Research Methodology: Impact of Loyalty Programs on Retention

This report delves into the application of qualitative research methodology to assess the impact of customer loyalty programs on customer retention, particularly within the Australian business context. It begins with an overview of qualitative research methods, including grounded theory, ethnographic research, phenomenology, and case studies. The report then outlines the research design, including the selection of an organization for study, research aims and objectives, research questions, and the formulation of hypotheses. The report also discusses the selection of a sample population and details data collection methods such as in-depth personal interviews. The report aims to understand how loyalty programs influence customer purchasing behavior and incentivize long-term engagement, and how qualitative research designs can be used to gain a deeper understanding of customer loyalty programs and their impact on customer retention for a business.

Running head: RESEARCH METHODOLOGY
Research Methodology
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction......................................................................................................................................2
1. Qualitative Research Methodology – An Overview................................................................3
2. Using Qualitative Research Method to Understanding the Impact of Loyalty Programs on
Customer Retention.........................................................................................................................5
2.1. Choice of Organization or Business for Study..................................................................5
2.2. Research Aims and Objectives and Research Questions..................................................6
2.3. Research Hypothesis.........................................................................................................7
2.4. Selection of Sample Population............................................................................................7
2.5. Data Collection.................................................................................................................8
2.6. Data Analysis Methods.....................................................................................................9
3. Ethical Considerations..............................................................................................................9
References......................................................................................................................................11

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Introduction
Customer loyalty programs are seen to play a major role in the retention of customers for
businesses around the world. Loyalty programs are signed up for by customers who intend on
using a particular product or service offered by a specific company and over an extensive period
of time. If Pareto’s principle is anything to go by, eighty percent of the revenue of a company is
derived from loyalty programs and the remaining revenue is earned through other means
(Chaudhuri et al. 2019). Customer loyalty programs, if implemented in the desired manner, can
get customers to avail a specific service or product for a very long span of time, especially if the
rewards that are offered as a part of the loyalty program are beneficial, impactful and long lasting
for the customer. Loyalty programs are seen to be particularly beneficial for companies that
operate in the food industry and in the aviation industry. Airline companies for instance, earn a
considerable source of their revenue through the implementation of customer loyalty programs
that allow customers to procure air tickets and other travel related services at heavily discounted
prices. Food outlets like restaurants and bistros are also seen to retain customers over the long
term by offering regular deals and discounts on anything that is purchased from their menu by
customers who belong to a loyalty club or program that is offered by that restaurant (Soderlund
2019). This assignment outlines how the qualitative research design can be put to use when
understanding the impact of loyalty programs on customer retention in the context of
Australia. The assignment specifically points out the forms of qualitative data collection that are
to be utilized for obtaining answers as to why loyalty programs are of great value for customers,
as well as the means of data analysis that will be deployed to interpret and understand the data
that is collected.

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1. Qualitative Research Methodology – An Overview
The best and most accurate way to assess the significant impact that loyalty programs can
have on customer retention is to make use of quantitative or qualitative research methodology for
this purpose (Maxwell 2019). Quantitative research methodology entails the use of quantifiable
variables for the purpose of arriving at answers to research questions. Quantitative research
methodology is usually considered to be far more reliable as a means of data collection than
qualitative research by most researchers as the results that are generated by such a method are
objective rather than subjective in nature, with the interpretation of the data being more or less
definite (Maxwell 2019). Yet qualitative research methods can also be utilized to arrive at the
answers to research questions that are aim at finding out how beneficial it is that customer
loyalty programs happen to be for a business, especially if it is looking to retain customers for its
products and services over the long term (Merriam and Grenier 2019). This section is going to
focus on the manner by which qualitative research methods can be put to use in order to gain an
understanding of the impact that customer loyalty programs have on customer retention for a
business.
Qualitative research methods are usually known to be of five important types. The first of
these is grounded theory, followed by ethnographic and narrative research, followed by cased
studies and finally by a theory that is known as phenomenology. The qualitative research designs
and methods of data collection are those that are implemented over a specific time span, and
takes longer to carry out than quantitative research is known to do, since it involves collecting
information in person and face to face. Grounded theory is one of the most important forms of

