The Effectiveness of Loyalty Cards on Business: A Comprehensive Study

This project investigates the effectiveness of loyalty card programs on business performance. It begins with an introduction to the topic, research questions, and hypotheses, followed by a literature review exploring the benefits and challenges of loyalty card programs. The methodology section outlines the research design, approach, and data analysis methods used, including descriptive analysis and regression models. The core of the project, Chapter 4, presents and analyzes the collected data from a survey of five organizations, discussing the impact of loyalty cards on revenue generation, consumer base, consumer retention, and data accessibility. The study finds significant associations between loyalty card usage and these key business factors. The project concludes with a summary of findings, conclusions, and recommendations, along with a bibliography and appendices.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author Note

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Abstract
The purpose of this study is to explore how loyalty cards can impose positive impact on
business. Loyalty cards, majority of time, resemble plastic credit cards and possess a barcode or
a magnet stripe that is generally scanned at the point of sale. Loyalty cards are designed for
attracting consumers and the programs are helped to incentivize consumers for keep coming
back to the businesses. Thus loyalty card programs are designed for encouraging the consumers
to keep coming back so that extra business can be generated. In order to find out the
effectiveness of loyalty cards on business quantitative data analysis method has been used. For
the nominal data `descriptive analysis through percentage description has been used. Ordinal
variables has been de divided into 2 subdividition. . Variables which are directly involved in
hypothesis testing, for them descriptive statistics, mean medium mode and liner Reggretion
model. 5 organizations has been selected for the survey with the help of random probability
sampling. 5 organizations has been selected for the survey with the help of random probability
sampling. It has been stated that the consent form that the survey needs to be filled by both
managers as well as employees of the sales department of the 5 organizations. From the study, it
has been found that there exists a significance association between loyalty card usage and
revenue generation capacity of sales and marketing factors. Additionally, there exists a
significance association between loyalty card usage and consumer base of sales and marketing
factors. . It has also been found that there exist a significance relation between loyalty card usage
and consumer retention. Lastly, there exists a significance association between loyalty card usage
and data accessibility of sales and marketing factors.

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Table of content
Chapter 1 - Introduction, research questions and hypotheses..........................................................4
Background..................................................................................................................................4
Problem statement.......................................................................................................................5
Research questions.......................................................................................................................7
Variables and hypothesis.............................................................................................................7
Aims and Object..........................................................................................................................7
Chapter 2 - Literature review...........................................................................................................8
Benefits of using loyalty cards by business organisations...........................................................8
Issues associated with conducting Loyalty card programs........................................................10
Strategies for developing effective loyalty card programs........................................................12
Literature Gap............................................................................................................................15
Chapter 3 – Methodology..............................................................................................................15
Research philosophy..................................................................................................................15
Research design.........................................................................................................................15
Research approach.....................................................................................................................16
Target population and sampling................................................................................................16
Data collection method..............................................................................................................17
Data analysis method.................................................................................................................18
Chapter 4 - Data presentation, evidence, analysis and discussion (3000).....................................18
Impact on other business factors................................................................................................25
Discussion and evaluation.........................................................................................................26
Chapter 5 - Summary and conclusion............................................................................................29
Bibliography..................................................................................................................................32

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Thesis Topic: How Loyalty cards help Business?
Chapter 1 - Introduction, research questions and hypotheses
Background
In this era in technological advancement, the competition between business organizations
in order to ensure competitive advantage in the market has got enhanced to a great level. In order
to ensure maintenance as well as enhancement of competitive advantage, business companies are
investing on innovative business strategies in order to attract consumers. Loyalty programs came
in existence while organizations realized that the competitive advantages that has been
experienced due to the product differentiation no longer holds good as a result of proliferation of
similar looking products. In this type of environment, possessing loyal consumers has become
more and more crucial yet difficult so much that consumer loyalty is considered to be one of the
rarest commodities. In order to ensure effective enhancement as well as maintenance of
consumer loyalty, management of business organizations are using various kinds of commence
loyalty platforms. The chief aim of commence loyalty program is to ensure that the management
is selecting the right type of audience at the right time for the organization.
Retail organizations were the first who came up with the concept of loyalty card and
loyalty program. Loyalty card program can be defined as an incentive plan which allows
businesses for gathering data about their consumers. consumers are offered with discounts on
purchase of products, coupons, points for purchasing merchandise along with other rewards in
exchange of voluntary participation in the loyalty program. Along with gathering crucial data
about the consumers, the second goal associated with loyalty card program includes building
repeat business by offering the participating consumers with products or services that are not
available to the non-participating consumers.
One of the chief benefits of loyalty program includes effective consumer retention. The
primary motive behind commencing a loyalty card program is to retain the consumers by
providing them with extra benefits that is not provided to consumers who does not possess the
loyalty card. A good number of studies have found that the relationship perception of a consumer
can be explained as 10 percent of the total variation in consumer retention as well as consumer
share. The fact that consumer retention strategies possess direct relation with the bottom line of
the business cannot be ignored. A business with a 60 percent consumer retention is found to be

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losing 3 to 4 times as many consumers compared to a business with 80 percent consumer
retention rate.
This innovative strategy has been found to a great way of generating extra businesses which has
encouraged a good number of consumers to come back to the business. Thus, loyalty cards are
considered to be an effective tool for marketing that helps spreading the words about the
company or brand. However, over time, a good number of limitations of the usage of loyalty
card for business has also been detected. Considering the fact that loyalty data does not possess
the potential to look into the purchase of other brands or stores, it provides limited picture to the
overall purchasing behaviours of the consumers. In this study, the aim of the researcher is to find
out how Loyalty cards can helps Business. Along with this, this research paper will also find
out the advantages as well as the disadvantages of loyalty cards and whether, business
organizations should opt for using loyalty card programs as an effective strategy to enhance their
business or not.
Problem statement
Loyalty cards are designed for attracting consumers and the programs are helped to
incentivize consumers for keep coming back to the businesses. In exchange to their willing
participation in the program, consumers are offered with special product discounts and rewards.
Loyalty cards are basically an incentive plan which aloe the retail businesses to another data
about their consumers. Loyalty cards, majority of time, resemble plastic credit cards and possess
a barcode or a magnet stripe that is generally scanned at the point of sale. The card ad been
designed to identify the consumer and send information about the purchase done by the same to
the database. This information is used by the retailers to understand the specific needs and
choices of the consumers and this in turn helps them to influence the buying habit of the same.
According to Evanschitzky et al. (2012), 86 percent of the shoppers in UK are listed in the
loyalty data base. This proves that according to a good number of consumers receiving the
benefits provided by the shops is worth giving up some measure of the privacy.
Thus loyalty card programs are designed for encouraging the consumers to keep coming
back so that extra business can be generated. According to a good number of researchers loyalty
card programs possess the potential to enhance the yearly revenue of an organization through
consumer retention, enhance sales, power awareness as well as effective consumer company

