There has been a significant increase in the introduction of customer loyalty programs in the past few years and customers are also seen as responding to these programs positively. According to the National Retail Federation in the United States, today retailers face the most challenging task of promoting loyalty in their customers According to experts considering the challenges faced by the retailers in the today’s competitive and globalized business environment, their prime focus has shifted from attaining higher sales targets and revenue generation to retaining their respective customers’ base.
In this pursuit, the retailers are making efforts to build such relationships with their customers that are not only helpful in sustaining customer base but also promote loyalty among them. As noted by Gable this change in the focus of retailers is based on two important motivations, which are: Being able to grow further in the market and multiple sales revenue and Improving consumer and brand value. Without having regard to how customer loyalty may be defined or ascertained, retailers expect that by achieving such motives through introducing loyalty programs, customers can be expected to continue to purchase more and more, once they are loyal.
Moreover, retailers also expect that once customers’ loyalty is achieved, it becomes difficult for their competitors to disrupt loyalty shown by customers. Marketers have various motivations and expectations behind the loyalty schemes they introduce. In order to implement customer loyalty programs, corporate entities are largely focusing on the customer relationship management, which largely focuses on devising policies and procedures which are helpful in retaining existing customers and attracting new ones. Large organizations with massive market shares adopt certain strategies to firstly maintain their respective shares and then expand them.
To some, loyal customers not only ensure organizational well-being but also increase the possibility of attracting new customers. The intentions behind attracting loyalties of customers, however, may not be limited to these two major objectives. In fact, organizations may have varying factors which motivate them to introduce loyalty schemes and derive expectations out of them in the long run. Keeping in view the antecedents of customer loyalty, organizations today have focused on increasing their market shares by ensuring loyalty amongst their customers. It is due to this reason that customer loyalty has been regarded as a significant asset for business entities. It has been noted that presently, customers have become more informed, selective and demanding, which in turn implies that they expect more from companies.
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