Content uploaded by Dimas Hendrawan
Author content
All content in this area was uploaded by Dimas Hendrawan on Dec 11, 2020
Content may be subject to copyright.
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 645
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
645
JAM
18, 4
Received, August ‘20
Revised, September ‘20
October ‘20
November ‘20
Accepted, November ‘20
Journal of Applied
Management (JAM)
Volume 18 Number 4,
December 2020
Indexed in Google Scholar
Correspo nding Author:
Dimas Hendrawan, Faculty of
Economic and Business, Uni-
versitas Brawijaya, Indonesia,
E-ma il: dimas.h@u b.ac .id,
DOI: http ://d x.doi .org /10.
21776/ub.jam.2020.018.04.04
IS THE LOYALTY PROGRAM EFFECTIVE IN
CREATING LOYALTY PROGRAM SATISFACTION
AND STORE LOYALTY?
AN EVIDENCE FROM INDONESIA RETAIL
INDUSTRY
Dimas Hendrawan
Rila Anggraeni
Faculty of Economic and Business, Universitas Brawijaya, Indonesia
Abstract: Retailers must find specific ways to be able to continue to maintain their business
with changes in consumer behavior. Some retailers use a loyalty program as their marketing
strategy that provides certain additional benefits for frequent consumers. The objective of
this work is to verify the effect of the loyalty program and loyalty program satisfaction on
store loyalty. The data was collected through questionnaires from 150 respondents. The
results reflected that loyalty programs significantly influence loyalty program satisfaction.
Loyalty program satisfaction significantly influences store loyalty. The loyalty program is
not directly related to storing loyalty. Loyalty program satisfaction mediates the effect of a
loyalty program on store loyalty. The study highlights the importance of loyalty program
satisfaction in the connection of loyalty program and store loyalty. To gain a loyal con-
sumer, the retailer should improve the exclusivity and the attractiveness of the program. A
useful and valuable reward will improve customer retention.
Keywords: Retail industry, Loyalty program, Loyalty program satisfaction, Store loyalty
Cite this article as: Hendrawan, Dimas and Anggraeni, Rila. 2020. Is The Loyalty Program
Effective In Creating Loyalty Program Satisfaction And Store Loyalty? An Evidence from
Indonesia Retail Industry. Jurnal Aplikasi Manajemen, Volume 18, Number 4, Pages 645–
655. Malang: Universitas Brawijaya. http://dx.doi.org/10.21776/ub.jam.2020.018.04.04
Recently, the retail business
in Indonesia has experienced
challenging conditions
(Putera, 2017). It is notice-
able from the financial per-
formance of many giant re-
tail stores, which declined
and almost closing down their
businesses (Sindonews.com,
2017). One of the Indonesia
retail business problems
caused by the change in con-
sumer consumption patterns from offline to online
(Amanah et al., 2017; Warayuanti and Suyanto,
2015). Currently, consumers can choose products
and make payment transactions through existing
retail websites (AlGhamdi et al., 2012). By trans-
acting online, consumers will get many benefits and
conveniences. Some of the benefits are consumers
can save transportation costs, time costs, and ma-
terial costs (money) (Punj, 2012).
Retailers must find specific ways to overcome
the constraint by implement appropriate marketing
strategies to be able to continue to maintain their
646 JOURNAL OF APPLIED MANAGEMENT VOLUME 18 NUMBER 4 DECEMBER 2020
Dimas Hendrawan, Rila Anggraeni
business with changes in consumer behavior. Re-
tailers should understand the needs and desires of
consumers, create value from the products offered,
communicate that value, and ultimately deliver value
to consumers (Kotler and Keller, 2016). The
consumer’s satisfaction leads to the creation of loyal
consumers or store loyalty. Loyalty refers to a
consumer’s defensive attitude towards something.
In the context of marketing, consumers who are
loyal to a brand or store show that the consumer
will keep choosing the brand or store compared to
another brand or store (Sweeney and Chew, 2002).
The loyal consumer will take specific actions, such
as say positive things about retailers to others, en-
courage others to make transactions at assured re-
tailers, and consider retail as the first choice when
purchasing products in the future.
The loyalty program is a marketing strategy that
provides certain additional benefits for frequent con-
sumers. Kumar and Shah (2004), have defined a
loyalty program as a structured effort made by sup-
pliers to provide incentives for loyal customers to
increase commitment to customer attitudes and be-
havior towards offers made by suppliers. In a simple
explanation, a loyalty program is a scheme that is
designed for customers to remain tied to the com-
pany or brand. It is much cheaper to generate sales
from people who have traded than those who have
not. Existing customers who have made transac-
tions and are satisfied are ready to receive more
money for more company services. It’s more prof-
itable than potential new customers who don’t nec-
essarily want to spend money because they don’t
fully trust the company (Knox and Walker, 2001).
