An investigation of loyalty programs on customer lifetime value: A study of a grocery chain in Kaduna
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- NGN 5000
Background of the Study:
Loyalty programs are critical tools for enhancing customer lifetime value (CLV) by encouraging repeat purchases and fostering long-term relationships. In Kaduna, grocery chains are increasingly implementing loyalty programs that offer rewards, discounts, and personalized promotions to incentivize consistent patronage (Adeniyi, 2023). These initiatives are designed to not only drive immediate sales but also to increase the overall value of a customer over time by enhancing retention and repeat purchasing behavior. With the integration of digital technologies, grocery chains can now track consumer behaviors and preferences more effectively, allowing for more tailored and effective loyalty strategies. As competition in the retail grocery sector intensifies, understanding the impact of loyalty programs on CLV becomes vital for sustaining profitability. This study investigates how various loyalty program elements contribute to increasing customer lifetime value, offering insights into the design and optimization of such programs to maximize long-term customer relationships (Ibrahim, 2024).
Statement of the Problem
Despite the widespread adoption of loyalty programs, there is limited empirical evidence on their impact on customer lifetime value within grocery chains in Kaduna. Retailers face challenges in measuring the effectiveness of loyalty initiatives and isolating their impact on CLV. Without clear metrics, it is difficult to optimize these programs to ensure maximum profitability. This study aims to fill this gap by evaluating the direct relationship between loyalty programs and CLV, thereby guiding more effective loyalty strategy development (Chinwe, 2023).
Objectives of the Study
To assess the impact of loyalty programs on customer lifetime value in a grocery chain.
To identify key loyalty program elements that drive increased CLV.
To recommend strategies for optimizing loyalty programs to maximize long-term customer value.
Research Questions
How do loyalty programs affect customer lifetime value in grocery chains?
Which specific loyalty program elements most significantly impact CLV?
How can grocery retailers optimize their loyalty strategies to enhance customer lifetime value?
Significance of the Study:
This study provides valuable insights into the role of loyalty programs in enhancing customer lifetime value. The findings will assist grocery chains in Kaduna to refine their loyalty initiatives, drive customer retention, and boost overall profitability through sustained long-term relationships.
Scope and Limitations of the Study
This study is limited to a grocery chain in Kaduna, Nigeria, and focuses exclusively on loyalty program impacts on customer lifetime value. It does not extend to other retail sectors or geographic regions.
Definitions of Terms
Loyalty Programs: Marketing initiatives designed to reward repeat customers.
Customer Lifetime Value (CLV): The total revenue a business can reasonably expect from a single customer account throughout the business relationship.
Grocery Chain: A retail network specializing in food and household products.
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