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Abstract
Fierce competition and complexity ofmodem business has prompted organizations to strive for creative and innovating strategies to retain customers. As attracting new customers in the business is far more costly than retaining existing customers; business organizations have started offering lucrative loyalty programmes to retain existing customers. The current study is empirical research that focuses on the effect of loyalty programs on customer retention with reference to Mega Mart Retail outlet. The data for the study was collectedfrom Mangalore region from the customers who physically visited Mega Mart retail outletfor buying their products. The results indicated that loyalty card programme has resulted in an increase in their purchases from the outlet and customers use loyalty cards most of the time while making theirpurchases.
Keywords: Loyalty card, Customer Retention, Customer Loyalty, Retail outlet
Introduction
"Good customers are an asset which, when well managed and served, will return a handsome lifetime income stream for the company. " Philip Kotier
In recent times, retailers are being exposed to a new generation of customers. These new generation customers can be classified on the basis of individual differences in expectations, preferences for wider choice, extent of brand loyalty and willingness to try competing brands so as to perceive higher value satisfaction. The changing profile of Indian consumer is likely to change the shape of Indian consumer market permanently. To match the varying consumer tastes and preferences, retailers have adopted innovative strategies. This tendency has resulted in issuing of loyalty cards to the customers as a means of innovative strategy to retain the customers.
As an important component of firms' customer relationship management (CRM) strategy, loyalty programs aim to increase customer loyalty by rewarding customers for doing business with the firm. Through these programs, firms can potentially gain more repeat business and, at the same time, obtain rich consumer data that aid future CRM efforts. Since American Airlines launched the first contemporary loyalty program in 1981, loyalty programs have blossomed and now span various industries, including retail, travel, and financial industries. It is estimated that more than half of U.S. adults are enrolled in at least one loyalty program (Kivetz and Simonson 2003).
Despite the prevalent use of loyalty programs, their effectiveness is not well understood (Bolton, Kaiman, and Bramlett...