Loyalty programs are used by customers to
obtain benefits such as information on new prod-
ucts, special offers, and gifts. A combination of hard
benefits through the reduction of direct financial costs
(i.e. free purchases) and soft benefits that give spe-
cial status to customers is provided by loyalty pro-
gram (Meyer-Waarden, 2015; Vesel and Zabkar,
2009). This program can help the company main-
taining good relationships with customers. If it’s
successful, the company can also maintain the sta-
bility of sales value, margins, and profits. Loyalty
programs allow marketers to maintain several cus-
tomers who have high repurchase rates, increase
customer purchase intentions, and reduce customer
intentions to switch (Meyer-Waarden, 2008). Dorotic
et al. (2012), stated that the loyalty program pro-
vides several types of benefits, namely hedonic ben-
efits, symbolic benefits, and utilitarian benefits. He-
donic benefits refer to the feelings of comfort and
exploration felt by members of the loyalty program
through the pleasure of obtaining or collecting points
and when withdrawing / claiming points that have
been collected. Symbolic benefits refer to social
benefits and recognition received by members of
the loyalty program such as ownership, recognition
by the company, social status, social acceptance,
and special treatment (Jang and Mattila, 2005). Utili-
tarian benefits refer to the merits gained by saving
some money that should have been spent through
the use of a loyalty program. Discounts, points, and
vouchers can be a form of saving money (Sreejesh
et al., 2016).
The loyalty program as marketing strategies can
build the member’s satisfaction (Wirtz and Chew,
2002), including satisfaction with the loyalty program
itself. Loyalty program satisfaction refers to the
affective statements of members as the results of
evaluations conducted on the benefits obtained from
the loyalty program (Oliver, 1997). Customer satis-
faction is interpreted as a customer evaluation of
the performance of the service provided by the com-
pany. Customer satisfaction focuses on evaluating
customer service attributes and other situational
variables (Back and Parks, 2003) and is regarded
as one of the significant outcomes of all marketing
actions. Customer satisfaction becomes one of the
bases used for the choice of future customer be-
havior, such as repurchasing and giving positive or
beneficial WOM to potential customers for specific
products (Jani and Han, 2014).
Customer satisfaction is a core determining
factor for creating loyalty. Many works have shown
a significant relationship between satisfaction and
loyalty. When customers are satisfied with prod-
ucts or services, customers will have a tendency to
remain loyal and are willing to provide recommen-
dations, make more purchases, and pay a higher
price. Yi and Jeon (2003), have shown that when
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 647
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
consumers satisfy with a loyalty program, they are
likely to develop loyalty toward a store or a brand.
In other words, loyalty program satisfaction is
a measure in which expectations of a loyalty pro-
gram are offered following expected results. In other
words, it reflects the success of the marketing strat-
egy undertaken by the retail business. Maintaining
the sustainability of company growth can be done
with a loyalty program. To be approved and cared
for by customers, loyalty programs need and must
be created by the company.
Store loyalty becomes a critical issue for retail-
ers to think about. Store loyalty defines as the
consumer’s tendency to be loyal to a particular store
or store chain (Knox and Denison, 2008). Increased
store loyalty will have a positive impact on retailers.
Loyal consumers will be willing to spread the posi-
tive or beneficial word of mouth about the store to
others. Loyal consumers also have retention so that
it will reduce marketing costs that must be spent by
retailers. Loyal consumers will be willing to repur-
chase and be exposed to other products offered by
retailers through cross-selling.
Malang is the second-largest city in East Java,
Indonesia. The population of Malang City in 2017 is
895,387 people, increased by 50,116 people over the
last five years (Abidin, 2018). The number has not
added to the number of residents outside the city
who are active in Malang so that if added together,
the total population of Malang City will exceed 1
million people. It shows that Malang City is one of
the cities with an adequately dense population level
when compared to the area of Malang City, which
is 252.1 square kilometers (km2). With the high popu-
lation density, there is also a large potential for the
community to become retail consumers. No won-
der business people are competing to attract the
attention of the public to visit and transact at busi-
ness centers.
THE HYPOTHESIS DEVELOPMENT
Loyalty programs are designed to increase cus-
tomer satisfaction and commitment (Demoulin and
Zidda, 2008). The effectiveness and relevance of a
loyalty program measured by achieving a particular
level of customer satisfaction threshold. A form of
appreciation for customer loyalty to the organiza-
tion or company as a benefit to members is also
provided by loyalty programs. Verhoef (2003), stated
that when customers engage in a loyalty program,
they will receive its benefits and will lead them to
loyalty.
