Customer Loyalty Programs: A Review

This assignment delves into the concept of customer loyalty programs. It reviews various research papers that examine factors influencing customers' likelihood to join such programs, the impact of reward systems and loyalty cards, and the effectiveness of eCRM strategies in fostering customer loyalty within the telecommunication sector. The analysis also considers the role of perceived program benefits, purchase orientations, and customer complaints in shaping loyalty levels.

Research Project
(Proposal)

Table of Contents
TITLE..............................................................................................................................................1
AIMS AND OBJECTIVES.............................................................................................................1
LITERATURE REVIEW................................................................................................................2
Factors that are essential in process of consumer loyalty and rewards schemes....................2
Effective elements that are related with consumer loyalty and reward schemes within Tesco. .2
Importance of customers loyalty in developing organisational performance........................4
Essential ways by which Amazon can sustain customers for long time................................4
Implications and changes take place in Tesco club card........................................................4
RESEARCH METHODOLOGY.....................................................................................................5
Types of Investigation............................................................................................................5
Research Design.....................................................................................................................5
Research philosophy...............................................................................................................5
Research Approach.................................................................................................................5
Research Sampling.................................................................................................................6
Data Analysis..........................................................................................................................6
Ethical consideration..............................................................................................................6
EXPECTED OUTCOME................................................................................................................6
REFERENCES................................................................................................................................7

TITLE
To analyse appropriateness of customer loyalty and reward schemes and its influence on
performance as well as production of company: A case study on Tesco corporation.
AIMS AND OBJECTIVES
To survive at marketplace, it is required for each organisation to develop qualitative
products and services for clients as this will assist them to gain trust and loyalty of them. Tesco
is a retail sector which are providing variety of items to customers; therefore, they will fulfil their
needs and wants. Tesco is a retail store which is established in United Kingdom and providing
many types of products and services to people. There are various sort of loyalty sessions and
rewards system is applied by manager in firm for consumers; thus, they will render them
maximum satisfaction. If quality of items are appropriate then, this will help organisation to
attract more individuals towards it. It works as a motivation for staff members and they will fulfil
their task with maximum effectiveness.
Aim: To analyse appropriateness of customer loyalty and reward schemes and its influence on
performance as well as production of company: A case study on Tesco corporation.
Objectives:
 To determine numerous elements which are required in procedure of reward scheme and
consumer loyalty.
 To examine distinctive components which are associated with consumer loyalty and
reward scheme within Tesco.
 To identify significance of consumer loyalty in organisation performance.
 To advise ideas so that Tesco will retain clients for longer period of time. To determine the impact and changes which used to take place in Tesco club cards from
past few years
Research questions
 What are those elements which are required in procedure of reward scheme and
consumer loyalty?
 What are distinctive components that are associated with consumer loyalty and reward
scheme within Tesco?
 What are significance of consumer loyalty in organisation performance?
 What are different ways that assist Tesco to retain clients for longer period of time?
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 What will be the future implications and changes arise in Tesco Club Card?
LITERATURE REVIEW
Factors that are essential in process of consumer loyalty and rewards schemes
According to De Chernatony (2013) Tesco is a leading organisation in retail sector;
therefore, it is must for them to accomplish procedure of loyalty as well as reward scheme. Taste
and preferences of clients will change as per time so that it is must for firm to evaluate it on
regular basis. There are some components which are associated with this, are stated as beneath: Expectations: It is must for enterprise to provide goods and services to people as per
their requirements. It is required for them to maintain its quality and sell at a affordable
prices. As a result, they will be able to retain consumers for longer period of time. Along
with, this assists to improve profits and market share. Personal relationship: As per the view point of Dorotic, Bijmolt and Verhoef (2012) It
is fundamental for company to build an appropriate relations with individuals because it
aids into their retention for longer time. As a result, they will able to maintain their sales
and profits effectually. Reputation: Tesco's goodwill is much adequate which assist them to take benefits from
competitors at marketplace. In addition, help to sustain clients for maximum period of
time. Convenience: It will also provide influence to consumer loyalty because if customers are
much convenient then they will always purchase goods and services of Tesco.
 Community outreach: If an organisation wants to involve in social exercises then, it is
required for them to maintain an effective relations with individuals. They will start
online business also to improve customer base (Gómez, Arranz and Cillán, 2012).
Henceforth, above mentioned elements help to enhance loyalty of consumer so that they will
increase their profits and market share effectually.
Effective elements that are related with consumer loyalty and reward schemes within Tesco
According to Henderson, Beck and Palmatier (2011) If clients purchase items and
services of same brand for long term then, this will considered as a consumer loyalty. It aids
company to maintain their customer base and in addition improve profits. As a result, they will
be able to take benefits from contenders at marketplace.