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relationship. Organizations like Designer Shoe Warehouse (DSW), Sephora, Starbucks, Tarte
and Amazon are some of the well known organization that have invested a lump some amount of
their revenue for conducting loyalty card programs. Thus it can be clearly understood the
mentioned strategy is getting popular in all types of industries, be it retail, beauty and other
industries.
While in various industries, loyalty program has been proved to be a highly effective
method of attracting consumers and retain loyalty, a good number of concerns are associate with
the usage of loyalty card for developing business. For instance, it is highly difficult to pinpoint
where the loyal behaviour of the consumers actually comes from. This is because, loyalty
framework cannot break from the transactional spirit. Majority of time, it appears that the
consumer who buys on a frequent rate is a loyal one. However, this may not be the case since the
consumers often opt to conduct repeated buy from an organization not due to satisfaction but
also since it is more convenient for him or her, or due to the provision of rewards. Hence,
loyalty, which in essence is an emotion, may not be gauged by the loyalty program.
Another major concern that is face by a good number start-up organization while
implementing loyalty card as a strategy to enhance competitive advantage is balancing the
bottom line. Considering the fact that in a start-up business the investment costs is high and the
yearly profit is low, offering high discounts to the consumers, regardless of the form, offers the
bottoline of the company. For instance, a loyalty discount of 10 percent, that is 5 dollar discount
on a 50 dollar sale, results in a 500 percent decrement in its profit. that is while the cost remains
the same, the organization, instead of earning 10 dollars for the same end up earning 5 dollars.
What appears to be a small discount, in this case, 5 percent can significantly impact profits.
While a good number of organizations are investing their finances in loyalty programs,
lack of effective researchers on how exactly the loyalty programs can help a business to flourish
has been evident. Not only has his, lack of researches been conducted about the concerns
associated with the implementation of loyalty card program for business purpose. Along with
this, lack of academic researchers associated with the concerns that the management of an
organization must be aware about before using loyalty cards as a revenue enhancement technique
has been detected. Hence this research has been conducted in order to help the management of
already established as well as start-up organizations to use loyalty card in an effective way.

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These researches will also pave the way for future researchers who are willingly to conduct study
on the impact of loyalty cards on businesses.
Research questions
The chief research questions for the mentioned research are as follows:
1. what are the positive impacts of loyalty cards on business
2. What are the risks associated with the usage of loyalty cards for business growth?
3. what are the strategies that are applied by the management for successful implementation
of loyalty cards for business growth?
Variables and hypothesis
H0: Loyalty cards do not impose any effects on the business growth.
H1: Loyalty cards help the business to boost its revenue
H2: Loyalty cards help the business to enhance consumer base
H3: Loyalty cards help the business to enhance access to valuable data.
Aims and Object
The aim of the mentioned research is to find out how Loyalty cards can enhance the growth of
businesses.
The objectives of the research paper are as follows:
4. To find out the positive impacts of loyalty cards on business.
5. To find out the risks associated with the use of loyalty cards for business growth
6. To find out strategies those are applied by the management for successful implementation
of loyalty cards for business growth.

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Chapter 2 - Literature review
Benefits of using loyalty cards by business organisations
There exist a good number of reasons behind creating consumer loyalty programs by the
organizations. It can be considered to be a cost effective way of winning the consumer’s trust as
well as ensure the growth of the business. According to Tanford (2013), loyalty program if
performed in an effective way it possess the potential to work as a marketing campaign. Kang,
Alejandro and Groza (2015) stated that amongst the most popular competitive advantage gaining
campaigns, loyalty card programs can be considered as an crucial one since it provide numerous
benefits to the businesses if conducted in an efficient way. One of the most crucial benefits of
conducting a loyalty card program includes retention of consumers. With the enhancement in
technology, the number of organizations selling similar products or service is increasing. As a
result competition between such organizations is high consumers have possess the power to shift
from one brand to another in case of nominal dissatisfaction. Thus consumer loyalty is
considered to be a highly rare yet valuable asset in today’s world of business. Loyalty programs
possess the potential to help the management of a business organization to retain the consumers
by building trust between the consumers as well as the company which encourage them to come
back for repurchasing. Lee et al. (2014) stated that well targeted and well organized loyalty
program possess the potential to help business organizations move ahead of the competition. It
can add great value to the products or services offered to the consumers by the organization.
According to psychologists rewarding consumers lead to creation of connection with the same at
an emotional level. This enhances the consumer company relationship and consumers often tend
to see the brand as something more than a place for purchasing product or services.
According to Singh and Khan (2012), for start-up businesses, loyalty programs acts as a
medium that can enhance awareness as well as reputation of the brand amongst the target
consumers. Loyalty programs are found to serve one dual purpose that include incentivize new
customers to stay around and to ensure that existing loyal customers still feel they are valued by
your operation after buying their goods and services.
Thus marketers not only improve customer appreciation in the business by establishing a
loyalty program, but also increase the likelihood that existing customers share this joy with their
near and dear ones. The more satisfied a customer is by a product, the more likely he or she is to

