Developing an Effective Customer Loyalty Program

Firstly, to start with it is important to understand what is Customer loyalty? Loyalty can be explained as an attitudinal or behavior. According to Mark, Grahame & Kathy (2003): “Loyalty is something that consumers may demonstrate their interest to brands, services, stores, product categories. Here, we use the term customer loyalty as opposed to brand loyalty; this is to emphasize that loyalty is a feature of people, rather than something inherent in brands (Mark, Grahame & Kathy, 2003).” To explain it further Customer loyalty is something where consumer or customer likes or prefer to buy

The company to demonstrate is The Co-operative Food. Retail chains are at the fore-front for advances in technology and are competing for ways in which to understand their customers and use the strategies to improve customer intimacy. The purchasing behavior in food retail is the most repetitive of all (Manas, 2011), so to get this customer intimacy correct has never been more important. The Co-operative Food (Co-op) uses their loyalty strategy by having membership scheme available to all colleagues and customers. This card acts as most retail cards do in that they collect a customer’s information which is then fed to the company’s data base. There is a number of ways in which this card creates an improvement in customer intimacy. First of all, unlike all of the other schemes available, twice a year the Co-op gives a share of its profits through the post to all of the members of the scheme. ‘You can enjoy your share of the profits along with exclusive member discounts and offers’

Kapferer (2004) stated that the majority of brand loyalty schemes in the UK supermarket industry are competitive in nature. This segment is highly competitive, as it is based upon capturing market share in the best possible manner to enhance the brand appeal and acceptance in the long run. Tesco is one of the largest supermarket chains in the UK, with a huge brand presence. It has introduced loyalty schemes that have been successful in attracting customers, along with enhancing the brand’s appeal and success. The success of Tesco is well known along with the fact that the brand lacked success in gaining the top position in the supermarket industry, when it followed the conventional path. This was mainly due to the fact that other brands,

In May ’15 American Express launched a coalition loyalty program called Plenti. Under coalition loyalty programs, members can earn and redeem points by shopping at participating merchants (e.g., Exxon, Macys, Rite Aid and ATT.) The program helps consumers to earn rewards faster and lead to better engagement and provides merchants and opportunity to attract new customers and run cross-promotional campaigns. The biggest challenge in launching the program was signing up merchants and building an economic case for shifting away from proprietary programs and collaborate for collective benefit.

Consumers usually opt for those retailers that are providing them the goods of their choice in cheaper prices. This is one of the most significant ways for retailers to understand the way consumers shop and purchase items. When a loyalty program is introduced by a retailer, their main aim is to target those consumers who have been with the corporation for a good long time and have shopped with the store on a daily basis. The loyalty programs provides vast amount of benefits which the consumers may not attain from anywhere else (Söderlund, & Colliander, 2015). From the consumer’s point of view, loyalty program are a kind of blessing because it allows them to purchase items at a cheaper price as well as allows them to reap more benefits from the retailer through the loyalty program. Many consumers have become part of the Tesco’s loyalty program because they believe that Tesco has provided them with vast amount of benefits for just being their loyal customer. Many customers are of the view that the loyalty program initiated by the Tesco is the most satisfying one out of all the loyalty programs that are initiated by other retailers.

Brands - we see them everywhere. Nowadays advertisement has become so common, that it is normal for us to see promotions all around from the moment we get up from bed and up until we go to sleep. We do like some of those advertised brands, and in order buy their production and stay loyal to them. However, some of them we do not and just try to ignore their output. Nevertheless, is it possible to influence people through loyalty programs and why do people choose to stay loyal in the first place? Some believe that companies want to make their customers happy and money is not the main goal for them, but I reckon that it is profitable for companies to have loyal and dependents consumers and it is the main reason of why now we have loyalty programs in our society.

