Impact of Loyalty Card Programs on Customer Satisfaction and Engagement with Reference to Colombo District Supermarket Retail Industry

Abstract

The super market industry in Sri Lanka is highly competitive and a drastic improvement has been observed in the last decade as consumer lifestyle is changing with greater degree of influence by Western lifestyles. Due to heavy competition in the super market industry, super markets are pushed into a situation to focus more towards customer acquisition and retaining programs in order to increase their market share. However, leading super market chains suggest that despite acquisition programs making impact, customers who have been already acquired by the organizations are switching to competitors. Hence, in order to obtain competitive advantage over competitors, super market chains ought to focus executing effective customer retaining program like loyalty program that would have a positive impact on the business performance of the organization. However, presently, super market chains have implemented loyalty programs that don’t yield expected benefits due to drawbacks in the loyalty programs which prevent customers from participating in the loyalty programs due to customer dissatisfaction on loyalty program in general. The research is essentially aimed at identifying factors that have impact on customer satisfaction on customer loyalty program to participate in super market industry. Anticipated Benefits, Privacy concerns, Variety seeking, Customer involvement and commitment are four key factors identified through literature survey that impact on customer participation to loyalty program. The shoppers of Keells, Cargills and Arpico and Laugfs were selected to represent the different loyalty card types in this research and all the Individuals in Colombo district who do their purchases at supermarkets qualify as the population for the research. The results of the study discuss the impact of customer retainment and engagement factors of loyalty card programs on customer satisfaction and the significant impact of those factors on the customer satisfaction.