The Loyalty, Loyalty Program Satisfaction And
Store Loyalty
Lervik and Johnson (2003), have defined cus-
tomer satisfaction as an evaluation of customer pur-
chases and consumption experiences that are cal-
culated cumulatively to date. The definition implies
customer satisfaction as a thorough evaluation of
the total experience with goods or services. Thus,
loyalty program satisfaction is defined as the affec-
tive statements of program participants as a result
of cumulative evaluations of impression and experi-
ence with loyalty programs.
Demoulin and Zidda (2008), stated that cus-
tomer satisfaction with the loyalty program becomes
a significant concept that needs to consider when
expanding a loyalty program. Customer satisfaction
with the program is a measure of how customer
expectations are met on a given loyalty program, as
store loyalty is a measure of how likely customers
will repurchase and engage with sellers. The rel-
evance of satisfaction in getting loyal customers and
positive word of mouth promotion is crucial. Some
researchers identify satisfaction as one of the fac-
tors driving loyalty (Zakaria et al., 2014).
The Loyalty Program and Store Loyalty
Sharp and Sharp (1997) clearly state that the
success of relationship marketing efforts must be
evaluated concerning consumer behavioral changes.
This study conceptualized store loyalty as a high
commitment of customers to repurchase or patron-
ize product preferences or services regularly in the
future, even though there are situational influences
and marketing works that can potentially lead to
switching behavior. The purpose of a loyalty pro-
gram is to reach a higher level of customer reten-
tion, especially in profitable market segments by
creating satisfaction and providing value for cus-
tomers. The program aims to increase customer
648 JOURNAL OF APPLIED MANAGEMENT VOLUME 18 NUMBER 4 DECEMBER 2020
Dimas Hendrawan, Rila Anggraeni
satisfaction and loyalty, which in turn will have a
positive effect on long-term financial performance.
Stores that provide a loyalty program to their
customers will benefit from loyalty to stores and
brands (Noordhoff et al., 2004). The relationship
will function as a ‘barrier to entry’ mechanism that
provides a competitive advantage for the company.
Sharp and Sharp (1997) found that loyal customers
have higher levels of purchase frequency.
According to the explanation above, the follow-
ing hypotheses are proposed:
H1. Loyalty program has a significant effect on
loyalty program satisfaction
H2: Loyalty program satisfaction has a significant
effect on store loyalty
H3: Loyalty program has a significant effect on
store loyalty
H4: Loyalty program has a significant effect on
store loyalty through loyalty program satis-
faction
The research model can be illustrated in the
picture below.
3 items about the customer’s satisfaction with the
loyalty program, and 3 questions about store loy-
alty. In addition to providing demographic informa-
tion, respondents were requested to respond on a
5-point Likert scale (1 = strongly disagree, 5 =
strongly agree). A survey method was conducted in
this study. The sample size of the study is 150 re-
spondents. Requirements to be a sample member
are the respondents must meet the criteria which
are at least 17 years old, have a member card from
a retail store, and use the offered loyalty program
(collect/claim points, discounts, vouchers, try new
products). From the collected questionnaire, the de-
mographics characteristics depict in Table 1.
Picture 1 Research Model
H1H2
H3
H4
Store
Loyalty
(Y)
Loyalty
Program
Satisfac-
tion
(Z)
Loyalty
Program
(X)
METHOD
The data collected aims to illustrate the forma-
tion of customer loyalty in retail stores in Indonesia.
For data collection, a questionnaire was used and
distributed for 3 months from April until July 2019 in
two retails in Malang City. The questionnaire com-
piled consisted of 8 items about the loyalty program,
Variables Frequency Percentage (%)
Gender
Male 15 10
Female 135 90
Age (years old)
17 – 22 60 40
23 – 27 33 22
28 – 35 21 14
36 – 45 22 14.67
> 45 14 9.33
Education Level
Junior school 1 0.67
Senior school 67 44.67
Diploma 25 16.67
Bachelor degree 52 34.67
Postgraduate degree
Job
Student 63 42
Civil servants 16 10.67
Private employees 41 27.33
Entrepreneurs 11 7.33
Other 19 12.67
Income (IDR.)
< 3.000.000 83 55.33
3.000.001 – 5.000.000 43 28.67
5.000.001 – 7.000.000 17 11.33
7.000.001 – 10.000,000 4 2.67
>10.000.000 3 2
Table 1 Respondents Characteristics
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 649
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
RESULTS
Validity and Reliability Test
The validity of the data can be determined by
the comparison of the Pearson Product Moment
index, the outcomes of the study are declared valid
compilation of r count > r tables or the significance
value of the renewal results < alpha (0.05). The
reliability test is the extent to which the scale can
generate consistent results if the instrument is used
repeatedly (Malhotra, 2012). The instrument is reli-
able if the reliability coefficient or the alpha
Cronbach is 0.60 or more (Arikunto, 2010). The
validity and reliability test results of each item vari-
able in this study have been described in the follow-
ing Table 2.