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help and recommend the business to others. In turn, this is a cyclical word of mouth which keeps
growing for the enterprise.
Berezan et al. (2015) have stated that loyalty card programs have gained high popularity
amongst the business industries due to its impact on the revenue of the organizations in a limited
period of time. A loyalty card program helps in increasing the profit margin of an organization.
Loyal consumers develop trust on the business that in turn encourages them to spend more on the
same. According to researchers, increment in consumer retention by 5 percent, results in
increment in revenue by a minimum of 25 percent to as high as 100 percent. The loyalty card
program helps the organization to provide incentives to the consumer that they actually desire
for. This creates a circle of consumer retention by bringing back the consumers along with
encouraging them to spend more on their products and services. Stathopoulou and Balabanis
(2016) have pointed out that loyalty card programs, along with retaining the existing consumers
also possess the potential to draw new consumers. A good number of organizations like Nike and
Sephora offer the consumers with discounts and points for signing up for their loyalty card
programs. This process has been proved not only to draw the attention of new consumers in a
successful way but also to encourage them for joining the mailing list.
Xie and Chen (2013) pointed out that one of the chief purpose of the loyalty cards is to
provide relevant consumer data as well as make the same aware of the current consumer trends.
Such data are used by businesses for all parts of the market, offline as well as e-commerce, to
identify their best customers along with tailoring their offerings to different consumer groups.
The organizations using loyalty cards uses this information to for optimizing inventory
management, pricing as well as promotional strategies since loyalty program data provides the
business with a complete analysis of customer behavior, purchasing patterns and preferences.
The outcomes of special offers can also be assessed on the basis of additional purchases, with the
help of using other platforms or reducing the time between purchases. These details are also
useful to advertisers. According to the chairman of Tesco, loyalty programs are highly efficient
when it comes to extracting valuable information from the consumers.
According to Schumann, Wünderlich and Evanschitzky (2014), One of the chief features
of the loyalty programs which is often rarely considered is that they allow organizations to lose

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unnecessary expanses. A successfully designed loyalty program enables businesses of
segmenting customers and find rentable as well as unprofitable consumers. It helps the
organizations to get rid of those who purchase only discounted lines and almost regularly avoid
premium supply. These client profiles will cost more than they deliver. With the help of loyalty
program, businesses gains the potentiality to only reward the best customer and thus reduce
payouts to consumers that are not so successful. This can be considered as one of the most
efficient way without a doubt to attract those consumers from whom the firm earns the greatest
income.
According to Kim et al. (2013), communication between the consumer and the company
can be considered as one of the effective ways to maintain an effective company consumer
relationship. A loyalty program provides consumers with a direct line that encourages and makes
communication easier (Aluri, Price and McIntyre 2019). Apart from announcing new service or
products, promoting sales, loyalty card programs facilitates recalls whenever necessary. This
take place due to the purchase date as well as barcode of the recalled items. The recall notice
gains more weight as well as significance, as it is based on the actual purchase of the consumers
affected good. Compared to a store sign or newspaper notice, the chance that this email-borne
recall notice will get read by the people is high.
It has been found that for simple program as well as easier access to rewards more
consumers demonstrates the urge of buying products from the organization. Besides, word of
mouth publicity by the existing consumers promotes the program of the organization to new
consumers. The best consumer program also possesses the potential to turn the consumers into
brand advocate. Kang, Alejandro and Groza (2015) stated that highly satisfied consumers often
helps other to make right buying decision. According to a survey 7 out of 10 millennial are
found to prefer helping their family as well as friends for making smart buying decisions.
Issues associated with conducting Loyalty card programs
Steinhoff and Palmatier (2016) pointed out that instead of being a highly ubiquitous
marketing tactic, several times it has been seen that loyalty programs are not giving the expected
results. The chief reason behind this is that a good number of demerits of the loyalty programs
are there that can be pointed out. One of the chief disadvantages of loyalty card programs is that
it is difficult to pinpoint or understand the chief factor s that are associated with the loyal
behaviour of the consumers. It is hard for the loyalty framework to break away from the

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transactional spirit. Majority of time, it appears that the consumer who frequently but products or
services from a certain organization is a loyal one. However, that may not be an actual case since
consumers often purchase from a specific organization just because it is convenient for them or
just for the benefits provided by the loyalty program. Thus, loyalty, which is the essence of an
emotion, often cannot be measured with the help of loyalty program.
Another major issue faced by the management of the organizations who opt for
conducting, loyal card programs is balancing the bottom line. The adverse impact that loyalty
card imposed on fanatical component is highly stressful. Discounts, regardless of the form,
results in the bottom line of the business a typical 50 dollar sales transaction can be break down
to 40 dollar investment cost and 10 dollar profit (Chaudhuri, Voorhees and Beck 2019). Now,
even a 5 dollar offer on a 50 dollar sale results in 50 percent decrement in the profit. While the
cost remains the same, instead of earning 10 dollars from the same, the profit gets reduced to 5
dollar. This 5 dollar which seems to be a small discount, often impose negative impact on the
profit margin of the organization. In order to deal with the mentioned issue, financial loss
includes making sure that the loyalty program is fairly priced as well as effective (Hwang and
Mattila 2018). If the program really is increasing repeated purchases as well as average order
value then the discount will be balanced and this possess no problem recouping the losses.
Another issue that is faced by the marketers while opting for the loyalty card program is market
saturation. With the popularity of loyalty cards an effective technique to retain consumers a good
number of organizations are found to be opting for the same. Loyalty programs are everywhere
and may appear to be identical. They all possess similar membership provisions, benefits as well
as purchase requirements. However, in this ultra competitive world, firms needs to be unable of
pulling back from their loyalty program commitments as a result of fearing lost sales. Schumann,
Wünderlich and Evanschitzky (2014) stated that while the average household that participating
in over nine reward programs, there is a necessity for businesses for creating programs which are
unique a well a distinguishable. However, it is highly tough to design loyalty program which is
based on the sustainable competitive advantage which cannot be copied. Advocacy loyalty
programs are a good way for standing out though since the marketers can reward the consumers
for their unique actions as well as work for the audience. Loyalty programs hope for bringing out
more repurchasing on the basis of the historical behaviours of the consumers. However, with
time, their incomes, requirements as well as lifestyles change.

