Customer Perception and Receptivity to Loyalty Programs offered by Organised Retailers

Customer Perception and Receptivity to Loyalty Programs offered by Organised Retailers

The Indian Retail Industry is growing at a fast pace. This growth to a large extent is driven by the organised retail market, with more and larger retail organisations investing heavily in increasing their store networks and improving in-store offerings. Apparel, accessories and related merchandise form a considerable chunk of the organised retail space and is in the ambit of a handful of established players vying to capture & increase larger portions of the available market using new strategies. Increased customer satisfaction and service is one of the means through which they will be able to fulfill their goals. The use and implementation of Customer Relation Management tools like Loyalty Programs is one of the ways in which they can achieve customer satisfaction. According to Sharp and Sharp (1997) loyalty programs are structured marketing efforts, which reward and encourage the loyal behaviour of their members. Capizzi et al (2004) defined it as the business process of identifying, maintaining and increasing the yield from best customers through interactive,value-added relationships.Loyalty programs are thereby are a rhetoric of relationship marketing in gaining customer loyalty.(Minami & Dawson ,2008) . Loyalty programs, however serve dual purposes of the organisation ?? acquisition of customer spending related information and ensuring that they patronise their store. According to Peters (1988) the costs of retaining customers are about 80 percent lower than acquiring new customers. This explains why there is a high degree of proliferation of retailer loyalty programs. Loyalty Programs today have become an inseparable part of the Customer Relationship Management (CRM) strategy of todays retailers. It is vital to gauge how successful these programs are as CRM tools. This study is concerned with how customers perceive such programs and how receptive they are towards these programs. The sample size consisted of 168 usable samples of member customers of loyalty programs of four competing departmental stores who were members of the stores. The study was confined to the city of Bangalore. Convenience sampling was used for the purpose of data collection. Data was collected through questionnaires and was subjected to descriptive analysis and inferential analysis. The reliability of the perceptual scale was found to be 0.766. The major findings of the research are: ? Lifestyle is the most frequented store and Shoppers Stop has the most attractive loyalty program. ? Customers have more important reasons for preference of a store than holding membership to the stores loyalty program ? Customers perceive that a loyalty program membership makes them enjoy monetary benefits. Offers and discounts followed by redeemable points are the most popular form of monetary benefits. ? Customers seek ??real and value creating benefits from loyalty programs ? There is a significant relationship between customer perception of loyalty program benefits and purchase behaviour. ? There is a significant relationship between customer perception of loyalty program benefits and store attractiveness and loyalty. The study will help retail organisations understand their customers better and help them in designing and implementing more satisfying, value creating and differentiated programs as a CRM tool to retain customers and build loyalty.

G.K Roll Krithika

Management Studies