Variable Item rscore rtable Significance Validity Results Alpha Cronbach Reliability Result
X X10.512 0.1348 0.000 Valid 0.901 Reliable
X20.481 0.1348 0.000 Valid
X30.493 0.1348 0.000 Valid
X40.537 0.1348 0.000 Valid
X50.450 0.1348 0.000 Valid
X60.555 0.1348 0.000 Valid
X70.633 0.1348 0.000 Valid
X80.532 0.1348 0.000 Valid
Z Z10.779 0.1348 0.000 Valid 0.797 Reliable
Z20.838 0.1348 0.000 Valid
Z30.856 0.1348 0.000 Valid
Y Y10.605 0.1348 0.000 Valid 0.791 Reliable
Y20.824 0.1348 0.000 Valid
Y30.796 0.1348 0.000 Valid
Table 2 Validity and RealiabilityTest Results
Normality Test
The normality test is the most fundamental as-
sumption in multivariate analysis, which is a form of
data distribution on a single matrix variable in pro-
ducing a normal distribution (Ghozali, 2011). The nor-
mality test can be done with the Kolmogorov-
Smirnov non-parametric statistical test. If the
Kolmogorov-Smirnov test produces a significance
greater than á of 0.05, the regression model fulfills
the normality assumption. The results of the nor-
mality and linearity test can be seen in Tables 3 and
4.
Unstandardized Residual
N 150
Normal Parametersa,b Mean .0000000
Std. Deviation 1.25632714
Most Extreme Differences Absolute .073
Positive .053
Negative -.073
Kolmogorov-Smirnov Z .897
Asymp. Sig. (2-tailed) .396
Table 3 Normality Test Results For Loyalty Program and Loyalty Program Satisfaction One-Sample Kolmogorov-
Smirnov Test
650 JOURNAL OF APPLIED MANAGEMENT VOLUME 18 NUMBER 4 DECEMBER 2020
Dimas Hendrawan, Rila Anggraeni
Tables 3 and 4 above show that the normality
test using the Kolmogorov-Smirnov test has met the
normality assumption. To examine the normality of
the variable loyalty program together with loyalty
program satisfaction, the Kolmogorov-Smirnov fig-
ure is 0.897, which is greater than the 0.05 signifi-
cance level. The same is true for normality testing
on loyalty program variables, loyalty program satis-
faction, and store loyalty. The Kolmogorov-Smirnov
figure is obtained for 0.655 which is also greater
than the 0.05 significance level.
Linearity Test
The linearity test is a test conducted to find out
the truth of the specifications of the model used
(Ghozali, 2011). If the significance value of linearity
in the linear model has a value of less than 0.050,
then the linearity assumption is said to be fulfilled.
The linearity test results can be observed in Table
5. Based on Table 5, the significance value of lin-
earity for the loyalty program and loyalty program
satisfaction variables is 0.000 and the significance
value of linearity for the loyalty program and store
Table 4 Normality Test Results for Loyalty Program, Loyalty Program Satisfaction, and Store Loyalty One-
Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 150
Normal Parametersa,b Mean .0000000
Std. Deviation 1.28154398
Most Extreme Differences Absolute .054
Positive .046
Negative -.054
Kolmogorov-Smirnov Z .655
Asymp. Sig. (2-tailed) .783
Variable Sig. Note
X Z 0,000 Linear
X Y 0,000 Linear
Z Y 0,000 Linear
Table 5 Linearity Test Results
loyalty variables is 0.000, both of which are below
0.005. Likewise, the significance value of the loy-
alty program satisfaction and store loyalty variables
of 0.000 is also below 0.005. These three results
conclude that the model fulfills the linearity assump-
tion.
Path Analysis
The calculation of the path coefficient is car-
ried out using regression analysis by looking at its
effect on each equation. In this study, the calcula-
tion of the path coefficient was carried out using
SPSS 21.
Variable Unstandardized Standardized t score Sig Adj. R Square Hypothesis
From To Beta Coefficients Beta Coefficients
X Z 0.249 0.572 8.476 0.000 0.322 H1 accepted
XY0.040 0.093 1.082 0.281 0.257 H2 rejected
Z 0.447 0.458 5.318 0.000 H3 accepted
Table 6 Path Analysis
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 651
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
Based on the calculation results, the loyalty pro-
gram variable (X) significantly influences the satis-
faction variable on the loyalty program (Z) because
it has a significance value <0.05 ( = 5%), which is
0.000 (H1 is accepted). Table 6 also shows that the
standardized beta coefficient of the first regression
equation has a value of 0.572. This shows that the
size of the loyalty program (X) has a positive effect
of 0.572 on loyalty program satisfaction (Z).