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qualitative research (Mihas 2019). This is a qualitative data collection and data analysis method
that allows a research to develop a concept or a theory that is capable of explaining a particular
phenomenon. The much known grounded theory associated with qualitative research is a tool
that was developed by the researchers Glaser and Strauss. It is a method that is put to use for
conceptualizing phenomenon. It is important to note in this respect that grounded theory is not
something that is viewed as an elaborate or descriptive method entirely and it is a research theory
and method that originates from the field of sociology (Quinlan et al. 2019). Units of analysis
when it comes to grounded theory are specified incidents or phenomenon rather than individual
behavior. Primary methods of data collection that are seen to be implemented as a part of the
grounded theory method are interviews that entail as many as twenty to thirty participants, with
data being collected until it reaches a point of saturation (Mihas 2019).
Ethnographic research methods on the other hand are procedures that are deployed on
the part of qualitative researchers to describe as well as analyze and interpret the characteristics
that are associated with a particular culture. This is a form of qualitative research that was
developed in the course of the nineteenth century and the twentieth century and which is made
use of by anthropologists for the purpose of exploring primitive cultures that are distinct from
native cultures (Tracy 2019). A researcher makes use of ethnographic methods when he intends
on studying the dynamics of a particular group of people who belong to a particular culture in a
particular region or country. The primary form of data collection and analysis when it comes to
ethnographic research methods is participant observation which is implemented over an
extensive and specified period of time (Holland 2019).
The third and most well-known form of qualitative research methodology is
phenomenology. This is used for the identification of phenomena and it focuses specifically on

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the subjective experiences of an individual or a group of people in order to arrive at an
understanding of the structure of such subjective or lived experiences (Guinis and Solarino
2019). Martin Heideggar and Edmund Husserl are credited with the invention of phenomenology
as a method of qualitative research and it describes in detail all the common characteristics of a
specific phenomenon that is taking place. The primary form of data collection when it comes to
phenomenology is the use of in-depth personal interviews, with the interviews taking place over
a time span of forty five minutes to one hour (Kegler et al. 2019).
The fourth and final method of qualitative research is the use of case studies. Case
studies were put to use by researchers in an early as 1829, and were initiated by a man by the
name of Frederic Le Play. The case studies are usually rooted in vast majority of disciplines such
as education, science, law and medicine (Kumar 2019). The case studies are usually made of
when a researcher wishes to arrive at an understanding of what should be focused on, why and
how it should be focused on, when the behavior of a subjected is to be observed rather than be
manipulated, for understanding further, a given phenomenon and when the boundaries between
phenomena and context are not at all clear. There are multiple forms of data collection that can
be put to use as a part of the case study method such as historical documentation, observation
and interviews. As such, the case studies are those that are prepared for specific individuals
rather than groups of persons (Aspers and Corte 2019).

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2. Using Qualitative Research Method to Understanding the Impact of
Loyalty Programs on Customer Retention
2.1. Choice of Organization or Business for Study
In order to understanding how loyalty programs have a positive or negative role to play
on customer retention, the first step that will be taken is to narrow down on an organization
that focuses on or makes use of loyalty programs in order to generate revenue and to retain
customers over the long term. An Australian business or organization or an international
business located in Australia will be selected for this purpose, so that the process of data
collection can be carried out with ease and efficiency.
2.2. Research Aims and Objectives and Research Questions
For further understanding the impact that loyalty programs are seen to have on customer
retention, specific research aims and objectives and research questions are to be developed based
on which the forms of data collection shall later be decided. The research objectives are as
follows –
 To understand how loyalty programs influences customers to make extensive purchases
from a particular business or organization that offers such programs in the first place
 To understand how loyalty programs give customers the incentive to keep coming back
for the purchase of services to the organization that offers such programs over the long
term
The specific research questions are as follows –

