Is loyalty program as a marketing tool effective?

Abstract

Loyalty programs are an ubiquitous instrument of customer relationship management. Complexity of modern business requires managers to strive for innovative strategies to acquire and retain customers in any product market field. As acquiring new customers is getting costlier day by day, business organizations have offered loyalty programmes to retain & reward existing customers and maintain relationships. One of the best ways to keep customers coming back for more is by establishing an effective loyalty or rewards program. Loyal customers, it is said, are worth striving for. They spread positive word-of mouth, reduce defection rates, and amplify the purchase frequency, to name just a few examples. But what can be done to induce that loyalty? Can loyalty schemes help us to do so? In this paper, we try to determine whether loyalty cards issued by stores have an impact on customer loyalty. The aim of this research is to enhance our understanding of loyalty program effectiveness.