From the table 6, we can also describe that 1)
the loyalty program variable (X) does not have a
significant effect on the store loyalty variable (Y)
because it has a significance value > 0.05 ( = 5%),
which is 0.281 (H2 is rejected); 2) loyalty program
satisfaction (Z) has a significant effect on the store
loyalty variable (Y) because it has a significance
value <0.05 ( = 5%), i.e. 0.000 (H3 is accepted)
while the standardized beta coefficient shows that
loyalty program satisfaction (Z) has a positive ef-
fect of 0.458 on store loyalty (Y).
The total data diversity is indicated by the model
measured by the formula:
R2m = 1 – P2e1 P2e2….P2ep where
P2e1 = 1 – R21 and P2e2 = 1 – R22.
R21 is the adjusted R square for equation 1 which
is equal to 0.322 and R22 is the adjusted R square
for equation 2 which is equal to 0.257 so:
P2e1 = 1 – 0.322 = 0.678
P2e2 = 1 – 0.257 = 0.743
From these calculations, the total coefficient of
determination is obtained as follows:
R2m = 1 – (0.678 x 0.743) = 0.496 or 49.6%
The results of the calculation of R2m explain
the diversity of data that can be shown by the path
model which is 49.6%, particularly, the information
accommodated in the data is 49.6% which can be
elucidated by the model. The remaining 50.4% of
the data diversity is explained by other variables.
Path Model Interpretation
Loyalty
Program
Loyalty
Program
Satisfaction
Store
Loyalty
0.
572
0.
458
e1 e2
0.
0
93
0.262
Picture 2 Path Hypothesis Model
a. The direct effect of the path coefficient equa-
tion can be stated as follows:
The direct effect of a variable loyalty program
on loyalty program satisfaction
Z = b1X + e1
Z = 0.572X + e1
The direct effect of the variables loyalty pro-
gram and loyalty program satisfaction on store
loyalty
Y = b2X + b3Z + e2
Y = 0.093X + 0.458Z + e2
b. The indirect effect of the path coefficient equa-
tion can be stated as follows:
The indirect effect of a variable loyalty pro-
gram on store loyalty through loyalty program
satisfaction
Y = b1X x b3Z
= 0.572X x 0.458Z = 0.262
652 JOURNAL OF APPLIED MANAGEMENT VOLUME 18 NUMBER 4 DECEMBER 2020
Dimas Hendrawan, Rila Anggraeni
c. The total effect of the path coefficient equa-
tion can be expressed as follows:
The total effect of a loyalty program on store
loyalty through loyalty program satisfaction
Y = b2X + (b1X x b3Z)
= 0.093 + 0.262
= 0.355
Sobel Test
With the help of the Sobel Test calculation ap-
plication by Preacher and Leonardelli, a p-value of
0.00001515 was obtained. Based on the above cal-
culation, it can be seen that the indirect effect of
the loyalty program (X) on store loyalty (Y) through
loyalty program satisfaction (Z) is 0.262 or 26.2%.
Based on the Sobel Test the z-value is 5.2496 and
the p-value is 0.0000015. From these results, it can
be seen that the z-value > 1.96 and p-value < 0.05
so that H4 is accepted.
DISCUSSION
A loyalty program is an essential tool for retail-
ers to win the competition. This study seeks to
broaden current insights about the relationship be-
tween loyalty programs and satisfaction as well as
their effects on store loyalty. An important reminder
is that this study adds a loyalty program satisfaction
variable to the relationship between loyalty programs
and store loyalty. This model allows researchers to
examine, investigate, and ultimately produce insights
about the effects of this construct on loyalty to the
store. This study shows that there is strong empiri-
cal support between loyalty program variables, loy-
alty program satisfaction, and store loyalty.
The program of loyalty had a significant effect
on loyalty program satisfaction with a direct rela-
tionship. This means that the application or enhance-
ment of the loyalty program will create or increase
the satisfaction of customers who have joined and
use the loyalty program. With the loyalty program,
the members of the loyalty program will get some
benefits that are not obtained by customers who
are not part of the loyalty program. Members of the
loyalty program get points every time they transact
for various types of products. When points are col-
lected at a certain amount, members of the loyalty
program can make use of them by obtaining dis-
counts on the purchased products. With this prac-
tice, members of the loyalty program can reduce
costs and use their money for other purposes.