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The data gathered with the help of loyalty card programs possess the
potential to provide only a limited amount of picture of the overall
purchasing behaviour of the consumers. For instance, it does not possess the
potential to track purchases that are made from other brands as well as
stress. Not only this often it has been seen that loyal consumers who lacks
technological awareness or are not comfortable with sharing information for
getting incentives of the programs can be missed by the organization.
Gómez, Arranz and Cillán (2012) pointed out that consumer profitability of the past does
not always guarantee profitability in the future. Loyalty programs are chiefly based on the
historical behaviour of consumers and are designed with the hope to produce more repurchases.
However, in this fast spaced world the revenue, requirements and lifestyles of the consumers are
constantly changing. Naturally, this is also changing their habits and trend of buying. Obviously,
the old model of loyalty program is favoured by the people. A Maritz poll indicated the same by
finding that four out of ten loyalty program participants quit at least one program. This can be
considered to be the reason while loyalty programs are criticized on the basis of the loyalty
measures such as the RFM (recycling, frequency and monetary value). While RFM can be
considered as a excellent customer loyalty measuring tool, but is not perfect.
Strategies for developing effective loyalty card programs
Brashear-Alejandro, Kang and Groza (2016) stated that we an increasing rate of business
organizations opting for loyalty programs, it has become highly crucial for a specific company to
implement creativity in their loyalty card program in order to ensure effective consumer
retention. According to the utilitarian theory, consumers who possess emotional connection with
the organization tend to stay loyal to the organization compared to consumers who purchase
product or service for convenience. Hence, a good number of organizations are investing on
making the consumers feel good about participating in the reward program. Companies are
creating effective loyalty program where consumers seek out the action instead of the reward
only. Just conducting a loyalty program possess the potential to add little value to the business
unless and until consumers are provided with out of the box or unique experience this will not
only ensure competitive advantages for a business, but will also leverage word of mouth
marketing in a way that process the program a tremendous growth opportunity. According to

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researchers, cohesive branding is also essential to ensure an effective loyalty program in order to
match up with the mentality and class of the target consumers. For instance, a loyalty card
program of a luxury retailer should be VIP themed and provide the consumers with a classy
experience. On the other hand when it comes to a toy shop the loyalty program needs to
colourful, light hearted and fun in order to attract their target consumers.
Considering the fact that effective communication with the consumers is one of the key
strategies to retain the same, organizations must ensure that prompt and respectful responses to
the consumers are provided. Not only this, this types of consumer retaining program also
provides the organization a chance to understand the specific requirements of the consumers so
that the company can design rewards that will be beneficial for the consumers (Reinartz and
Linzbach 2018). Unnecessary as well as ineffective gifts will enhance the investment cost of the
business and lacks the potential to satisfy the consumers. Hence, communication with the
consumers, detailed analysis of the data gathered needs to done before implementing an effective
loyalty car program.
Steinhoff and Palmatier ( 2016) have pointed out that providing recognition to the
consumers in the form of giving them a specific status not only enhances consumer satisfaction
but also enhance their emotional connection with the organization. According to psychologists,
consumers likes to belong to a status that is seen as important or rare. Popular hotel chains like
JW Marriot use this strategy in order to retain their loyal consumers. with the help of this
strategy the management can demonstrate where exactly the consumers stand within the loyalty
card program. For instance, creating an exclusive club that is comprised off only the best loyalty
program members can be considered as an effective idea (Kreis and Mafael 2014). Another
efficient way of enhance consumer’s satisfaction though loyalty card program is introducing VIP
program. a point threshold can be set that needs to be reached by the consumers in order to
include in the VIP program this can be collars spent, number of orders as we as consumer
referrals. Starbucks organizes one of the most simple yet most effective VIP programs. In spite
of offering only two tiers that includes the green tier and the Gold tier, Starbucks Rewards create
an exclusive experience which is worth talking about. In spite of the fact that the Gold tier is
easy to reach for everyday coffee drinkers, Starbucks still elevates the experience with the
personalized Gold Card and access to free beverages.

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Establishing a loyalty card program in order to attract the consumers without short listing
the valuable ones can result into an ineffective one according to researchers companies are
sending more than 2 billion dollars on loyalty card programs over a year while an average
resident of UK belongs to about 14 different reward programs, while they only stay active in
only 6 of them. Thus, it can be understood that in effective loyalty program results in high
investment costs while lacking the efficiency. Moreover it includes competing with a good
number of other organizations. Hence, it is highly crucial for an organization to select only the
consumers who spend highly on other brands. Not only this, organizations must implement
strategies to differentiate themselves from the competition, but also should offer loyalty cards to
the consumers who spend a considerable amount of money on the company. One of the most
effective strategies to ensure investing only on consumers who spend effectively and loyal is to
introduce non monitory points. The non monitory points include provision of points on every
purchase of the consumers. On the basis of the number of points gained, loyal consumers are
selected. This technique is highly effective since, collection of greater points is directly
associated higher number of with the number of purchase. This strategy helps the marketers to
differentiate between loyal consumers and regular consumers.
Yoo and Bai (2013) stated that there exists 4 chief costs that is associated with creating a
loyalty program, that includes software design, marketing as well as rewards. Software is used
for creating as well as managing the loyalty program and thus can be designed in house or
purchased from providers. Effective software is highly crucial for a loyalty program since it will
help the management to track the details of the consumers and thus provide the same with
products that will enhance consumer satisfaction and retention. The next product which is highly
crucial for attracting consumers to the loyalty program is effective design. According to
researchers, this need not to be highly expensive, but should be creative and align with the
business. Effective design of the loyalty card program ensure that the functionality as well as
look of the pram appeals to the type of consumers an organizations is looking to attract. The third
and fourth factors that marketers need to invest in marketing and rewards. a loyalty program
refers to a long term strategy that should mention it in all major communication. On the other
had the cost of rewards should vary as per the set up the business. For start-ups, the rewards
should be of low cost yet unique. Rewards should also depend on the status of the consumers in
the loyalty program.

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Literature Gap
One of the chief gaps in literature that has been detected while conducting literature
review is lack of information about effective strategies that can be applied by organizations for
ensuring an effective loyalty card programs. While a good number of academic journals have
been found that have talked about the importance of loyalty cards for business, highly limited
number of journals are available, when it comes to effective techniques and strategies that can be
implemented by the marketers in order to ensure effective loyalty card programs.
Chapter 3 – Methodology
Research philosophy
The research philosophy that has been used for this study is positivism. The` positivism
research philosophy adheres to the view that only the factual knowledge gained through
measurement and observation is trustworthy. In a study that follow positivism research
philosophy, the role of the researchers gets limited to data collection followed by interpretation.
In such studies research findings are usually quantifiable as well as observable. Considering the
fact that the thesis of this research includes “How loyalty cards help business?”, being a
quantitative research question, it demands statistical data collection. Hence in this research, the
researcher has collected quantifiable observations that has led to statistical analysis. Moreover,
the researcher has independently from the study and deductive approach has been approached.
Considering the fact that for this research, data will be collected from a large number of samples
and then this data has been analysed and evaluated in order to come to conclusion and develop
implications, for this research, positivism research philosophy has been selected.
Research design
As the research design, the researcher have used cross sectional research design. A cross
sectional research design is used in an observational study which includes statistical analysis of
the data collected, from the population or a representative subset at a specific point of time. It
measures both the exposure as well as outcome of the interest at the same point of time.
Considering the fact that in this research, a large group of samples has been used for evaluating
the research question, cross section research design is apt for this study. Not only has this, in this
research, one time data collection been performed in order to understand how loyalty cards can
help businesses. Thus for this research, the researcher have selected cross sectional research

