Do customer loyalty schemes lead to increased customer loyalty and retention?

Abstract

The issue that this study will address is whether or not customer loyalty schemes are effective in generating customer retention. Customer loyalty is something that many of today's organisations strive to achieve. However, it certainly is not something that will come easy to an organisation, and will require a great deal of time and investment. Due to the sheer difficulties faced, organisations will hope that by offering a loyalty scheme, customer retention will be at a peak. To address this issue, the purpose of this study will be to explore the customers' perception of customer loyalty schemes, and whether or not it makes them more inclined to return to the same retailer. The research will indicate the main influencing factors, in determining customer loyalty. Also, whether or not a loyalty scheme is built to deal with the varying factors. To gather data, an online survey was conducted and distributed to a number of local consumers. This data was then analysed to discover relevant themes. The key themes being: customer relationships, customer incentives and marketing of loyalty schemes. The findings of the research were then compared to the literature and the objectives of the study, to draw up relevant conclusions and recommendations. This research will show that customer loyalty schemes may not guarantee customer retention, however they do have some level of influence in determining where consumers choose to shop.