Members of the loyalty program also stated that
by joining the loyalty program, they would obtain
new information or offer retail parties. This infor-
mation obtains earlier than the information provided
by retail parties to the general public. This informa-
tion is usually associated with new products and dis-
counts that will or are ongoing. Loyalty members
also said they felt involved with the retail. With the
benefits obtained as above, members of the loyalty
program feel satisfied.
The loyalty program satisfaction had a signifi-
cant influence and a direct relationship to the store
loyalty. It means that when a loyalty program mem-
ber is satisfied with the services provided, they will
tend to be a loyal consumer of the stores. The mem-
bers of the loyalty program said that it was an ap-
propriate step to join the loyalty program. Initially,
customers are offered to have a membership card
(or become a member of the loyalty program) by
retailers. Retailers also explain the benefits to be
gained as well as compensation that may exist (for
example there are no administrative costs to be-
come a member of the loyalty program).
By becoming a member of the loyalty program,
respondents expressed satisfaction with what re-
tailers provided. It means that the expectations cre-
ated by respondents correspond to what is received.
For example, when members of a loyalty program
look for value from a brand in the form of low prices,
retailers can facilitate it. It has encouraged mem-
bers of the loyalty program to make retail the first
choice when shopping. It is because there are fears
of spending more when shopping at other retailers.
Besides, the respondent members will also tell the
good things from retail to others in the hope that
they will receive the same benefits as themselves.
Based on the multiple regression statistical tests,
it found that the loyalty program did not have a sig-
nificant influence on store loyalty. It shows that the
loyalty program offered by the store does not nec-
essarily create loyalty from members of the loyalty
program. Respondents stated that there was a plea-
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 653
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
sure when collecting points from the loyalty pro-
gram, but this did not encourage respondents to say
good things from the shop to others. Likewise, when
respondents withdraw points to obtain certain
awards, it does not encourage respondents to do
the same activities. Although the respondent ac-
knowledges that there is a different feeling (in good
terms) when the respondent becomes a member of
the loyalty program compared to other consumers,
it also does not constitute a reason to be loyal to the
store. This condition shows that when members
benefit from a loyalty program it turns out to be
merely a personal pleasure that does not need to be
shared with others.
Loyalty program satisfaction mediates the re-
lationship between the loyalty program and store
loyalty. It means that store loyalty can be formed
when members of the loyalty program satisfy with
the program. When loyalty program members can
get various benefits from points collected (discounts,
prizes, etc.), there is a feeling of pleasure when
collecting points, a feeling that he is different and
treated differently compared to consumers who do
not have membership in the loyalty program, then
this will create satisfaction. Members of the loyalty
program feel that joining the loyalty program is the
right step because it is in line with expectations and
when satisfaction arises, the loyalty program mem-
ber will say good things related to store to others
and encourage others to shop at the store. In addi-
tion, respondents also stated that they would make
the store the first choice to shop.
The loyalty program did not have a significant
effect on store loyalty directly. It means that the
loyalty program offered by the store does not nec-
essarily create loyalty from members of the store’s
loyalty program. Respondents stated that there was
a pleasure when collecting points from the loyalty
program, but this did not encourage respondents to
say good things from the shop to others. This study
aims to see whether the loyalty program offered by
retailers in Malang is considered effective in creat-
ing satisfaction and loyalty. The results found on
respondents indicate that the loyalty program can
create loyalty program satisfaction and store loy-
alty. For this reason, retail marketers need to con-
tinue to implement this strategy so that their market
share is not easily moved or captured by competi-
tors. But this marketing strategy needs to be con-
tinuously innovated since the business challenges
will increase.
The loyalty program needs to be supported by
an improvement in the management system related
to the consumer database. It means that marketers
must improve the infrastructure quality that supports
the consumer database management operational
system, so that marketers so that the strategies are
not misplaced. In addition, marketers are also re-
quired to continue to carry out marketing intelligence
systems to determine changes in consumer behav-
ior. Rewards offered in loyalty programs must be
developed (Nastasoiu and Vandenbosch, 2019). The
rewards from collecting points so far are only lim-
ited to the advantage of price discounts that can
encourage consumers to increase the frequency of
consumption or prizes in the form of certain prod-
ucts. Marketers can provide various forms of re-
ward, for example, flight ticket vouchers, dinner
vouchers, free holiday vouchers, or others. Of
course, this technique can be done through collabo-
ration with third parties.
The procedure to become a member of the loy-
alty program, the rules of the game, and the proce-
dure for withdrawing points must be transparent and
simple.Marketers must provide services for mem-
bers of the maximum loyalty program. In this case,
special training is provided for customer service who
is face to face with consumers. Customer service
is required to have the good product knowledge and
good communication skills to serve a variety of ques-
tions, disbursements, and complaints from consum-
ers. Marketers can implement personalization in their
loyalty programs (Nastasoiu and Vandenbosch,
2019). This can be done by categorizing loyalty pro-
gram members based on the value given to the com-
pany. Furthermore, marketers can provide special
services for each category of different loyalty pro-
gram members, for example by creating platinum,
gold, silver, and bronze member cards, each of which
has different rules, conveniences, and benefits.
