size, current significant amount of spending power and its potential for huge amounts of future spending power. But, a very negative attribute associated with Gen Y is that they are found to be the least loyal among all other generations. They have a different approach to shopping than the demographic segments before and there has been little academic research that shows the effect of loyalty program on Gen Y customers. This paper attempted to understand the relationship between loyalty program membership duration, perceived program benefits and behavioural loyalty of Gen Y. The results show a positive relationship between the variables leading to development of a model.