Research pick: Businesses encouraging shopper loyalty - "Customer retention using loyalty cards program"

Customer loyalty can be a key component of ongoing business success, especially in a market with lots of rivals and a limited number of potential customers. Business must be involved in ongoing research in order to know what works to retain customers in ever-changing markets. In particular, determining what incentives might work to improve customer loyalty can be key.

The loyalty card system is perhaps the most well-known incentive programs that rewards loyalty and purportedly improves repeat business. The basic concept is that customers sign up to the program and are reward when they make repeat purchases or engage with the business in other ways, such as by referring friends, leaving reviews, or following the business on social media. Commonly they earn points on their card for various activities and these can be exchanged for in-store discounts, free gifts, or even vouchers or coupons that can be redeemed at associated outlets, such as restaurants, cinemas, or even holiday companies and theme parks. The specific rewards and incentives a company offers to its loyal customers vary widely, depending on the type of business and the preferences of the target audience. Some businesses use physical cards that are scanned at the point of purchase, others encourage their customers to download a mobile phone app.

Of course, there is also the advantage to the business of not only retaining customers but learning more about their buying habits and other activities linked to use of the loyalty card. Tracking activity gives businesses invaluable information on customer behaviour so they can be tarhets more effectively through marketing campaigns.

A study in the International Journal of Business Innovation and Research looked at the various factors that led customers to shop at two outlets in India Ondoor and Reliance Fresh, and to uncover whether loyalty cards had a role to play in customer retention. Nyagarama Omboga Thomas and Sapna Singh of the Department of Management at SRK University in Bhopal and Mohit Gangwar of Bhabha University also in Bhopal, used a descriptive survey research design to collect data via questionnaire.

The researchers’ analysis of the data revealed that there were many factors that had on influence on the purchasing choices of customers, including product availability, brand variety, the atmosphere of the given outlet, return policy, price, service, promotions, and store location. But, the businesses’ loyalty card programs had a strong impact on those customers who were signed up with the program.

Thomas, N.O., Singh, S. and Gangwar, M. (2023) ‘Customer retention using loyalty cards program’, Int. J. Business Innovation and Research, Vol. 30, No. 2, pp.200–217.