Loyalty business model

The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.

The service quality model

A model by Kaj Storbacka, Tore Strandvik, and Christian Grönroos (1994), the service quality model, is more detailed than the basic loyalty business model but arrives at the same conclusion. In it, customer satisfaction is first based on a recent experience of the product or service. This assessment depends on prior expectations of overall quality compared to the actual performance received. If the recent experience exceeds prior expectations, customer satisfaction is likely to be high. Customer satisfaction can also be high even with mediocre performance quality if the customer's expectations are low, or if the performance provides value (that is, it is priced low to reflect the mediocre quality). Likewise, a customer can be dissatisfied with the service encounter and still perceive the overall quality to be good. This occurs when a quality service is priced very high and the transaction provides little value.

This model then looks at the strength of the business relationship; it proposes that this strength is determined by the level of satisfaction with recent experience, overall perceptions of quality, customer commitment to the relationship, and bonds between the parties. Customers are said to have a "zone of tolerance" corresponding to a range of service quality between "barely adequate" and "exceptional." A single disappointing experience may not significantly reduce the strength of the business relationship if the customer's overall perception of quality remains high, if switching costs are high, if there are few satisfactory alternatives, if they are committed to the relationship, and if there are bonds keeping them in the relationship. The existence of these bonds acts as an exit barrier. There are several types of bonds, including: legal bonds (contracts), technological bonds (shared technology), economic bonds (dependence), knowledge bonds, social bonds, cultural or ethnic bonds, ideological bonds, psychological bonds, geographical bonds, time bonds, and planning bonds.

This model then examines the link between relationship strength and customer loyalty. Customer loyalty is determined by three factors: relationship strength, perceived alternatives and critical episodes. The relationship can terminate if:

1. the customer moves away from the company's service area,
2. the customer no longer has a need for the company's products or services,
3. more suitable alternative providers become available,
4. the relationship strength has weakened,
5. the company handles a critical episode poorly,
6. unexplainable change of price of the service provided.

The final link in the model is the effect of customer loyalty on profitability. The fundamental assumption of all the loyalty models is that keeping existing customers is less expensive than acquiring new ones. It is claimed by Reichheld and Sasser (1990) that a 5% improvement in customer retention can cause an increase in profitability between 25% and 85% (in terms of net present value) depending upon the industry. However, Carrol and Reichheld (1992) dispute these calculations, claiming that they result from faulty cross-sectional analysis.

According to Buchanan and Gilles (1990), the increased profitability associated with customer retention efforts occurs because:

• The cost of acquisition occurs only at the beginning of a relationship: the longer the relationship, the lower the amortized cost.
• Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
• Long term customers tend to be less inclined to switch and also tend to be less price sensitive. This can result in stable unit sales volume and increases in sales volume.
• Long term customers may initiate free word of mouth promotions and referrals.
• Long term customers are more likely to purchase ancillary products and high-margin supplemental products.
• Long term customers tend to be satisfied with their relationship with the company and are less likely to switch to competitors, making market entry or competitors' market share gains difficult.
• Regular customers tend to be less expensive to service because they are familiar with the processes involved, require less "education," and are consistent in their order placement.
• Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.

For this final link to hold, the relationship must be profitable. Striving to maintain the loyalty of unprofitable customers is not a viable business model. That is why it is important for marketers to assess the profitability of each of its clients (or types of clients), and terminate those relationships that are not profitable. In order to do this, each customer's "relationship costs" are compared to their "relationship revenue." A useful calculation for this is the patronage concentration ratio. This calculation is hindered by the difficulty in allocating costs to individual relationships and the ambiguity regarding relationship cost drivers.

Expanded models

Virtuous Circle

Schlesinger and Heskett (1991) added employee loyalty to the basic customer loyalty model. They developed the concepts of "cycle of success" and "cycle of failure". In the cycle of success, an investment in your employees’ ability to provide superior service to customers can be seen as a virtuous circle. Effort spent in selecting and training employees and creating a corporate culture in which they are empowered can lead to increased employee satisfaction and employee competence. This will likely result in superior service delivery and customer satisfaction. This in turn will create customer loyalty, improved sales levels, and higher profit margins. Some of these profits can be reinvested in employee development thereby initiating another iteration of a virtuous cycle.

Fred Reichheld (1996) expanded the loyalty business model beyond customers and employees. He looked at the benefits of obtaining the loyalty of suppliers, employees, bankers, customers, distributors, shareholders, and the board of directors.