654 JOURNAL OF APPLIED MANAGEMENT VOLUME 18 NUMBER 4 DECEMBER 2020
Dimas Hendrawan, Rila Anggraeni
Marketers can form specific communities for
members of the loyalty program to be closer to cus-
tomers. The retailers can quickly inform all forms
of offers, receive various input from customers, and
provide answers/solutions to customer questions or
complaints.
CONCLUSIONS AND RECOMMENDA-
TIONS
Conclusions
This study aims to discover the impact of the
loyalty program and loyalty program on satisfaction
on store loyalty in the retail industry. According to
the research results, it is known that the loyalty pro-
gram has a significant effect on loyalty program
satisfaction, while loyalty program satisfaction has
a significant effect on store loyalty. Different re-
sults are shown through this study where the loy-
alty program does not have a significant effect on
store loyalty directly nevertheless has a significant
indirect effect on store loyalty through the loyalty
program satisfaction.
This research is intended to be able to contrib-
ute to scientific development, especially consumer
behavior, and to be a comparison for further research
that focuses on loyalty programs, customer satis-
faction, and store loyalty. The results of this study
are also expected to provide additional information
for business practitioners such as business owners
and marketing managers in understanding customer
behavior so that they can determine the right mar-
keting strategy.
Recommendations
This study focuses on the satisfaction and loy-
alty variables of consumers so that future research-
ers are expected to develop them by involving other
variables both as mediation and moderation. The
next researchers are also suggested to be able to
develop this research in other locations which will
certainly provide different findings that can enrich
knowledge related to consumer behavior and mar-
keting science.
REFERENCE
Abidin, Aflahul. 2017. Lima Tahun, Penduduk Kota
Malang Bertambah 50.116 Orang released 14th
February 2017. Tribun Bisnis, viewed 16 March
2019, http://jatim.tribunnews.com/2017/02/14/lima-
tahun-penduduk-kota-malang-bertambah-50116-or-
ang.
AlGhamdi, R., Nguyen, J., Nguyen, A., and Drew, S. 2012.
Factors influencing e-commerce adoption by re-
tailers in Saudi Arabia: A quantitative analysis.
International Journal of Electronic Commerce Stud-
ies, vol 3 no 1, pp. 83-100.
Amanah, D., Harahap, D. A., and Lisnawati, D. 2017. Ex-
ploring online purchase decision among univer-
sity students in Indonesia. Journal of Humanities
and Social Science, vol 22 no 5, pp. 72-77.
Arikunto, S. 2010. Prosedur penelitian: Suatu Pende-
katan Praktik Edisi Revisi. Jakarta. Rineka Cipta.
Back, K. J. and Parks, S. C. 2003. A brand loyalty model
involving cognitive, affective, and conative brand
loyalty and customer satisfaction. Journal of Hos-
pitality and Tourism Research, vol 27 no 4, pp. 419-
435.
Demoulin, N. T. and Zidda, P. 2008. On the impact of
loyalty cards on store loyalty: Does the customers’
satisfaction with the reward scheme matter?. Jour-
nal of Retailing and Consumer Services, vol 15 no 5,
pp. 386-398.
Dorotic, M., Bijmolt, T. H., and Verhoef, P. C. 2012. Loy-
alty programmes: Current knowledge and research
directions. International Journal of Management
Reviews, vol 14 no 3, pp. 217–237.
Ghozali, Imam. 2011. Aplikasi Analisis Multivariate
Dengan Program IBM SPSS 19 edisi kelima.
Semarang. Badan Penerbit Universitas Diponogoro.
Jang, D. and Mattila, A. S. 2005. An examination of res-
taurant loyalty programs: What kinds of rewards
do customers prefer?. International Journal of Con-
temporary Hospitality Management, vol 17 no 5,
pp. 402–408.
Jani, D. and Han, H. 2014. Personality, satisfaction, im-
age, ambience, and loyalty: testing their relation-
ships in the hotel industry. International Journal of
Hospitality Management, vol 37, pp. 11-20.
Knox, D. S. and Denison, J.T. 2000. Store loyalty: its
impact on retail revenue. An empirical study of
purchasing behavior in the UK. Journal of Retail-
ing and Consumer Services, vol 7 no 1, pp. 33–45.
DIKTI ACCREDITED SK NO. 30/E/KPT/2018 ISSN: 1693-5241 655
Is The Loyalty Program Effective In Creating Loyalty Program Satisfaction And Store Loyalty? ...
