Loyalty program rewards and their impact on perceived justice, customer satisfaction, and repatronize intentions

• This study examines rewards in a retail loyalty program context and their impact on perceived distributional justice, customer satisfaction, and repatronizing intentions.
• The results indicate that rewards had an impact on each of the three effect variables.
• The results suggest that loyalty programs have the potential of not boosting members' loyalty, at the same time as they may reduce loyalty among non-members.

This study examines three types of rewards in a retail loyalty program context (under-reward, equity-reward, and over-reward) and their impact on perceived distributive justice, customer satisfaction, and repatronize intentions. The results from a between-subjects experiment showed that equity-reward produced higher levels of perceived distributive justice than both under-reward and over-reward. Moreover, equity-reward and over-reward produced higher levels of both customer satisfaction and repatronize intentions than did under-reward. Yet there were no differences in satisfaction and repatronize intentions for equity-reward and over-reward. These outcomes suggest that loyalty programs have the potential of not boosting members' loyalty, at the same time as they may reduce loyalty among non-members.