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design for this research. Cross sectional studies differs from the case control studies due to the
fact that they aim to include a fairly large sample which represents the whole population.
Considering the fact that for this study instead of selecting a specific organization, the researcher
have selected the retail industry as a whole as the subject of the research, for this research cross
section research design has been selected. Cross sectional studies has helped the researcher to
establish odds ration along with relative risks associated with the implementation of loyalty card
programs by organizations. The data has been gathered for the intended study specifically.
Research approach
For this research, the deductive research approach has been used. A deductive research
approach is concerned with the development of hypothesis on the basis of the existing theory and
designing a research strategy for testing the hypothesis. In researchers that contains hypothesis,
the deductive research approach is used in order to ensure that the research issues has been
resolved in an effective way. Considering the fact that this research possesses hypothesis to
prove, for this study, the deductive research approach has been selected. Deductive approach can
be explained with the help of hypothesis that can be derived from the proposition theory. In other
words, this approach is conserved with deducing conclusion from the propositions. The chief
reasons behind selecting the deductive approach includes:
1. It helped the researcher to explain casual relationships between the concepts as well as the
variables
2. It helped the researcher to measure the concepts in a quantitative way.
3. It also helped the researcher to generalize the research findings to a certain extent.
Target population and sampling
The target population of this research paper include the managers and employees of the
sales department of business organizations in UK. Target population of a study refers to the
sample size to which the researchers are interested in generating the conclusions. The target
population possess varying characteristics and it is also known as theoretical population.
Considering the fact that the thesis question is how the loyalty card program help businesses to
prosper can, employees working in the Human resource department does not possess the
potential to understand the impact of loyalty cards on business. However, the sales department,
since it deals with the consumers as well as the revenue of an organisation an reflect the most on

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the impact od loyalty cards on businesses. Hence, for this research, the sales manager and
employees has been selected to be the target population.
For sampling, the convenience sampling method has been selected for conducting the
research. The researchers have selected 25 business organizations associated with different types
of industries where loyalty card programs are used frequently. Consent letter along with detailed
information about the purpose of the study has been sent to the organizations through email.
Amongst the 25 organizations, 16 companies have showed their interest by reverting back.
Amongst the 16 companies, 5 organizations has been selected for the survey with the help of
random probability sampling. Probability Sampling is a sampling technique in which sample
from a larger population are chosen using a method based on the theory of probability. For the
participant to be considered as a probability sample, he/she must be selected using a random
selection. It has been stated that the consent form that the survey needs to be filled by both
managers as well as employees of the sales department of the 5 organizations.
Data collection method
As data collection method, primary data collection methods has been selected. Primary
data collection is defined as the process of gathering information with the help of data collection
tools like interviews, survey as well as experiments. Considering the fact that in order to obtain
an appropriate answers of the research issue and to ensure lack of biasness in the research,
surveying of both the sales managers and the sales executives of a large number of organization
can be considered as an highly effective method, a researcher have selected conducting survey as
an effective tool for collecting data for this study. According to researchers, researchers uses
both online as well as offline surveys for gathering primary data. For this study online survey has
been conducted (Voorhees et al. 2015). The survey questioners has been sent to the target
organizations through email. One of the chief reasons behind conducting offline survey, is the
cost effectiveness of the primary data collection process. Surveys, specifically online surveys,
needs to invest a very small costs per participants. Even with the incentives, the costs per
response is often less than the cost of running a focus group or interview while the data collected
is often more in number and is much more cost effective. Another reason behind conducting
online survey is that data collection gets much easier that in turn tends to get use easy to read
data sources which can be compiled as well as analysed as needed for your market research

18MANAGEMENT
requirements. Another reason behind selecting survey as the research method is to ensure
anonymity of the data collected. Considering the fact that the participants may get concerned
about their own as well as business. The anonymity of surveys allows people to feel more candid
with their responses. For obtaining accurate data, participants are needed to honest with their
aswers. Surveys provide more honest responses than other types of research methodology,
especially if it is clear that the answers will remain confidential. The survey has been mailed to
the 5 organizations though email.
Data analysis method
For data analysis, quantitative data analysis method has been used. In the quantitative
data analysis, the researchers are expected to turn raw numbers in to meaningful data with the
help of rational as well as critical thinking. Quantitative data analysis may include the frequency
calculation of variables as well as the differences between the variables. A quantitative approach
is usually relate to the fining evidence or either support or rejecting hypothesis that has been
formulated at the earlier stages of the research process. The same figure within data set can be
interpreted in many different ways; therefore it is important to apply fair and careful judgment.
This specific piece of the primary data findings requires to be analysed and objectively
interpreted in a critical way with the help of comparing it to other findings within the framework
of the same research.
For the nominal data `descriptive analysis through percentage description has been used.
Ordinal variables has been de divided into 2 subdividition. Variables which are directly involved
in hypothesis testing, for them descriptive statistics, mean medium mode and liner Reggretion
model. Since, the researchers have used scales of reading from of 1 to 5 for likert scale, the
probability testing value will be 0.05. In case the probability value of the regretion model is
equal to or exceeds from 0.05, then null hypothesis has been accepted and alternative hypothesis
is rejected. For cofounding variables, descriptive statistics including mean median mode standard
deviation has been used. In case the t-value obtained is positive, it has been considered that the
potential dependent or independent variables are directly proportional and vise versa.