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 Purely Point Based Loyalty Systems: Companies use this plan to keep their customers
connected with their firm. Tesco provides points to their clients when they purchase their
products and services which they can claim when they buy it again. Firm uses this tool to
influence their users and induce them to take action by making their mind by offering
them special offers on their collected points. Hybrid Loyalty Programs: Tesco uses this program to enhance their sales by retaining
their customers for long term by fulfilling their demands and making them satisfied by
their offerings. Company have established loyalty box to build their users interest for
their product which advantage their firm (Kaur and Soch, 2012). Coalition Programs: It will comprise points of other brands which will be utilized by
people in forthcoming time. Like, Tesco will give some points which will be redeemed
by people for mobile recharge or in cafe. Tier Based Affinity Program: Companies uses this tactic to retain their customers by
making them loyal towards firm by providing them adequate benefits such as
accumulated points, patronage and making them pay membership fee. As per Khaligh,
Miremadi and Aminilari (2012) this provide them advantage when they avail their
products and services by offering them specials deals, discounts and some monetary
benefits when they purchase it again. They offer gold and silver membership coin to their
customers according to money they are ready to invest.
 Pure Lifestyle Loyalty Programs: Firms include this plan so that they are able to target
niche segments and are able to enhance their customer base. Company had frame certain
offers for women and youth to provide them items according to their lifestyle. This help
to increase their profitability by retaining their customers and is more beneficial than E-
commerce enterprises of United Kingdom (5 reasons why you should have a customer
loyalty program, 2018).
Reward schemes: There are many kinds of discount offers will provide by organisation to their
customers. For an example: if they are selling products online then, they will give some cash
back to buyers or extra benefits on their next purchase (Meyer-Waarden, Benavent and Castéran,
2013). This will assist them to improve client base and profits in an effective way.
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Importance of customers loyalty in developing organisational performance
As indicated by Namkung, Jang and Choi (2011) there are various sorts of significance of
consumer loyalty in organisation performance, which are described as below: Customers loyalty are easier to sell: Loyal buyers are much familiar with business;
therefore, it is easy for manager to sell them goods and services. They will ask them for
any suggestions which will assist Tesco into their success and development. Customer loyalty can act as brand ambassadors: Customers who are highly satisfied by
company's products and services communicate their experience to people through
personal interaction and also through social media. This is an effective tool as it influence
buyers behaviour because they find items trustful when they listen positive reviews.
 New customers are more expensive: As per research it has been comprehended that new
clients are much costly for organisation as they need to earn their trust and loyalty
(Namkung, Jang and Choi, 2011).
Essential ways by which Amazon can sustain customers for long time
As per Omar, Weland Nazri (2013) there are many ways which aid company to sustain
clients for longer period of time, they are mentioned as beneath: Get rid of motivation killers: It is essential for superior to observe work effectually; thus,
they will easily determine issues and solve them. This will work as a motivation for staff
members. There are some examples of motivational killers, like toxic individuals, lack of
vision and many more. Gamification motivation: If workers are not much inspired then, they will feel bored
from work. Therefore, they will not able to accomplish task within limited period of time.
Henceforth, superior has to alter their policies so that they will develop interest of
employees into work.
 Clear goals are set and give feedback: To attain targets with set time frame, manager
needs to set it. Along with, they will provide feedback to them which will assist them to
improve their working efficiency Ou, Shih and Wang (2011).
Implications and changes take place in Tesco club card
As per the Namkung, Jang and Choi (2011), business provide loyalty cards to their
ultimate customers which support in enhancement of sales and profit. Tesco provided loyalty
cards to each and every individual of their customers whom have relation with a company from
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past few years. Such cards are define as the Club Cards which motivate customers to buy
products and provide suitable discount and cash vouchers as well. A major advantage of
adopting this technique is related with increase in customer base. Most of user get motivated for
buying products through Tesco due to high quality standard of goods. Along with this, it will
also reflect on the profitability of a company. Thus, more sales will lead to take place once the
Club cards used to distributed to all permanent users of a company. Some major disadvantages of
Tesco Club Cards that business users might use it in negative frame like they could shift to some
other business in recent time.
Some major changes could be estimated in Club Cards of Tesco like in previous days it
lead to take place in card format but later now it could get provided on phone and also deliver to
client via application of a company. This loyalty card made and enhance sales maximum as well
as increase profit margin of a company.
RESEARCH METHODOLOGY
Types of Investigation
It is crucial component of research project in which both quantitative and qualitative data
is collected so that they get accurate facts and figures. Investigator want to construct quality
report so that they get correct results and are able to make appropriate decisions.
Research Design
It is defined as pattern followed by investigator so that they are able to gather competent
information for their report. This determine framework to researcher so that they are able to
collect, measure and analyse their data properly. Descriptive, Experimental and Exploratory are
various types which they can use according to type of project and organisation' situations. In this
report Descriptive form of research design is used.
Research philosophy
It constitutes importance in report as it carries opinions of various correspondent and
authors which make it valuable by including sources of their information. For preparation of this
report Interpretivism is used so that correct outcomes are attained.
Research Approach
Researcher formulate significant hypothesis for their report which help them in collecting
appropriate data for their study. This approach consists two variants which can be applied
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according to investigator knowledge. Inductive reasoning is based on their observation while
deductive is done on basis of established concepts. Empirical data which is also known as
”bottom-up” approach is not applied in this report.