Duff and Einig (2015) expanded the model to debt issuers and credit ratings agencies to investigate what role commitment plays in issuer-CRA relations.

Satisfaction-profit-chain (SPC) model

The satisfaction-profit chain is a model that theoretically develops linkages and then enables researchers to test them statistically for a firm using customer data (both from surveys and other sources). The satisfaction-profit-chain was tested in the context of banking industry showing that product and services improvements indeed were associated with customer perceptions, which led to beneficial customer behaviors such as repurchase, and desirable financial outcomes such as increased sales and profitability The satisfaction-profit-chain, as a methodology for managing customer loyalty and firm profitability, is also applicable in business-to-business markets, irrespective of whether the B2B firm sells goods and/or services.

The satisfaction-profit-chain refers to a chain of effects whereby increased performance on key attributes leads to improvements in overall satisfaction, which in turn affects loyalty intentions and behaviors. The increased customer loyalty is shown to affect short- and long-term financial outcomes including sales, profitability, and stock price. More recently, some studies show that especially in the context of services such as retailing and financial services, employee satisfaction can play a critical role in enhancing customer loyalty. This happens because both customer satisfaction and employee satisfaction can mutually reinforce each other, and promote stronger customer loyalty. More specifically, for a given level of overall satisfaction, customer loyalty is disproportionately stronger when customers perceive that employees are also satisfied.

The SPC model has become the basis of a large body of empirical research showing the strong impact of customer satisfaction on customer loyalty. Research has clearly shown that one of the best ways to increase customer loyalty—measured as repurchase intentions and/or repurchase behavior—is by increasing customer satisfaction (more satisfied customers are more loyal, in general). Though the relationship is positive, research shows there are many differences:

1) The effect of customer satisfaction on customer loyalty can vary based on customer demographics and segments, such that it is stronger for some demographic groups and segments than others.

2) The effect of customer satisfaction and customer loyalty, and subsequent financial outcomes for firms, can vary based on industry. Specifically, factors such as—goods versus services industry, degree of competition or concentration in the industry, the utilitarian or hedonic nature of products, and customers' switching costs can affect the nature (non-linearity) and strength of the link between customer satisfaction and customer loyalty.

3) The measurement of loyalty—especially for customers is multi-faceted. Customer loyalty includes a variety of outcomes—intentions and behaviors associated with repurchase including word-of-mouth, complaint behaviors, share-of-wallet or the relative proportion of purchasing from a single firm relative to customer's total purchasing, and likelihood to recommend.

4) Customer loyalty is influenced, not only by customer satisfaction but also employee satisfaction. Customer loyalty is a function of customer satisfaction. In many firms, especially service-oriented industries such as retailing, health-care, financial services, education, and hospitality the level of satisfaction experienced by front-line employees is a critical component. The level of employee satisfaction influences customer satisfaction as shown in a large-scale study of managers, front-line employees, and customers of a DIY retailer in Europe: results showed that managers affected overall job-satisfaction of front-line employees, which in turn affected the satisfaction of customers they interacted with. Most surprisingly, the level of customer loyalty was much higher among those customers who were themselves more satisfied, but also interacted with more satisfied employees. Highly satisfied customers who dealt with relatively less satisfied employees were relatively less loyal.

Commitment-loyalty model

The customer commitment approach to loyalty is based on the idea that customers with higher commitment toward the brand are also more likely to be loyal toward the brand. Earlier models of customer commitment conceptualized it as a unidimensional construct (e.g., Garbarino and Johnson 1999; Moorman et al. 1992). More recently, scholars have developed a five dimensional scale to measure customer commitment and relate it to customer loyalty. The five commitment dimensions include:

• Affective commitment
• Normative commitment
• Economic commitment
• Forced commitment
• Habitual commitment

Data collection

Typically, loyalty data is being collected by multi-item measurement scales administered in questionnaires by software providers such as Confirmit, Medallia, and Satmetrix. However, other approaches sometimes seem more viable if managers want to know the extent of loyalty for an entire data warehouse. This approach is described in Buckinx, Verstraeten & Van den Poel (2006).

All historical trends for different segmentations and their standard of living may also be very helpful in developing customer retention strategy. Lifestyle is also a very powerful tool, can be used for better customer retention and to know his/her needs in better way.

