Customers’ Perceived Benefits of a Frequent-Flyer Program

Customer retention has grown in importance as most firms have acknowledged that customer retention has a bearing on profitability over the long term. Firms such as airlines, hotels, retailers, and car manufacturers offer loyalty programs to their customers to reward customers for their support and encourage continuous future support from such customers. Despite the popularity of loyalty programs, little academic research has been published in respect of how customers perceive the benefits offered by loyalty programs. This paper is a first to report on research that resulted in a model that can be used to manage the benefits perceived by members of an airline’s loyalty program. The model to measure and manage members’ perceived benefits of a loyalty program for an airline has good psychometric properties and consists of three underlying dimensions, namely recognition, convenience, and exploration.