Analyzing The Impact Of Loyalty Card Program On Customer Retention: A Case Study Of Tesco

Write an essay on Customer retention.

Customer retention has emerged as one of the major issues that organizations have to face in order to sustain their position in the market (Khan 2012). Increased competition in several industries has forced organizations to consider unique marketing strategies. The organizations will have to consider unique marketing strategies not only to increase the profit level but also to develop a long lasting relationship with its customer. Customer retention can actually provide more profit for the organization as compared to capturing a new customer (Wang, Cavusoglu and Deng 2016). Thus, many organizations have initiated loyalty programs and loyalty card in order to retain their customers. In this research study, the focus will be on the impact of loyalty card program on the customer retention. The study will focus on analyze the hypothesis of whether loyalty card can have positive impact on customer retention or not.

Tesco is the third largest food retailer in the world and the largest retailer in UK. The company is situated on 1929 (Tesco.com 2016). Presently, Tesco has its stores in 12 countries across Europe and Asia. Innovative marketing strategy of Tesco has helped the company to become popular among the customer all over the world. From the beginning, Tesco’s unique marketing strategies not only help the organization to capture the attention of the new customer but also help to retain them for longtime. Loyalty card program is among one of the unique strategies that Tesco has implemented to retain their customers for longtime.

In the present tough competition, every organization is trying to retain their customers for a longer period of time. In this regards, many organizations have utilized loyalty program and loyalty cards. However, many studies have argued that the impact of loyalty card program depends on several factors. Therefore, it is up to the organizations to utilize those factors in order to retain their customers. In this study, the focus will be on the analysis of several factors related to the loyalty card program so that it can able to highlight the kind of impact it can have on the customer retention perspectives.
4. Research Aim:
The major aim of the study is to analyze the kind of impact that loyalty card program can have to the perspective of customer retention.

According to Acatrinei and Puiu (2012), research study can able to enhance the value of any research study. Since, it can direct the study in a particular path. For analyzing the impact of loyalty card on customer retention, the objectives of the research study are follows:
To analyze the loyalty card program of Tesco
To analyze the impact of loyalty card program on customer retention
To provide recommendation to Tesco to improve its loyalty program to improve customer retention

Rationale of the study

As per the article by Rashid, Rehman and Aslam (2016) customer retention is one of the most important CRM strategies that allow organizations to retain customers for a longer time. Customer strategies allow organizations to gather important information about the customers. Therefore, it allows organization to learn on how to satisfy a particular or a group of customers. On the other hand, Ou, Verhoef and Wiesel (2016) highlight three components including loyalty, commitment and satisfaction that play a key role in retaining the customer for long time. However, it is not necessary that all the customers will have similar requirements. Thus, it is necessary for the organizations to identify the pattern related to customer need in order to fulfill them in an effective way. On the other hand, Prasad and Kumar (2016) customer retention strategies include both tangible and non-tangible benefits that every organization need to utilize.

As per the article by Arbore and Estes (2013) customer loyalty describes the repeat purchase of the customers. However, the article mentioned that there is a distinct difference between attitudinal and behavioral concepts of loyalty. According to Dorotic et al. (2014), attitudinal concept of loyalty refers to the commitment of the customers towards the objective of loyalty, particularly towards a particular name or brand. On the other hand, behavioral concept of loyalty refers to a function of behavior and commitment. Lack of attitudinal concept leads to spurious loyalty and absence of behavioral dimension will make loyalty latent. On the other hand Voltmer et al. (2013) describes that adoption of the attitude components can describe several phase of the latent loyalty. While, many studies focuses on the component of spurious loyalty in order to explore further dimension. However, De Cnudde and Martens (2015) distinguish cognitive, forced and inertial loyalties. The article mentioned that cognitive loyalties occur from the perceived functional superiority of the brand name. The article mentioned that incentivized loyalties and identifies price can be categorized as the two facts of the cognitive loyalty.

As mentioned by Hutchinson et al. (2013) structure of any loyalty program can have significant impact on the customer retention perspectives. Therefore, organizations will have to extremely careful in order to fulfill the objective of the loyalty card program. Firstly, organizations will have to documented all the detailed information about the customers in order recognize loyal customers. In addition, well-structured loyalty card program can help the customers to understand easily about the kind of benefits they are expected to receive. On the other hand, Kim et al. (2013) mentioned three factors could have major influence on the success of the loyalty card program. These factors are reward structure, program design and customer fits with the loyalty card program. However, Tanford (2013) mentioned that all the beliefs regarding customer loyalty is not true. The article also mentioned that the effectiveness of the loyalty card program varies from one industry to another. The article also mentioned that the effectiveness of the loyalty card program is least effective in those industries where frequency for purchasing is very low.