See also

• Loyalty marketing
• Business model
• Customer loyalty programs
• Strategic management
• Brand engagement
• Relationship marketing
• Net Promoter Score
• American Customer Satisfaction Index
• Template:CUSTOMER LOYALTY PROGRAMS AND HOW THEY IMPACT ON BUSINESS COMPETITIVENESS

CUSTOMER LOYALTY PROGRAMS AND HOW THEY IMPACT ON BUSINESS COMPETITIVENESS Name: Professor: Course: Date:

Table of Contents INTRODUCTION 3 Background to the study 3 Problem statement 4 Research question and study objectives 4 LITERATURE REVIEW 5 Introduction to the chapter 5 Customer loyalty programs 5 Customer loyalty programs and business competitiveness 8 Limitations and significance of the literature 9 RESEARCH METHODOLOGY 11 Introduction to the chapter 11 Research philosophy 11 Research approach 11 Research design 12 Research strategy 12 Population and sample 13 Data collection 13 Data analysis 14 Research hypothesis 14 Reliability and validity of the study 15 PROJECT PLAN 16 References 18

INTRODUCTION Background to the study Customer retention is one of the success factors in managing any business. With the rise in globalization, business is faced with increasing pressure to reinvent in order to stay competitive. Businesses must, therefore, ensure that they are able to provide value to their customers and enhance their level of satisfaction (Pilinkiene, Auskalnyte and Kurschus 2013). Besides, for business operations to be stable and sustainable in the contemporary business environment, businesses must respond effectively to the changing tastes and preferences of customers. Customer loyalty programs are one way in which businesses can enhance their customer retention capacity and enhance their business competitiveness in the industry. Bolton, Kannan and Bramlet (2000) defined customer loyalty programs as a reward system used by different types of businesses i.e. retailers; service providers and manufacturers to ensure customers remain loyal to the brand. In this paper, the researcher examines various forms of customer loyalty programs in order to find out how specific programs contribute to business competitiveness in different industries. In highly competitive industries, consistent customer engagement is very important if the business is to realize a higher level of customer satisfaction. Customer engagement helps the business in understanding the needs and expectations of the customers regarding a particular product or service. According to Zakaria et al. (2014), advertising and promotional activities adopted by the company should help in building stronger business-customer relationships. However, in most cases, the conventional advertising and promotional activities fail to realize this goal. Uncles, Dowling and Hammond (2002) highlighted that the objective of loyalty programs is mainly to enhance the level of customer satisfaction thus increasing the customer retention rates. For instance, some loyalty program offers prior access to new products, free merchandise, and sales coupons. The researcher assesses how these examples of loyalty programs ensure greater productivity, profitability or even market share by the business. Problem statement The use of loyalty programs is prevalent in the retail and air industries. In these industries, previous studies how found that it is relatively difficult to improve the retention rates of customers through the use of conventional promotional and advertising techniques. According to Uncles, Dowling and Hammond (2002), these conventional forms of promotion only attract customers to feel and try out new products were ineffective in realizing repeat purchases by the said customers. Furthermore, conventional advertising was unable to help the firm in building a stronger relationship with the customers. Due to these challenges, customer loyalty programs have been developed with the sole aim of realizing greater customer retention rates thus better business competitiveness (Pilinkiene, Auskalnyte and Kurschus 2013). Nevertheless, the researcher has found that very few studies have been conducted to establish the significance of the link between customer loyalty programs, customer retention, and business performance. In the current study, the researcher intends to bridge the existing study gap by evaluating how specific customer loyalty programs would influence business performance or competitiveness. Research question and study objectives In this study, the researcher attempts to answer the following research question:  How do customer loyalty programs impact on the level of business competitiveness within its industry and in the market? To answer the research question, the researcher should evaluate the following issues in relation to customer loyalty programs and business competition: i. Determine the impact of customer loyalty programs on customer retention. ii. Assess the goals of various customer loyalty programs adopted by various businesses. iii. Establish the relationship between customer loyalty programs with business performance factors such as productivity, profitability and market share. iv. Present viable suggestions on how customer loyalty programs can be implemented by businesses to enhance business competitiveness. LITERATURE REVIEW Introduction to the chapter This chapter provides a summary of the past studies that have been conducted on the issue of customer loyalty programs and business performance. The goal of this chapter is to establish facts which are already known on the topic and determine the knowledge gap that exists from the past studies. Customer loyalty programs In the recent decades, the level of business competition has intensified due to the numerous opportunities and challenges that come from globalization and technological advancements. Due to globalization and technological developments, businesses are now faced with more competition, new environmental threats and increasing risks in the market. To continue to be competitive, businesses must come up with strategies that offer a high level of customer satisfaction and unique customer experiences (Magatef and Tomalieh 2015). Furthermore, the marketing strategy of the business must not only be based on attracting new customers but also retaining the existing customers. Basically, it will be counterproductive for businesses to acquire customers then fail to retain these customers. From the past surveys, it has been established that on average the existing customer base of most of the conventional businesses in around 67% while prospective new customers are only 33% (Wilson 2006). From the survey, it is clear that businesses must put effort and investments in customer retention just as they put in customer acquisition. One of the most commonly used customer retention technique is the customer loyalty program. According to Wang Chen and Chen (2015) retailers have developed loyalty programs to help them in gathering information about the behavior of their customers and assist them in understanding various market trends. In doing so, customer loyalty programs are very important in product development processes as they help the business to respond to the immediate needs of the market and customers’ expectations. In short, customer loyalty programs can be described as a reward system developed by businesses especially retailers to influence the purchase decision-making process of their customers. Alternatively, customer loyalty programs can be defined as structured marketing efforts intended at rewarding customers based on their loyalty to the brand in a manner that is advantageous to the firm as well (Tong and Tong 2006). In this case, these programs mostly target the customers who regularly buy from the store or company. Besides, recent technological developments have significantly impacted on the design and implementation of customer loyalty programs. For instance, digital tools such as the internet have enhanced the quality of tools available