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RQ 1 – How do loyalty programs influence customers to make extensive purchases from a
particular business or organization?
RQ 2 – What are the incentives that are provided as a part of loyalty programs to ensure
customer retention for a business over the long term?
2.3. Research Hypothesis
A number of research hypotheses are developed in order to facilitate the process of data
collection and data analysis.
Hypothesis 1 – Loyalty Programs have a positive impact on customer retention for a business
Hypothesis 2 – Loyalty programs have a negative impact on customer retention for a business
Hypothesis 3 – Loyalty programs have no impact on customer retention for a business
2.4. Selection of Sample Population
The research population or research sample is a group of people who are going to be
studied and scrutinized in order to arrive at the answers to the research questions posed. Based
on the resources that are made available for a research project as well as the time that is allowed
for it, the sample research population is derived or selected (Richards et al. 2019). Due to the
paucity of time and resources, the research sample that is going to be located for this
project will be small in size and will be comprised of twenty five people at the most. A
random and convenient or probabilistic sampling method is going to be made use of for this
purpose (Lazazzara et al. 2019). Probability sampling is the type of sampling technique that is
utilized when the samples from a large sized population are selected using a method that is
known as theory of probability. When participants are to be considered as probability samples,

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they have to be selected using random selection procedures (Singer et al. 2019). The people who
are selected as a part of the sample population will be people who are working at the business
organization that is chosen for the study as well as the customers of that particular organization
and this will be done to get a holistic understanding and overview of what customer loyalty
programs are all about, why these are being implemented by the organization, for how long these
are being implemented and the type of feedback that customers have to provide for the loyalty
programs, that is how beneficial or useful it is for them and why they have signed up for it
(L’Haven and Van Grootel 2019).
2.5. Data Collection
In order to acquire data on the loyalty programs, the business organization that is going to
be studied upon will be approached and key personnel will be identified and subjected to in-
depth personal interviews to understand the logic behind the organization’s implementation of
loyalty programs and understanding how well or how poorly it has worked for them (Maxwell
2019). The interviews with the key personnel at the chosen organization shall be carried out only
after obtaining the prior consent and permission of these individuals either over the phone or
over email after which an appointment will be scheduled with these personnel for interview. By
visiting the chosen organization for study and by speaking to the key personnel who are involved
in the business development and the running of the organization, as well as people who are
involved in customer care service, information will be obtained on the loyalty programs that are
offered by the business and information shall also be obtained on the customers who have signed
up for the loyalty programs that are offered by the business. Using this customer information that
is provided by the organization, phone calls shall be made and emails shall be sent out to these
customers requesting an appointment for an interview (Aspers and Corte 2019). The interviews

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with the customers shall be carried out over a period of forty five minutes to one hour during
which questions shall be posed to the customers about why it is that they have signed up for the
particular loyalty program, for how long it is that they have been loyalty customers for the
chosen business and whether they intend on being recipients of the loyalty program that is
offered by the business over the long term or not. By interviewing both the key personnel at the
chosen organization and customers, the perspective of both the organization and the customers
will be acquired with regard to the impact that implementation of loyalty programs have on
customer retention for a business (Kumar 2019).
2.6. Data Analysis Methods
The interviews that are carried out with the sample population will at times take the form
of narratives for the most part. Some of the data analysis methods that will be put to use in order
to interpret the information that is obtained from the sample population are content analysis,
narrative analysis and discourse analysis. The behavioral or verbal data that is obtained from
customers and key personnel of the organization will be classified, summarized and then
tabulated (Kumar 2019). The detailed accounts or experiences provided by the respondents will
be reformulated and all written text as well as naturally occurring talk that forms a part of the
research process will be subjected to discourse analysis. By using these forms of data analysis,
the three different hypotheses shall be tested and the one that appears to be relevant or valid will
be highlighted and explained (Guinis and Solarino 2019).
3. Ethical Considerations
The following ethical considerations shall be taken at the time of implementing the research
 The identity of participants or respondents will be kept strictly confidential

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 Participation will be of a voluntary nature.
 The purpose and outcome of the research will be made known to the respondents
 The questions asked during the interviews will be kept as comprehensive and as
impersonal as possible (Merriam and Grenier 2019).
 Respondents can opt out of the research process anytime they experience discomfort
(Tracy 2019).
 All personal information revealed by the respondents will be kept secret and confidential
(Tracy 2019)
 Respondents will not be subjected to unnecessarily long hours of interview (Mihas 2019)
 Appointments for interviews with the respondents shall be scheduled based on
permission given by and the convenience of the respondents (Holland 2019).

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