The effects of loyalty programs on customer loyalty in automotive industry

Abstract

The fundamental concepts of customer satisfaction, brand loyalty, and brand association serve as the cornerstones of the companies' marketing strategies. To ensure to have those concepts in their businesses, companies need to place the customer into the center, and implement their marketing strategy with considering these cornerstones effectively. Understanding and assessing the demands, actions, and qualities of the customer is the first step for putting customer into the focus. By gathering, examining, and utilizing the behavioral and characteristic data, brands can enhance their performance. One of the important strategies to implement customer data management within the operations, is customer loyalty program. With loyalty programs, the companies can increase their sales revenues and utilization or purchasing of the products and services. Various businesses such as airlines, retailers and banks develop loyalty programs in order to keep the customer loyal to their brands. One of the key players in the market, automotive companies, also integrate loyalty programs within their strategy. However, there is not sufficient amount of research in the literature that mentions the usage of car brand loyalty programs and clearly demonstrates the impacts of loyalty programs on customer loyalty by taking customer satisfaction into account. In this dissertation, the impacts of the car brand loyalty programs on customer loyalty were assessed with a survey and previous literature-based research. There were a total of 331 people answered the survey. To fully comprehend the impact of loyalty programs on customer satisfaction, the three main benefits of the programs -utilitarian, symbolic, and hedonic-were initially grouped. After doing so, the relation between customer satisfaction and customer loyalty were examined to figure out the main goal of the study. The studies of the data revealed a favorable relationship between customer satisfaction and the utilitarian, symbolic, and hedonistic advantages of the loyalty program. Additionally, the study demonstrated that customer loyalty grows as customer satisfaction does. The additional variables (gender, age, education level, income group, job, owned car brand, car ownership period and service visit frequency of the customers) were also tested to observe whether they have an impact of the research model. The results showed that customer loyalty differs according to the car ownership period and job of the customer. Besides these, there was not any other significant difference amongst the variables. During the research, the reasons for not participating in a car brand loyalty program and the preferences of non-members for loyalty program features were also discovered. Lack of information, a lack of perceived need for a loyalty program, the absence of any existing loyalty programs, and the absence of any appealing offers that attract customers are the most frequent excuses given for not enrolling in a loyalty program. Additionally, non-member clients prefer to sign up for a loyalty program that allows for easy registration, benefits for regular use, and point collection.