to the business to collect, store and analyze data (Tong and Tong 2006). Generally, there are more than seven types of customer loyalty programs i.e. simple point system, tier system to reward initial loyalty and encourage more purchases, charging an upfront fee for VIP benefits, structuring non-monetary programs around your customers' values and partnering with another company to provide all-inclusive offers among others. In a simple point system, frequent customers are usually awarded points which translate to different types of rewards such as discounts, freebies or customer special treatment (Starvish 2011). This loyalty program has been found to work best in types of businesses which depend on frequent and short term purchases. On the other hand, tier system is designed in a manner that it rewards initial loyalty and encourage more purchases. For example, initial customers are normally afforded small rewards as the value of the reward increases with subsequent purchases. Tier system is common in businesses characterized by high commitment and price such as airline and hospitality businesses (Starvish 2011). Elsewhere, charging an upfront fee for VIP benefits is another type of loyalty program that is massively growing in some industries. These programs are designed to develop better relationships between the business and its customers. In some cases, an annual fee that allows customers to bypass some purchase barriers is charged. Structuring non-monetary programs around your customers' values help to enhance loyalty as it shows that the business is willing to understand its customers better (Starvish 2011). By understanding the customers, the business can then develop loyalty tools such as promotional coupons and discounts which are consistent with the customers’ sense of worth. Lastly, the business may partner with another company to provide all-inclusive offers. Again, this approach involves fully understanding the needs of the customers and ensuring that the loyalty programs are mutually beneficial to both the company and the customer. Additionally, loyalty programs designed to improve the bond between customers and organization were found to be more effective in increasing customer retention rates of the company. Kotler, Kartajaya and Setiawan (2017) highlighted that these loyalty programs provided additional incentives for the customers to repeat purchasing thus increasing the switching costs to a competing company or product. For example, the frequent flyer program associated with major airlines was found to enhance customer retention as travelers want to reap the benefits of traveling regularly. Customer loyalty programs and business competitiveness Business competitiveness can simply be defined as the attainment and sustenance of competitive edge/advantage by a business in its industry. In this highly competitive business world, businesses must come up with strategies which make them unique compared to the competitors and ensure they will allocate business resources more efficiently. According to past studies, effective implementation of customer loyalty programs by retail stores positively impact on sales and profitability of the business (Kolowich 2015). Thus, loyalty programs can be said to add competitive value to the business. According to Mannay (2010), loyalty programs can impact on business competitiveness by reducing costs and enhancing the effectiveness of the business processes in the long run. For instance, block chain-based loyalty rewards program reduces management costs associated with the system as well as enhancing transparency within business transactions (Deloitte 2017). Other competitiveness factors that can be impacted by loyalty programs include efficiency of service delivery and identification of new and unique business opportunities. The main goal of customer loyalty programs is to enhance the rate of customer retention by the business by offering rewards to the best and most frequent customers. While rewarding customers, these programs create an effective platform for these businesses to collect essential customer information on issues such as shopping habits and preferences (McGuire, Chui and Manyika 2012). Though some scholars have argued that loyalty programs improved customer value, some studies have indicated that loyalty programs failed to significantly improve the quality of customer service leading to no considerable change in rates of customer loyalty. In this case, some scholars have highlighted that companies must consider strategies that improve customer retention that goes beyond the loyalty programs. According to Bolton, Kannan and Bramlet (2000), businesses must ensure increased engagement among them and the customers in order to ensure that customers are able to benefit from increased retail experience. Building and sustaining strong customer relationship is one of the critical success factors in modern marketing. Loyalty programs are therefore included as essential components of customer relationship management strategies (McGuire, Chui and Manyika 2012). Through these loyalty programs, business will be able to maintain effective communication with the customers thus the business benefits by gaining important customer data regarding expectations and needs. The customer relationship management system will, therefore, develop various categories of customers through which marketers can be able to target only loyal customer groups through their programs. According to Chen and Hitt (2002 the design of the loyalty program should, therefore, be intended towards enhancing the happiness of customers. That is, the objective of the loyalty programs should encompass (1) acquisition of customers who are likely to repurchase (2) identification of customers who are unlikely to repurchase and (3) prioritization of marketing resources on customers with features for repurchase but are yet to buy. Limitations and significance of the literature Though customer loyalty programs have been relatively successful in the airline industry, the impact of these programs on retail businesses was mixed. Some studies indicated that customers moved to other retail outlets once the loyalty programs were eliminated (Gomez, Arranz and Cillan 2006). In this case, loyalty programs in retail business did not lead to sustainable customer retention thus only impacted on the business competitiveness in the short term. Apart from hospitality and retail industries, loyalty programs have had negligible impact on other industries such as manufacturing and technology. In this regard, the success of customer loyalty programs can be attached to the type of business or industry. On the other hand, Molinero (2016) argued that loyalty programs were expensive to small and medium businesses as they considerably adds to the operational costs of these businesses thus making these businesses less competitive. Consequently, the review of past studies indicate that business managers should put their efforts in the determination of better ways of serving customers and ensuring that all the needs of the customers are catered for in order to enhance business competitiveness. Magatef and Tomalieh (2015) highlighted that understanding needs, and expectations of the customers were more important than short-term engagement through loyalty programs. Additionally, a cross-sectional study of global financial services showed that customer loyalty programs impacted positively on customer evaluation, behavior and repeat purchase intentions (Mannay 2010). However, the business managers must recognize the impact that these programs would have on their businesses in terms of competitiveness. As seen in some of the studies, loyalty programs do not always lead to positive effect on company’s competitiveness. The review therefore provides the researcher with a better understanding of customer perceptions and expectations leading to a more effective study design.

