Benefits of loyalty programs

The business research is done to focus on the impacts that have been brought due to the introduction of loyalty cards on the level of satisfaction among the customers. It is a kind of loyalty program or scheme that acts as an important marketing strategy for influencing the buying behaviors of consumers and keeps them satisfied too. The loyalty cards are introduced to provide customers a better shopping experience and at the same time, provide them with additional benefits of shopping, rewards and points for every purchase that they have made. The satisfaction of customers is obtained when their needs and requirements are fulfilled and they are provided with enough benefits, rewards, discounts and other offers on products and services delivered by the companies. Magatef and Tomalieh (2015) stated that in spite of the various benefits of using loyalty cards, very few individuals have taken the membership due to lack of relevance in rewards, ineffective structure of rewards and lack of effective customers’ services. Market data and information along with customer information are collected and then loyalty card programs are introduced to respond to the sales and ensure influencing the customers to make purchases consistently. The advantages and disadvantages of using loyalty cards would be illustrated here along with its probable impacts on the satisfaction of consumers.

The loyalty cards make shopping more convenient and easy for the customers because they could not only get additional benefits such as various offers, rewards, etc. but could also easily make the next purchases with less costs. The loyalty cards are present at various levels including the platinum, gold and silver tiers.  The information about customers are obtained and a customer profile is created to understand the needs and requirements of customers. According to Long et al. (2013), the customer loyalty is the behavior and attitude of customers due to which they prefer one brand over another and it is the responsibility of the brand to make sure that proper CMR strategies are followed to influence their buying behaviours are influenced. The loyalty card schemes could allow them to gain reward points and discounts, which could be used while making the next purchase. They would be able to buy the products at lower prices with the help of those points and even get some additional rewards with every purchases they would made. According to Magatef and Tomalieh (2015), retail loyalty programs and cards could even provide rebates, points, discounts and other rewards that could strengthen the customer relationship as well as ensure customer loyalty, thereby making them visit the store to make purchases consistently. 

Drawbacks of loyalty programs

Mimouni-Chaabane and Volle (2010) stated that customer loyalty can result in various benefits such as increased sales of products and services, more customers and generation of more revenue in business. To make this successful, the loyalty cards are introduced for provide the customers a better shopping experience and even gain some benefits and rewards that can be utilized while making the next purchase. According to Magatef and Tomalieh (2015), loyalty card and loyalty programs have created more possibilities for increasing the numbers of customers and ensured that they do not feel hesitated while making purchases from the organisation. Based on the responses of Uncles, Dowling and Hammond (2003), a loyalty card program creates a sense of trust and loyalty among the customers and increases the awareness among the customers regarding the products and services delivered as they will be able to get certain benefits with each purchases made. It would be easy for the company to reach more customers and create a wider customer base, furthermore gain enhanced levels of profit.  

According to Magatef and Tomalieh (2015), to develop customer loyalty and create satisfaction among them, it is important to implement several loyalty programs such as providing them with reward points while making purchases, additional discounts and offers on purchase over a particular amount. Long et al. (2013) emphasized on the research related to the management of relationships with customers through providing of loyalty card program. It was also stated that perceived benefits of the loyalty card programs could be the value obtained by customers along with the benefits that the customers would be able gain through formation of membership and by receiving rewards and points. The advantages of participating in loyalty programs could be categorized into economic, psychological and sociological benefits. Based on the responses of the researchers, it is quite clear that the purchase volumes have increased and even the incentives and benefits are lost mostly while exiting from the membership of the loyalty card. Mimouni-Chaabane and Volle (2010) stated that there had been certain privacy concerns and excessive spam and contacts, which might even deteriorate the management of proper transactions made by the consumers. The authors also conducted detailed researches and criticized the fact that loyalty card programs could save some amount of money though it is not worth the problems that might be faced while providing personal information before making membership.  The information could be sent to third parties and this could hinder the authentication process too. Information about the customers could be tracked even and send through personalized coupons that might be not be worth the benefits and rewards provided by the loyalty card programs, based on the responses provided by Uncles, Dowling and Hammond (2003). 