There is a difference between a Customer Frequency Program (CFP) and a Customer Loyalty Program (CLP). In the first program the loyalty is to the frequency program and not tot the brand (Shoemaker & Lewis, 1999). A frequency program’s focus is to build repeat business, while the focus by a loyalty program is to build an emotional attachment to the brand: “for the brands people already buy” (Dowling, Uncles, & Hammond, 2003). In actual practice it is very difficult to measure if someone is loyal to the brand or just to the frequency program (Dowling, Uncles, & Hammond, 2003). This because of the reason that the outcomes are the same (Smith,

Various authors have described loyalty on their own way.This part of the thesis describe the various authors work related to loyalty.

Throughout the years customer loyalty has grown to be one of the central goals of modern businesses. The longer you bind customers to your business, the less costly these customers become to serve. Over the years these customers become loyal and at some point they even become business builders. They are willing to pay premium prices, they spend more and they bring in new customers. Loyalty programs (discounts, gifts and such) are meant to act as a gate to improve the match between customers and their preferences and thus should benefit the customer. Others, however, claim that loyalty only chains consumers by making them more dependent on producers. Producers have great interest in more information on this topic so they can use this for their own marketing strategies.

A loyalty program is a reward based program that is offered by a company to their customers who make purchases frequently. Loyalty programs have been known to gain customers more coupons, exclusive access to certain sales, free promotions, and much more. Many different organizations and stores have created different types of loyalty programs for their customers over the years. These programs are important to prospective customers in gaining their loyalty so that they may shop at their store as opposed to another local competitor. Having various stores with these programs is also beneficial to the customer because stores are constantly competing against each other. Stores over the years, especially during holiday seasons, are always trying to outdo their competitors to get you the lowest price possible and them the most sales.

The primary focus of this research is to develop and understanding the reasons for brand loyalty, as there is a literature gap in this area of marketing management. A lot of researches been done in the past on the benefits of brand loyalty but there is a literature gap on how an organisation can build brand loyalty. The literature of market is still debating of what compromises brand loyalty (Chaudhuri & Holbrook, 2001).

In the initial part of study, it has elaborate meaning of loyalty. Now, this section has presented literature on effectiveness of loyalty on customer retention. Loyalty program often considered as value sharing or enhancement instrument. Sabol, 2002) addressed that value enhancement function is important because of ability to provide superior value to customer relationship and retention. Loyalty program provide value to consumer in two stages. (Bolton, 2000), has explained stages in brief that in the first stage program points are issued to customer and the second stage when customer redeemed those points. Though these points value don’t have any practical value unless customer redeemed them. However, according to the study by (Machanda, 2004) showed that it has important psychological meaning to customer. Points accumulation can gives customer feelings of benefits and these benefits are able to give customer positive value perception. It is because customer can redeemed those values later for rewards. At redemption stage, customer receives both economic and psychological value. Thus it enhances appreciation and recognition of

Liu(2008) claimed that online shopping customers’ satisfaction may be ruined by the lacking of on-time delivery. A quarter of Chinese customers were dissatisfied with online-shopping experience due to the low delivery service level(CNNIC,2004).

Brand loyalty is the target of all marketers. It is the product of a psychological contract between the brand and the consumer (Helicon, 2016). Loyalty consists of positive attitudes and preferences for brands leading to their consistent repurchase. Brand loyalty is an avenue for companies to develop long-term relationships with customers. As the cost of advertising has dramatically increased in recent years, marketers are increasingly turning to pricing and price related promotions as a means of influencing purchasing decisions by consumers (Krishnamurthi, 1991). While pricing has a significant impact, consumer preference is often a very difficult barrier to overcome even

The growth for mobile service has been gradually developing from a total number of subscribers of 1.513 million at the end of 1996 to 7.477 million in 2001. (Malaysian Communication and Multimedia Commission, MCMC) The market for the telecommunication industry in Malaysia is highly competitive. This industry is currently dominated by 3 operators Telekom, Maxis and DiGi. For example, as Maxis Communications Berhad (“Maxis”) being one of the most favorable choice for users, Maxis believes that the main competitive factors in the mobile services market are network coverage, service quality, pricing and brand. Therefore, these could be the main factors that determine the level of customer loyalty towards