Knox, Simon D. and Walker, D. 2001. Measuring and
Managing Brand Loyalty. Journal of Strategic Mar-
keting, vol 9, pp. 111-128.
Kotler, Philip and Keller, K. L. 2016. Marketing Manage-
ment: Pearson Education.
Kumar, V. and Shah, D. 2004. Building and sustaining
profitable customer loyalty for the 21st century.
Journal of Retailing, vol 80 no 4, pp. 317-329.
Lervik, L. and Johnson. M. D. 2003. Service equity, satis-
faction and loyalty: From transaction-specific to
cumulative evaluation. Journal of Service Research,
vol 5, pp. 184- 195.
Malhotra, N. K. 2012. Basic Marketing Research: Inte-
gration of Social Media, Fourth Edition. US:
Pearson.
Meyer-Waarden, L. 2008. The influence of loyalty
programme membership on customer purchase
behaviour. European Journal of Marketing, vol 42
no 1–2, pp. 87–114.
Meyer-Waarden, L. 2015. Effects of loyalty program re-
wards on store loyalty. Journal of Retailing and
Consumer Services, vol 24, pp. 22-32.
Nastasoiu, A. and Vandenbosch, M. 2019. Competing
with loyalty: How to design successful customer
loyalty reward programs. Business Horizons, vol
62 no 2, pp. 207-214.
Noordhoff, C., Pauwels, P. and Odekerken-Schröder, G.
2004. The effect of customer card programs: A com-
parative study in Singapore and The Netherlands.
International Journal of Service Industry Manage-
ment, vol 15 no 4, pp. 351-364.
Oliver, R. L. 1997. Satisfaction: A behavioral perspec-
tive on the consumer. Irwin-McGraw-Hill: New York.
Punj, G. 2012. Income effects on relative importance of
two online purchase goals: Saving time versus sav-
ing money?. Journal of Business Research, vol 65
no 5, pp. 634-640.
Putera, Andri Donnal. 2017. Bisnis Ritel Enggak Ada
Matinya!. [Online]. From: https://ekonomi.kompas.
com/read/2017/11/02/081944726/bisnis-ritel-enggak-
ada-matinya. [March16, 2019].
Sharp, B. and Sharp, A. 1997. Loyalty programs and their
impact on repeat-purchase loyalty patterns. Inter-
national Journal of Research in Marketing, vol 14
no 4, pp. 473-86.
Sindonews. 2017. Daftar Ritel di Indonesia yang Memilih
Menutup Usaha. [Online]. From: https://ekbis.
sindonews.com/read/1253581/34/daftar-ritel-di-
indon esia-yang-memilih-menutup-usaha-
1509533639 sindonews.com. [March 16, 2019].
Sreejesh, S., Sarkar, A., and Pradhan, S. 2016. Examining
the roles played by a store satisfaction-love frame-
work in shaping the influence of store loyalty pro-
grams. Management Research Review, vol 39 no 8,
pp. 879-898.
Sweeney, J. C. and Chew, M. 2002. Understanding con-
sumer-service brand relationships: a case study
approach. Australasian Marketing Journal, vol 10
no 2, pp. 26-43.
Verhoef, P. C. 2003. Understanding the effect of relation-
ship management efforts on customer retention and
customer share development. Journal of Marketing
vol 67 no 4, pp. 30–45.
Vesel, P. and Zabkar, V. 2009. Managing customer loy-
alty through the mediating role of satisfaction in
the DIY retail loyalty program. Journal of Retailing
and Consumer Services, vol 16 no 5, pp. 396-406.
Warayuanti, W. and Suyanto, A. 2015. The influence of
lifestyles and consumers attitudes on product pur-
chasing decision via online shopping in Indone-
sia. European Journal of Business and Management,
vol 7 no 8, pp. 74-80.
Wirtz, J. and Chew, P. 2002. The effects of incentives, deal
proneness, satisfaction and tie strength on word-
of-mouth behavior. International Journal of Service
Industry Management, vol 13 no 2, pp. 141-162.
Yi, Y. and Jeon, H. 2003. Effects of loyalty programs on
value perception, program loyalty, and brand loy-
alty. Journal of the Academy of Marketing Science,
vol 31 no 3, pp. 229–240.
Zakaria, I., Rahman, B. A., Othman, A. K., Yunus, N. A.
M., Dzulkipli, M. R., and Osman, M. A. F. 2014. The
Relationship between Loyalty Program, Customer
Satisfaction and Customer Loyalty in Retail In-
dustry: A Case Study. Procedia Social and Behav-
ioral Sciences, vol 129, pp. 23-30.