19MANAGEMENT
Chapter 4 - Data presentation, evidence, analysis and discussion (3000)
Survey question
1. For how many years have
you worked in the
organization
1-5 years 6-10 years 11-15
years
16-20 years More than
20 years
2. The type of organization you
work
Finance and
Banking
Governmen
t
Oil and
Gas
ManufacturingWholesale
and Retail
3. Your designation in the
organization
Manager Team Lead Employee
4. level of the usage of the
loyalty cards in your
company
My
company
does not use
loyalty
cards
Very
recently
they have
included
this
strategy
Loyalty
cards
programs
are used
rarely in
specific
cases
Loyalty cards
program are
used on casual
level
Loyalty
cards
program is
one of the
fundamental
strategies of
the
organization
4. How do rate the revenue
generation capacity of the
sales and marketing
department of your
organization?
Very low Low Moderate High very high
5. How do you rate the ability
of the sales and marketing
department of your
organization when it comes
to enhancing consumer base?
Very low Low Moderate High very high
6. How would you rate theVery low Low Moderate High Very high

20MANAGEMENT
ability of the strategies
implemented by the sales and
marketing department of your
organization to enhance
access to valuable data
7. How do rate the consumer
retention ability of the sales
and marketing department of
your organization?
Very low Low Moderate High Very high
8. How do rate the product
awareness increasing ability
of the sales and marketing
department of your
organization?
Very low Low Moderate High Very high
9. How do rate the ability of the
sales and marketing
department of your
organization when it comes
to knowing the consumers?
Very low Low Moderate High Very high
10.How do rate the customer
Loyalty and Happiness
ensuring ability of the sales
and marketing department of
your organization?
Very low Low Moderate High Very high
Participants’ background
Experience Frequency Percentage
1 6 12

21MANAGEMENT
2 8 16
3 19 38
4 7 14
5 10 20
Type of
organization
Frequency percentage
1 8 16
2 3 6
3 6 12
4 13 26
5 20 40
Designation Frequency percentage
1 11 22
2 14 28
3 25 50
It has been found that majority of the participant who were being interviewed have
worked in the organization for more than 15 to 20 years. When it comes to the type of
organizations from which majority of the participants belongs it is whole sale and retail industry.
Finally when it comes to the designation other participants who have been interviewed, it
includes employees of the sales department. Therefore it can be stated that loyalty cards help the
business to boost its revenue, loyalty cards help the business to enhance consumer base and
loyalty cards help the business to enhance access to valuable data.
Hypothesis Test 1: Loyalty Card programs, Revenue Generation
Regression Statistics
Multiple R 0.438365838
R Square 0.192164608
Adjusted R Square 0.175334704
Standard Error 0.804954225
Observations 50

22MANAGEMENT
ANOVA
df SS MS F
Significanc
e F
Regression 1 7.398337 7.398337 11.41805 0.001452
Residual 48 31.10166 0.647951
Total 49 38.5
Coefficients
Standar
d Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
1.29026982
8
0.31976
9
4.03500
4
0.00019
5
0.64733
1
1.93320
9
0.64733
1
1.93320
9
loyalty
card usage
0.31752521
1
0.09396
9 3.77906
0.00145
2
0.12858
9
0.50646
2
0.12858
9
0.50646
2
From the regression and Anova test it has been found that the significant value are
approx. values is equal to 0.0014. Therefore, the significance value is lower than the probability
testing value 0.05. This implies that there exists a significance association between loyalty card
usage and revenue generation capacity of sales and marketing factors. As per the regression
analysis the t-stat is greater than 0 or positive. It means revenue generation capacity is directly
proportional to the usage of loyalty card.
Hypothesis Test 2: Loyalty Card programs, Consumer Base
Regression Statistics
Multiple R
0.65785
4
R Square
0.43277
2
Adjusted R
Square
0.42095
5
Standard Error
0.89391
4
Observations 50
ANOVA
df SS MS F
Significan
ce F

23MANAGEMENT
Regressio
n 1
29.2640
4
29.2640
4
36.6220
6 2.09E-07
Residual 48
38.3559
6
0.79908
2
Total 49 67.62
Coefficien
ts
Standar
d Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept 0.731807
0.35510
9
2.06079
8
0.04476
3
0.01781
3
1.44580
1
0.01781
3
1.44580
1
loyalty card
usage 0.631507
0.10435
3
6.05161
6
2.09E-
07 0.42169
0.84132
4 0.42169
0.84132
4
From the regression and Anova test it has been found that the significant value are
approx. values is equal to 0.2*1010. Therefore, the significance value is lower than the probability
testing value 0.05. This implies that there exists a significance association between loyalty card
usage and consumer base of sales and marketing factors. As per the regression analysis the t-stat
is greater than 0 or positive. It means consumer base is directly proportional to the usage of
loyalty card.
Hypothesis Test 3: Loyalty Card programs, data accessibility
Regression Statistics
Multiple R
0.48081
7
R Square
0.23118
5
Adjusted R
Square
0.21516
8
Standard Error
0.72393
1
Observations 50
ANOVA
df SS MS F
Significan
ce F
Regressio 1 7.56437 7.56437 14.4337 0.000409

24MANAGEMENT
n 2 2 4
Residual 48
25.1556
3
0.52407
6
Total 49 32.72
Coefficien
ts
Standar
d Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercep
t 1.139002
0.28758
2
3.96061
2
0.00024
7
0.56077
9
1.71722
6
0.56077
9
1.71722
6
loyalty
card
usage 0.321068 0.08451
3.39917
6
0.00040
9 0.15115
0.49098
7 0.15115
0.49098
7
From the regression and Anova test it has been found that the significant value are appox
values is equal to 0.00002. Therefore, the significance value is lower than the probability testing
value 0.05. This implies that there exists a significance association between loyalty card usage
and data accessibility of sales and marketing factors. As per the regression analysis the t-stat is
greater than 0 or positive. It means data accessibility capacity is directly proportional to the
usage of loyalty card.
loyalty
card
usage
revenue
generati
on
capacity
consum
er base
valuable
data
accessibil
ity
consum
er
retentio
n
consum
er
product
awaren
ess
consum
er
knowled
ge
consume
r
satisfacti
on
mean 3.18 2.3 2.74 2.16 2.74 2.62 2.38 2.44
median 3 2 3 2 3 3 2.5 3
mode 4 2 3 3 3 3 3 3
std. 1.21144 0.87749 1.1629 0.80895 1.1629 1.14699 1.01764 1.00319

