How can loyalty programmes improve brand loyalty?

Abstract: Title: How can loyalty programmes improve brand loyalty? Level: Final assignment for Master Degree in Business Administration Author: Anna Kapetanakis, and Gideon Mekonnen Jonathan Supervisor: Sarah Philipson (Assistant Professor) Date: June, 2015 Aim: To investigate how customers loyalty can be improved through loyalty programmes. Method: Mixed approach, both qualitative and quantitative data, is chosen for this study. The qualitative data using telephone interviews with customers and the firm was carried out at the beginning of the study to formulate the survey. Online survey with closed questions, based on responses from the qualitative interviews and the theoretical framework, was designed and sent to 3500 potential respondents. The contact list from IvyWear’s CRM database was used to distribute the survey. 309 respondents (9%) completed the survey, which was available online for 7 days. The quantitative data was analysed using descriptive statistics and cluster analysis. Result & Conclusions: The empirical data and analysis has shown that IvyWear customers can be categorised as “true loyals”, “latent loyals”, “spurious loyals”, and “not loyals”. It was also found that “bonuses and points” are the most preferred reward among customers that can be used to improve loyalty toward IvyWear. Suggestions for future research: The findings may not reflect brand loyalty and effects of loyalty programmes on loyalty beyond the clothing retail industry. Comprehensive study covering other industries and targeting respondents outside membership registers would provide deeper understanding of brand loyalty among customers. Contribution of the thesis: The study adds to the debate on loyalty programmes and how members of these programmes can be managed in the way that they can not only choose the brand, but also attract new customers through positive word of mouth. The results are particularly important for managers and marketers in the retail industry, who are under pressure to show the benefits of loyalty programmes. The results will be invaluable in the design of loyalty programmes to impact on the long-term profitability of firms.