Consumer Retention & Loyalty Programs; Do

They Work?

Matt Crowley, Dan Spezzano, Brandon Maisonet, Connor Monaghan

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Agenda

1. Introduction2. Literature Review

a. Customer Retentionb. Store Environmentc. Resisting Competitiond. Emotional Attachment

3. Methodology4. Results5. Discussion6. Conclusion 7. Q & A

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1. Introduction● Research Statement

○ Our research determines whether or not CLPs will have an effect on customer retention.

● Research Question○ Do Customer Loyalty Programs work?

● Purpose of Study○ Determine if CLPs work as a business strategy in retaining customers.

● Importance of Study○ This research will benefit firms, and researchers who would like to further understand how to obtain repeat

customers. ○ Customers would also benefit from the research, as they can understand what makes a good CLP and when

they should take advantage of one.

● Previous Studies● Deficiencies

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2a. Literature Review

Customer Retention

● Measures how loyal one’s customers are.● Satisfied customers spend more, cost less, and refer other customers to the

business.● Hypothesis: If loyalty programs are implemented, then there will be greater

customer retention, as opposed to not implementing a loyalty program.

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2b. Literature Review Cont.

Store Environment

● The lighting, music, color, ease of access, and supply.● Is the store easy to navigate and does it appeal to it’s audience?● Hypothesis: If a store caters to a customer's aesthetic appeal, then they are

more likely to return to that store.

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2c. Literature Review Cont.

Resisting Competition

● Trust, defensive towards your brand, loyalty programs help companies retain their customers, so they are customers for life

● Hypothesis: If a customer is enrolled in a CLP, then they will be more likely to resist competition.

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2d. Literature Review Cont.Emotional Attachment

● An emotional attachment can be formed between a customer and a brand, just like it can be formed between one person and another person, pet, or place.

● Three big factors that can contribute to one’s emotional attachment to a brand are affection, connection and passion.

● Hypothesis: If a consumer is attached, then they will go to that brand frequently, which will make a small, but definite impact on the brand’s financial improvements.

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3. Methodology

● Conducted a survey with the variables of:○ Loyalty Programs○ Store Environment○ Customer Service○ Customer Satisfaction○ Customer Retention

● Collected and examined survey results and determined significant relations between these variables.

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Regression Model

Store Environment

Customer Service

Loyalty Programs

Customer Satisfaction Customer Retention

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Hypothesis of Regression Model

1. Ease of access and aesthetic Appeal → Customer Satisfaction2. Friendly and exceptional employees → Customer Satisfaction3. Involving and rewarding CLP’s → Customer Satisfaction4. Appealing to customers wants → Customer Retention

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1. StoreEnvironment

2. Customer Service

3. Loyalty Programs

4. Customer Satisfaction

Customer Retention

Demographic ResultsGender Frequency Relative Frequency

Male 62 62%

Female 38 38%

Totals: 100 100%

Age Frequency Relative Frequency

19 and Younger 38 38.38%

20-24 54 54.54%

25 and Older 7 7.07%

Totals: 99 100%

Race Frequency Relative Frequency

African 4 4%

African American 1 1%

Asian 5 5%

Caucasian 86 86%

Hispanic 3 3%

Other: Arabic 1 1%

Totals: 100 100%

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Demographic Results Cont. Income Frequency Relative Frequency

<$20,000 60 60%

$20,001 - $40,000 0 0%

$40,001 - $60,000 4 4%

$60,001 - $80,000 3 3%

$80,001 - $100,000 1 1%

>$100,000 3 3%

Don’t Know 15 15%

Decline to Answer 14 14%

Totals: 100 100%

Education Frequency Relative Frequency

Some College 68 68%

2 Year Degree 11 11%

4 Year Degree 14 14%

Master’s Degree 4 4%

Doctoral Degree 1 1%

Professional Degree 0 0%

Don’t Know 0 0%

Declined to Answer 2 2%

Totals: 100 100%12

Reliability ScoresSurvey Variables Alpha Score

Customer Service 0.65

Store Environment 0.46

Loyalty Programs 0.53

Customer Retention 0.48

Customer Satisfaction 0.33

Participants clearly understood the questions.

.7+

Participants mostly understood the questions.

.41-.69

Participants didn’t understand the questions.

.4 and Below

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Regression ResultsIndependent Variables

Significance of Independent Variables

Explanation of Data:

Customer Service 0.130 Customer Service collected has no relationship with Customer Satisfaction.

Store Environment 0.000 Store environment has a very strong relationship with Customer Satisfaction.

Loyalty Programs 0.002 Loyalty Programs holds a strong relationship with Customer Satisfaction.

Dependent Variables Significance of Dependent Variables

Explanation of Data:

Customer Satisfaction

0.000 Customer Satisfaction holds a very strong relationship with Customer Retention.

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Discussion

● Customer Service and Customer Satisfaction.● Store Environment and Customer Satisfaction.● Survey demographics.● Prior to research, we all thought CLP’s worked.

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Conclusion● Customer Loyalty Program

implementation. ● Regression Results and Relationship

Limitations:

● Sampling Size (100)● Sampling Error

● Survey Participant Inaccuracy● Largely Male and Caucasian● Possible Group Bias

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Questions?

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