RESEARCH METHODOLOGY Introduction to the chapter This chapter describes the procedures and techniques that will be used by the researcher to realize the goals of the study. In the development of the research design, the researcher evaluates various past studies and compares the methodologies used with the goals of the current study. In the current study, the goal of the researcher is to explore and explain the relationship between customer loyalty programs and business competitiveness. Research philosophy The researcher considers a pragmatic philosophy to be appropriate for the case of the current study as there are elements of social science and statistics associated with the study. Based on this philosophy, the researcher contends that there is no single approach that can exhaustively resolve a study problem (McKim 2017). Pragmatic philosophy allows for lessening of subjective biases that may be associated with the study while at the same time allowing for non-scientific findings to be conclusively explained. Research approach Generally, there are many approaches that the researcher can use to realize the goals successfully. However, these approaches must be valid, reliable and accurate to allow for effective conclusions and generalizations to be made and ensure that the researcher can be able to make good recommendations (McKim 2017). According to Muganda, Otuya and Waiganjo (2014), mixed research approach is normally used in this type of research philosophy. Mixed research approach consists of qualitative and quantitative research methods. In this case, the data gathered for the sake of the current study can be analyzed using statistical approaches. Mixed research approach will be effective for this study as it allows the researcher to have a better understanding of customers’ opinions and decisions regarding the loyalty programs. That is, scientific or statistical analysis is used to enhance quality of qualitative findings. Research design This study will be a descriptive research. That is, the study aims at exploring different various types of customer loyalty programs which are used in different types of businesses and how they impact on the competitiveness of the businesses (Johnson, Onwuegbuzie and Turner 2007). In this study, the researcher adopts a semi-structured questionnaire method in data collection. This allows for close ended questions for easy statistical analysis as well as open ended questions for the respondents to provide their opinions. The study will also analyze specific cases from past studies where loyalty programs had been applied and how they impacted on the businesses. Lastly, the researcher will compare and contrast the findings of the cases and survey in order to make reliable conclusions or generalizations. Research strategy In this study, a mixed research strategy is selected. The strategy involves both quantitative and qualitative approaches in data collection and analysis. The emphasis of quantitative research methods is to measure or numerically analyze data collected through processes such as polls, administered questionnaires, surveys and manipulation of existing data via computational techniques. However, there are data which will be collected that cannot be analyzed statistically such as opinions, ideas, beliefs and personal perceptions. These types of data will be evaluated using qualitative methods such as content analysis and grounded theory (Johnson, Onwuegbuzie and Turner 2007). As a result, the researcher will be able to understand how loyalty programs impact on customer behavior and the business as a whole. Population and sample The target population in the current study will include both business managers and customers of various retail businesses and stores. Since the study is both quantitative and qualitative in nature, the researcher will select a sample size of 100 participants to meet conditions for a normal distribution thus enhance the credibility of the study. In the selection of the sample, a random sampling technique will be used. In the selection of the participants, the researcher must adhere to the ethical principles of voluntary participation, confidentiality, anonymity and informed consent (Quinlan et al. 2015). Data collection The data to be used in this study will be collected using open-ended questionnaires administered directly to the respondents or participants. According to O'Cathain, Murphy and Nichol (2010), open-ended questionnaires are the most effective data collection tool in this type of study as it allows for respondents to explain their answers and perceptions on various issues under study. For instance, open-ended questionnaires help the researcher to understand how loyalty programs have influenced consumer behavior as well as their purchasing decision. To aid qualitative analysis, data will also be collected from secondary studies and theories and based on personal observations (Bolton, Kannan and Bramlet 2000).

