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Journal of Management Research
Year : 2021, Volume : 21, Issue : 1
First page : ( 35) Last page : ( 48)
Print ISSN : 0972-5814. Online ISSN : 0974-455X.

The Impact of Customer Loyalty Programs on Customer Retention in the Retail Industry

Lakshman Duleepa1, Faiz Fazila2

1Lecturer in Department of International Business, Faculty of Management & Finance, University of Colombo, Sri Lanka – 0070

2Student in Business School, University of Bedfordshire, United Kingdom - MK41 9EA

Online published on 19 January, 2022.

Abstract

As the importance of the concept of customer loyalty increases, organizations are investing more towards loyalty programs for retaining their existing customers as well as attracting new customers. This study analyzes the literature to synthesize some debatable areas such as types of customer loyalty programs and their impact on customer retention. This research is carried out as a systematic review, evaluating ten recently published research articles due to their high relevancy. Our analysis identifies four major categories of customer loyalty programs in the retail industry namely, point system, rewarding system, loyalty card system and gift card system. Further, it is found that a rewarding system is the most effective type of loyalty program in the retail industry where retailers can provide additional rewards based on the customers’ loyalty levels. Through this study, it is found that all four types of customer loyalty programs are positively correlated with customer retention while the rewarding system has the highest co-relation with customer retention.

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Keywords

Customer Loyalty Programs, Customer Retention, Switching Barriers, Loyalty Cards.

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