Research Sampling
Researcher is required to carry out activities to take opinions from people so that they are
able to gather sufficient information for their project. But interviewing whole nation is not
possible as it will consume large time and money. Therefore they determine small segments from
their population so that they get accurate data. There are two types of sampling which are
probability and non- probability and this also consists various sub varieties. It is a concept which
determine number of units they are required to interview to gather adequate information.
Data Analysis
Researcher conduct this process in which they investigate and reorganise facts to get
relevant information to make appropriate conclusions and which assist them to take decisions. To
find adequate knowledge about report they use tools and techniques and collect primary and
secondary data. Researcher first design questionnaire to take opinions from people and take
information from various sources such as journals, websites and newspaper for making literature
review for their report.
Ethical consideration
Conducting research was not simple as investigator has shortage of time and money
which was a challenge for them to collect adequate data for their report. Organisation had given
them limited duration to gather information as it carry huge cost.
EXPECTED OUTCOME
Company uses different tactics to retain their customers by providing various offers to
induce them to purchase their product and not to shift to other brands. This help company in
sustaining their clients so that they are able to enhance their profitability and their market
position. This provide advantage to Tesco to generate adequate sales and remain competitive.
This help company in establishing their market share in respect to other firms in same sector. If
they don't provide schemes to people then they will not be able to survive and maintain their
clients. This can even result in loss of their goodwill in United Kingdom. Executives should keep
evaluating their outcomes so that they can take adequate actions to attain their desired results.
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REFERENCES
Books and Journals:
Bijmolt, T. H., Dorotic, M. and Verhoef, P. C., 2011. Loyalty programs: generalizations on their
adoption, effectiveness and design. Foundations and Trends® in Marketing. 5(4).
pp.197-258.
Blut, M., Beatty, S. E. and Brock, C., 2014. The impact of service characteristics on the
switching costs–customer loyalty link. Journal of Retailing. 90(2). pp.275-290.
Castañeda, J. A., 2011. Relationship between customer satisfaction and loyalty on the internet.
Journal of Business and Psychology. 26(3). pp.371-383.
Chen, Y. and Pearcy, J., 2013. Dynamic pricing: when to entice brand switching and when to
reward consumer loyalty. The RAND Journal of Economics. 41(4). pp.674-685.
Cook, S., 2012. Complaint Management Excellence: Creating customer loyalty through service
recovery. Kogan Page Publishers.
De Chernatony, L., 2013. Creating powerful brands. Routledge.
Dorotic, M., Bijmolt, T. H. and Verhoef, P. C., 2012. Loyalty programmes: current knowledge
and research directions. International Journal of Management Reviews. 14(3). pp.217-
237.
Gómez, B. G., Arranz, A. M. G. and Cillán, J. G., 2012. Drivers of customer likelihood to join
grocery retail loyalty programs. An analysis of reward programs and loyalty cards.
Journal of Retailing and Consumer Services. 19(5). pp.492-500.
Henderson, C. M., Beck, J. T. and Palmatier, R. W., 2011. Review of the theoretical
underpinnings of loyalty programs. Journal of Consumer Psychology. 21(3). pp.256-
276.
Kaur, H. and Soch, H., 2012. Validating antecedents of customer loyalty for Indian cell phone
users. Vikalpa. 37(4). pp.47-62.
Khaligh, A. A., Miremadi, A. and Aminilari, M., 2012. The impact of eCRM on loyalty and
retention of customers in Iranian telecommunication sector. International Journal of
Business and Management. 7(2). p.150.
Meyer-Waarden, L., Benavent, C. and Castéran, H., 2013. The effects of purchase orientations
on perceived loyalty programmes' benefits and loyalty. International Journal of Retail
& Distribution Management. 41(3). pp.201-225.
Namkung, Y., Jang, S. S. and Choi, S. K., 2011. Customer complaints in restaurants: Do they
differ by service stages and loyalty levels?. International Journal of Hospitality
Management. 30(3). pp.495-502.
Namkung, Y., Jang, S. S. and Choi, S. K., 2011. Customer complaints in restaurants: Do they
differ by service stages and loyalty levels?. International Journal of Hospitality
Management. 30(3). pp.495-502.
Omar, N. A., Wel, C. A. C. and Nazri, M. A., 2013. Program benefits, satisfaction and loyalty in
retail loyalty program: Exploring the roles of program trust and program commitment.
IUP Journal of Marketing Management. 9(4). p.6.
Ou, W. M., Shih, C. M. and Wang, K. C., 2011. Relationships among customer loyalty
programs, service quality, relationship quality and loyalty: An empirical study. Chinese
Management Studies. 5(2). pp.194-206.
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Pepe, M. S., Abratt, R. and Dion, P., 2011. The impact of private label brands on customer
loyalty and product category profitability. Journal of product & Brand management.
20(1). pp.27-36.
Peppers, D. and Rogers, M., 2016. Managing Customer Experience and Relationships: A
Strategic Framework. John Wiley & Sons.
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