The effect of loyalty programs on customer lifetime value: An investigation of a supermarket chain in Abuja
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Background of the Study:
Loyalty programs are designed to reward repeat customers and encourage long-term patronage. In the competitive retail sector of Abuja, supermarket chains are increasingly deploying loyalty programs to boost customer lifetime value (CLV). These programs typically offer rewards, discounts, and personalized promotions, aiming to enhance customer satisfaction and drive repeat purchases (Chukwu, 2023). By incentivizing repeat behavior, loyalty programs not only increase immediate sales but also extend the duration of the customer relationship, ultimately elevating CLV. With growing digital integration, many supermarkets now use data analytics to tailor these programs to individual shopping behaviors. The ability to track customer purchases and preferences allows for the creation of more effective, customized loyalty initiatives. As consumer expectations evolve in an increasingly competitive retail market, understanding the impact of loyalty programs on CLV becomes critical for supermarket chains. This study investigates how different loyalty program elements influence customer lifetime value, providing insights into how such programs can be optimized to maximize profitability and customer retention (Ibrahim, 2024).
Statement of the Problem
While loyalty programs are widely implemented, their direct impact on customer lifetime value remains under-researched in the context of Abuja’s supermarket chains. Retailers often lack robust measurement frameworks to link loyalty rewards with long-term financial outcomes. This uncertainty complicates efforts to design effective programs that truly enhance CLV. Without clear data, supermarkets may invest in loyalty initiatives that do not yield expected benefits, thereby affecting overall profitability (Adebola, 2023).
Objectives of the Study
To determine the effect of loyalty programs on customer lifetime value.
To identify which elements of loyalty programs most significantly influence CLV.
To offer recommendations for optimizing loyalty initiatives in supermarkets.
Research Questions
How do loyalty programs affect customer lifetime value in supermarket chains?
Which specific program elements drive increased CLV?
What strategies can be implemented to maximize the benefits of loyalty programs?
Significance of the Study
This study highlights the importance of loyalty programs in enhancing customer lifetime value, offering actionable insights for supermarket chains in Abuja to optimize their loyalty initiatives and drive long-term profitability (Chukwu, 2023).
Scope and Limitations of the Study
This study focuses on a single supermarket chain in Abuja, Nigeria, and does not extend to other retail sectors or regions.
Definitions of Terms
Loyalty Programs: Initiatives that reward repeat customers to encourage long-term engagement.
Customer Lifetime Value (CLV): The total worth of a customer to a business over the entire duration of their relationship.
Supermarket Chain: A group of retail grocery stores operating under a common brand.
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