Research Aim

As described by Zakaria et al. (2014) a loyalty card program is a marketing tool that can help organizations to manage customer information in order to develop a profitable relationship with them. Loyalty card program also help organizations to know all its customers in a better way that can help to develop a strong bonding with them. Now, strong bonding is extremely critical for retaining customers for a long time. On the other hand, Hutchinson et al. (2015) mentions that it is more costly and difficult to get a new customer than retaining an existing customer. Therefore, organizations will have to focus more on retaining their existing customers in order to maintain its position in the market. However, many studies have also argues that loyalty program creates switching barriers for the customers, as the cost for switching increases by the loyalty card program. Thus, higher switching cost reflects greater possibility of retaining customers. Studies have also mentioned that loyalty card program has the potential to minimize the advertising and publicity cost of an organization (Fordyce III et al. 2013). It also enhances turnover by influencing customer to purchase more in order to redeem a gift. Thus, loyalty card program helps organizations to increase the profit level in the long run.

As per the article by Doka et al. (2013) conceptual framework has the potential to provide a clear picture regarding the topic of the research study. The conceptual framework for analyzing the impact of loyalty card program on customer retention discuss as follows:

From the above discussion, it can be assess that loyalty card program can have serious impact on the success of an organization. Since, loyalty card program helps organization to recognize their prestigious customers in a better way. However, many studies have mentioned several challenges that can affect the effectiveness of the loyalty card program. For instance, studies have mentioned that it is very difficult to measure the effectiveness of the loyalty card program (Garzon and Taylor 2016). However, there are several measures are available but none of them can actually depict the exact impact of the loyalty card program. In addition, the competitors can copy this strategy easily. Therefore, it will eliminate the benefit and effectiveness of the program.

Type of investigation:
According to Kitchin and Tate (2013) outline of the research includes different methodologies and measures that researcher can implement at the time of conducting any research study. This explanatory research will focus on the loyalty card program to measure the kind of impact it can have on customer retention. The researcher will focus on the explanatory research, as it can explore different scenarios in a proper way. For the successful completion of the study, the researcher will try to consider a systematic approach. Since, systematic approach can help the researcher to complete the entire research study within the given timeframe.

Research objectives

Data collection method:
As mentioned by Roels (2013) data collection is among the most significant part that can help any research study to fulfill all the objectives properly. In this study, the researcher will consider both secondary and primary data collection method. In order to collect primary data, the researcher will consider survey technique to gather information across different industry. The researcher will utilize face-to-face, online platform and social networking sites for capturing information about the loyalty card program. The researcher will utilize both quantitative and qualitative data collection method for this particular research study. The researcher will formulate questionnaires with only closed-end questions for collecting quantitative information about the research topic. The researcher will utilize social media and online platform to collect quantitative information about the loyalty card program on customer retention. On the other hand, the researcher will also use qualitative questionnaires for capturing in-depth information about the impact of loyalty card program. The researcher will only include open-end questions for capturing qualitative information. For understanding several perspectives of the managers, the researcher will utilize face-to-face conversation technique. However, as the managers of Tesco has busy schedule, the researcher will only take 15 minutes to complete the entire survey process. On the other hand, the researcher will also focus on the secondary data collection technique as well in order to enhance the value of the research study. The researcher will utilize trusted websites, business magazines, books, journals and newspaper in order to collect secondary information about the research topic.

In this study, the researcher will first focus on the sampling technique so that the collected data can able to depict the objective of the research study. Sampling method has two parts non-probability sampling and probability sampling. Here, the researcher will choose non-probability sampling method. The research study will consider non-probability sampling technique as it will allow collecting information that is more relevant. In addition, non-probability sample will allow collecting information from the employees of Tesco. In this study, the researcher will select 110 executive levels of employees from Tesco in order to collect quantitative information about the impact of loyalty card program. The researcher will choose 15 managers from Tesco to collect qualitative information. Both quantitative and qualitative information are collected in this study, as it will highlight different aspect of the research study.

Access of respondents is a key factor that has to keep in mind at the time of collecting information. Many respondents often do not share exact and accurate information that eventually reduces the quality of the research study. Hence, to obtain information about the topic, it is important to fix meeting with the respondents previously. It is also important to maintain punctuality so that the respondents can give their full time at the time of collecting information about the research topic. Furthermore, it is expected that the study will face difficulties in getting appointment of the Tesco’s manager at the time of collecting qualitative information.

Research questions

In this study, ethics will be maintained at the time of collecting information. For instance, no respondents will be forced to give information about the research topic. No outside interruption will be taken into consideration at the time of collecting information. The dignity of the respondents will also be maintained at the highest order at the time of collecting information. Furthermore, collected information will be kept in secure place so that it cannot be utilized by any other research study.

As described by the article by Puthal and Sahoo (2012) data analysis is a critical part of the research study. In this study, different types of statistical tools such as mean, mode, and median will be utilized. Furthermore, the research study will include correlation and regression technique, as it will add value to the study. The study will conduct the data analysis in such a way so that it can able to fulfill all the objectives of the research.

Time is one of the prime constraints of this study. Therefore, a conscious effort has been made at the time of selecting sample size for the study. Furthermore, as student conducted the research, money has become another constraint that has its effect on the study. However, a genuine attempt has been made for this particular study so that it can able to meet all its objectives.

References:

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