25MANAGEMENT
Dev. 54 6 27 27 6 4 5
Majority of the participants have agreed to the fact that the organization held loyalty card
programs rarely. However, considering the fact that the standard deviation is more than 1 that a
good number of the respondents are found to be deviated from the response. When it comes to
revenue generation capacity, it has been found that majority of the respondents found that the
ability of the sales team to generate loyalty card usage is low. However, considering the fact that
the standard deviation is more than 1 that a good number of the respondents are found to be
deviated from the response. Majority of the participants have selected option 2 which is
moderate power of the sales team when it comes to the accessibility of data. When it comes to
revenue generation capacity, it has been found that majority of the respondents found that the
ability of the sales team to retain consumers as well as enhance consumer awareness by the sales
department, both are found to be moderate. However, considering the fact that the standard
deviation is more than 1 that a good number of the respondents are found to be deviated from the
response. When it comes to revenue generation capacity, it has been found that majority of the
respondents found that the ability of the sales team to consumer’s knowledge as well as enhance
consumer satisfection by the sales department, both are found to be low. However, considering
the fact that the standard deviation is more than 1 that a good number of the respondents are
found to be deviated from the response
Impact on other business factors
loyalty
card
usage
consume
r
retention
consumer
product
awarenes
s
consumer
knowledg
e
consumer
satisfactio
n
loyalty card usage 1 0.657854 0.106799 0.155416 0.263964
consumer retention 0.657854 1 0.120851 0.286282 0.320921

26MANAGEMENT
consumer product
awareness
0.106799 0.120851 1 0.483536 0.266977
consumer knowledge 0.155416 0.286282 0.483536 1 0.659029
consumer satisfaction 0.263964 0.320921 0.266977 0.659029 1
From the above co-relation analysis, it has been found that there exist a significance
relation between loyalty card usage and consumer retention. The correlational coefficient of the
two factors is 0.657854. Another significant relationship has been found in between the loyalty
card program and the consumer satisfaction.
As per the hypotheses test 1, 2and 3, all the significant value are less than 0.05 and the t
values are positive. Form this, it can be concluded that the null hypothesis is rejected and
alternated hypotheses has been accepted.
Discussion and evaluation
From the above analysis it can be clearly understood that loyalty card possess the
potential to enhance the revenue of the business by effective consumer base, consumer retention
and satisfaction as well as well as higher accessibility to data. With the increasing number o
emerging organizations in UK, the completion between organizations as well as the struggle to
attract consumers has got increased to a great extent. The chief reason behind this is
improvement of consumer experience. According to Lazarevic (2012), one of the chief role of
loyalty card programs is to enhance the word of mouth promotion. Loyal consumers who enjoys
special discounts offers as well as rewards are found to encourage their friends to join. Not only
this, a good number of retail organizations found to offer special offers to the consumers who
recommends the same to their friends and families. For instance, loyalty cards programs often
bears tagline like “recommend a friend and get an extra stamp on your card.” Not only this, the
consumer base of an organization that has implemented effective loyalty program, also gets
increased by the promotional advertises and lucrative offers posted both online as well as offline.
Considering the fact that, majority of the potential consumers, in this age of technology are

27MANAGEMENT
present is popular social media platforms, lucrative offers and interesting advertisement when
posted in the same, attracts consumers to the organization
While attracting new consumers is a highly crucial factor for all business organizations, it
is equally crucial for organizations to ma sure they are being able to retain existing consumers.
Amongst a good number of consumer retain techniques, organizations are found to be preferring
consumer retention programs. According to Niranjanamurthy et al. (2013), the chief reasons
behind the importance of loyalty programs includes increased profits, reduced costs in
marketing, enhanced consumer satisfaction and reliance. With the increment in organisations in a
single industry, consumers possess enough power to shift from one organization to another in
case of the smallest dissatisfaction. Consumer retention as well as loyalty possess a multitude of
benefits. Since loyalty card program helps the organization to show value to the organization, it
helps the organization to retain consumers. This in turn result in increment of profit of the
organization in long term. From the above survey it has been found that till now, in UK, loyalty
programs are held at rare to causal level. Organizations who have stated that the usage of loyalty
cards has been done on a casual level, the employee retention rate is found to be high. It can be
clearly understood that acquiring a new consumers significantly more expensive than keeping an
existing one. for example according to a study of Monetate , a consumer who possess one
previous experience n shopping from the organization is more likely to get controlled again to a
loyal consumer compared top new consumers. Thus it stands to cause that consumer loyalty
programs possess the potential to be incredibly valuable for any organizations who possess
repeated number of promotions. Loyalty program are also found to be effective when it comes to
retaining the consumers be preventing them from returning to the consumers. Those programs
possess the potential to enhance as well as maximize the lifetime value of the consumer by
offering incentives for spending more along with buying more often. Dagger and David (2012)
stated that loyalty programs acts like win-win strategy for brands as well as consumers. They
bring additional recurring revenue for the organization along with making the consumer
satisfied.
From the above analysis it can be clearly understood that loyalty card program possess
direct relationship with the increment of the revenue of the organization, along with
enhancement of the consumer base as well as existing consumer retention, it can be clearly

28MANAGEMENT
understood that increment in frequent sales can be pointed out as one of the chief reasons behind
increment in revenue. Loyalty card system encourages consumers for coming back in order to
take advantage of the special offers as well as rewards. This repeated sales enhances the profit
margin of the organizations. Organizations that have successfully implemented the loyalty card
programs have reported that the amount of offer should be enhanced on the basis of the
purchases made by the consumers (Breugelmans et al. 2015). This prevents the management to
reduce investment cost without affecting the degree of consumer satisfaction.
From the above discussion, it has been found that a positive relationship exist between
product awareness as well as loyalty card programs. Loyalty card program can be considered an
effective method for increasing the product awareness of the consumers. It might encourages the
consumers for trying new products by offering them the chance of getting one for free.
According to researchers, changing the reward on a daily basis along with keeping things fresh
enhances the knowledge of the products. A good amount of knowledge can also be gained about
the consumers with the help of loyalty card programs. With the help of the loyalty card scheme,
the management develops the potential to track as well as analyse the shopping habits of the
consumer. It also helps the organization to adjust loyalty offers for matching their requirements.
They can adjust the market plans, on the basis of products, trends, style as well as for capitalize
along with increasing the overall return. Arbore and Estes (2013) stated that loyalty card
programs are excellent when it comes to making the consumers feels crucial as well as relevant.
Before the increment of technological advancement and enhancement in completion, offering of
good service was enough to enhance consumer loyalty. However, in this age of high competition,
consumers possess a high amount of choices, including both online as well as offline shops,
effective price comparison opportunities, consumers lacks the urge to stay with one brand.
The findings also indicates that loyalty card programs helps organization to save money.
While investing on a loyalty card program, the management actually invest on consumer
retention program which are far less expensive compared to attracting new consumers. Acquiring
new consumers can be 25 percent more expensive compared to retaining the current consumers.
Not only has this loyalty card programme also possess the potential to enhance the accessibility
to the consumer’s data. Considering the fact that majority of the consumers are found to be
preferring customized experienced, encoring costumers to fill their profile as a part of the loyalty