Data analysis Data analysis process in this study will be performed in two stages. The first stage involves analysis of quantitative data using SPSS software. In this analysis, the researcher intends to find the relationship and the nature of the relationship between loyalty programs and various measures of business performance such as customer retention, productivity, profitability and market share (Moghaddam and Moballeghi 2008). The statistical software also evaluates the significance of these relationships. The second stage encompasses content analysis of the respondents’ opinions, beliefs, and ideas collected from the questionnaires. To ensure validity, accuracy, and reliability, the researcher compares and contrasts responses from various respondents and putting aside extreme findings for further evaluation. Moreover, data from past studies regarding loyalty programs and purchasing decisions of the customers are also compared with the findings of the current study (Bryman, 2006). Research hypothesis In every study problem, hypotheses are developed to guide the evaluation and help the researcher in the discussion of findings and making conclusions. In the current study, the researcher has come up with two hypotheses for confirmation or rejection. These hypotheses are: Research hypothesis, H1: Customers’ loyalty increases with an increase in the customer loyalty programs The first hypothesis is based on the argument that businesses have to be nice to the customers. That is, businesses have an economic and social responsibility towards their customers. In return, the nicer the business, the more loyal the customer is. Research hypothesis, H2: Loyalty programs can help businesses to enhance their productivity, profitability and market share The goal of businesses is always to maximize the shareholders’ wealth. In doing so, the business must be more profitable, productive and have a larger market share compared to its competitors. Customer loyalty programs are expected to motivate customers to continue buying from the same company thus improving on all the highlighted business performance variables (Zekiri and Nedelea 2011). Reliability and validity of the study For the research to be reliable, valid and accurate, it must meet the conditions for internal and external validity as well as reliability. To ensure validity in this study, the researcher selects a large sample which will allow for conditions of normal distribution to be met during analysis. Furthermore, random sampling technique is used to select the sample thus reducing problems that can arise as a result of sampling biases and errors (Johnson, Onwuegbuzie and Turner 2007). For reliability, the researcher will conduct inter-rater reliability tests before analysis to determine homogeneity and concordance within the data. This allows the researcher to isolate extreme findings for further analysis thus reducing problems that can arise from extreme values during statistical analysis (Johnson, Onwuegbuzie and Turner 2007). The opinions of the respondents are also compared with those from past studies to determine the degree of conformity and understand the reasons for the differences.

PROJECT PLAN The project plan outlined in the table 1 shall be implemented for a period of fourteen weeks Table 1: Research project outline Stage Activities Time period Milestones Project proposal  Selection of research topic  Development of the research proposal template  Designing survey questionnaires  Approval of the research proposal 4 weeks Complete research proposal Data collection  Sample selection  Availing survey questionnaires to the sample through an online platform  Follow up activities 4 weeks Filled survey questionnaires Data analysis  Statistical analysis using SPSS  Content analysis of data 3 weeks Results of SPSS Results of content analysis Report  Discussion of statistical analysis results  Discussion of content analysis results 3 weeks Final report

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