Research studies on the impact of loyalty programs on customer satisfaction

According to Uncles, Hammond and Dowling (2003), the customer loyalty presents a paradox and many individuals see it as an attitude based phenomenon, which can be influenced by the customer relationship management (CRM). Initiatives such as popular loyalty and affinity are the main influencers of the loyalty bonus and customer satisfaction. However, Uncles, Hammond and Dowling (2003) states that the empirical research demonstrates that loyalty which is exhibited by repeated purchases is more shaped by the passively accepted brands than the strongly held attitudes regarding them, which in turn is a considerable liability and limitation. So based on the perspectives of Uncles, Hammond and Dowling (2003), the main limitations can be considered by the fact that loyalty can be perceived from three different frameworks, which are customer brand commitment, customer brand acceptance and customer brand buying behavior. Nonetheless, Uncles, Hammond and Dowling (2003) further states that the researches also have certain limitations while gathering data, through any research surveys, since these factors controls the research processes, which can be mentioned as. 

Formulation of the research aims and the objectivesof the study refer to the broad detailing about the purpose of the research, which in turn needs to be well defined and precise. If not then the purpose of the research can be nullified

The Choice of the data collection method, refers to collection of data to help gather information and amply the depth of the analysis. However, this method is interrelated with the research objectives and the aims, failure to which, the data gathering is either failed or inadequate to direct the research to a definite result

Implementation of data collection methodsis another liability due to the fact that inadequate knowledge about the data collection method and proper selection of the same is fundamental in the determination of the success and failure of the research study

Scope of discussion is another liability since the extensive nature of the research can compromise with the main scope of the research. The large extent of the conducted research can tamper or lead to the irrelevancy of the main topic or objectives of the research and the data gathered

So based on these factors, Uncles, Hammond and Dowling (2003) concludes that every research has these limitations, which needs to be taken into account while conducting any research study. 

According to Long et al. (2013) states that the outcomes of every conducted research provides new insights for the scholars as well as imparts newer research directions, which in turn helps understand the progress and advancement of developments in the relationships. Long et al. (2013) further elaborates that specific research direction includes the identification of psychographic and personality traits, which in turn lays impact on the relationship management and can be used to identify the customers having higher propensity to form a stronger bond.

Long et al. (2013) also argues that customer relationship management along with loyalty bonus and customer satisfaction is one of the complex and holistic concepts, due to the fact, that it requires a lot of understanding and designing of the appropriate business process along with the integrated systems. Long et al. (2013) further more suggests that researches should be conducted in such a manner, that it can demonstrate the relevance of the need for effective systems integration, leadership, information sourcing, target and positioning within the customer relationship managerial strategies, whatsoever is desirable. Long et al. (2013) concludes that the future researches on loyal bonus and customer satisfaction should take the facts into consideration that customer relationship is one of the prime elements, which determines the two parameters and it should be done by understanding the behaviors of the employees, the quality of the services, the relationship developments and the interaction management. 

References

Long, C.S., Khalafinezhad, R., Ismail, W.K.W. and Rasid, S.Z.A., 2013. Impact of CRM factors on customer satisfaction and loyalty. Asian Social Science, 9(10), p.247.

Magatef, S.G. and Tomalieh, E.F., 2015. The impact of customer loyalty programs on customer retention. International Journal of Business and Social Science, 6(8), pp.78-93.

Mimouni-Chaabane, A. and Volle, P., 2010. Perceived benefits of loyalty programs: Scale development and implications for relational strategies. Journal of Business Research, 63(1), pp.32-37.

Uncles, M.D., Dowling, G.R. and Hammond, K., 2003. Customer loyalty and customer loyalty programs. Journal of consumer marketing, 20(4), pp.294-316.