29MANAGEMENT
card programs, data about the consumer’s experience, choices are known by the organization
(Winters Ha 2012). This data in turn, helps the business to create targeted marketing campaigns
which in turn results in increment in the bond of the consumers and the company (Kang et al.
2015). Consumer satisfaction can be enhanced at a commendable rate with the help of the
obtained data about the consumer. However, here, it has been found that that a good number of
organisations have disagreed to the fact that the data accessibility through loyalty card programs
lacks the potential to enhance as well as retain consumer base to a commendable level.
According to `90, considering the fact that a good number of consumers within the age range of
50 to 80 years, or consumers who resides in areas with low technological advancement may not
be interested or are unable to join a loyalty card programs (Baloglu, Zhong and Tanford 2017). A
good number of consumers who are loyal may also chose to keep their personal data confidential
and may not sign up for loyalty cards. In such cases, it becomes difficult for organizations to
track down the data of the consumers who agree loyal. Not only this, several consumers who
makes repeated purchases, often found to make purchases just for convenience. Consumers also
selects to purchase products from a certain organization due to the loyalty cards facilities
obtained by the same (Ashley, Gillespie and Noble 2016). Thus loyalty cards, which is generally
defined as an essence of emotion, and a result of consumer company bond, may not be measured
with the help of loyalty programs. However, it can be said that, with increasing competition
between the organizations, more and more organizations are found to be opting for loyalty card
programs not only to ensure a buyer–company relationship but to ensure repeated purchase by
the consumers.
While it can be clearly understood that loyalty car programs possess the potential to
enhance consumer retention as well as revenue of an organization, it is highly crucial t remember
that ineffective implementation of loyalty card program can result in loss in the revenue without
significant increment in neither the profit margin nor the consumer retention rate. It is highly
crucial for organizations to under rated that offering loyalty programs to random consumers and
investing a huge amount in the sae in the initial stage can result in loss of the profit margin, for
instance, even a 5 percent discount can decrease the profit range to 50 percent (Palmeira et al.
2016). Majority of the organizations that fails to succeed through loyalty card implementation
are found to evidence failure, either due to undifferentiated appeal, wrong implementation or
wrong value proposition

30MANAGEMENT
Chapter 5 - Summary and conclusion
From the above discussion it can be summarized that organizations who have attempted
as well as implemented loyalty card programs tactfully have experienced enhancement in
revenue to great extent. Loyalty programs came in existence while organizations realized that
the competitive advantages that has been experienced due to the product differentiation no longer
holds good as a result of proliferation of similar looking products. While in various industries,
loyalty program has been proved to be a highly effective method of attracting consumers and
retain loyalty, a good number of concerns are associate with the usage of loyalty card for
developing business. One of the greatest advantages of the loyalty car program is that loyalty
programs possess the potential to help the management of a business organization to retain the
consumers by building trust between the consumers as well as the company which encourage
them to come back for repurchasing. For start-up businesses, loyalty programs acts as a medium
that can enhance awareness as well as reputation of the brand amongst the target consumers. A
loyalty card program helps in increasing the profit margin of an organization.
Loyal consumers develop trust on the business that in turn encourages them to spend
more on the same. Not only this, The organizations using loyalty cards uses this information to
for optimizing inventory management, pricing as well as promotional strategies since loyalty
program data provides the business with a complete analysis of customer behavior, purchasing
patterns and preferences. The outcomes of special offers can also be assessed on the basis of
additional purchases, with the help of using other platforms or reducing the time between
purchases. A successfully designed loyalty program enables businesses of segmenting customers
and find rentable as well as unprofitable consumers. It helps the organizations to get rid of those
who purchase only discounted lines and almost regularly avoid premium supply. These client
profiles will cost more than they deliver. With the help of loyalty program, businesses gains the
potentiality to only reward the best customer and thus reduce payouts to consumers that are not
so successful. It is hard for the loyalty framework to break away from the transactional spirit.
Majority of time, it appears that the consumer who frequently but products or services from a
certain organization is a loyal one. Loyalty, which is the essence of an emotion, often cannot be
measured with the help of loyalty program. Not only this, with the increment of the popularity of
the loyalty program, more organizations are found to be opting for the same, increasing the
barrier to achieve success by implementing loyalty card programs. Advocacy loyalty programs

31MANAGEMENT
are a good way for standing out though since the marketers can reward the consumers for their
unique actions as well as work for the audience. Loyalty programs hope for bringing out more
repurchasing on the basis of the historical behaviors of the consumers.
However, with time, their incomes, requirements as well as lifestyles change. From the
study, it has been found that there exists a significance association between loyalty card usage
and revenue generation capacity of sales and marketing factors. Additionally, there exists a
significance association between loyalty card usage and consumer base of sales and marketing
factors. As per the regression analysis the t-stat is greater than 0 or positive. It means consumer
base is directly proportional to the usage of loyalty card. It has also been found that there exist a
significance relation between loyalty card usage and consumer retention. Lastly, there exists a
significance association between loyalty card usage and data accessibility of sales and marketing
factors. As per the regression analysis the t-stat is greater than 0 or positive. It means data
accessibility capacity is directly proportional to the usage of loyalty card.
From the above discussion, it can be concluded that loyalty card programs are highly
effective and possess the potential to enhance the revenue, consumer base along with retain
employees for organizations. In spite of the good number of advantages, it has been found that in
spite of the good number of advantages it has been found that if not implement effectively
loyalty card program may result in decrement in the profit margin. Organizations that have
successfully implemented the loyalty card programs have reported that the amount of offer
should be enhanced on the basis of the purchases made by the consumers. This prevents the
management to reduce investment cost without affecting the degree of consumer satisfaction.

32MANAGEMENT
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