The effect of loyalty rewards on customer lifetime value: A study of a fintech startup in Kano
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- NGN 5000
Background of the Study:
Loyalty rewards have emerged as a strategic tool for fintech startups aiming to increase customer lifetime value (CLV) by incentivizing long-term engagement and repeat transactions. In Kano, fintech startups are incorporating innovative loyalty rewards—such as cashback offers, tiered reward systems, and exclusive benefits—to enhance customer retention and drive increased value over time (Suleiman, 2023). These rewards not only encourage customers to engage more frequently with the service but also help in building a strong brand relationship by rewarding loyalty. As competition in the fintech sector intensifies, startups are leveraging these reward systems to differentiate themselves, build trust, and foster long-term loyalty. By analyzing customer behavior and transaction data, startups can refine their loyalty reward structures to optimize CLV. This study examines the impact of loyalty rewards on customer lifetime value within a fintech startup in Kano, exploring how different reward mechanisms influence customer retention and overall profitability (Ibrahim, 2024).
Statement of the Problem
While loyalty rewards are widely used in the fintech industry, there is limited empirical evidence on their direct effect on customer lifetime value in startups. Fintech companies in Kano face challenges in measuring how different loyalty reward strategies translate into increased CLV. The absence of robust evaluation frameworks makes it difficult to determine the ROI of loyalty rewards, thus hindering strategic improvements and further investments in such initiatives (Chinwe, 2023).
Objectives of the Study
To assess the impact of loyalty rewards on customer lifetime value.
To identify key reward mechanisms that drive increased CLV.
To provide recommendations for optimizing loyalty reward strategies.
Research Questions
How do loyalty rewards affect customer lifetime value in a fintech startup in Kano?
Which loyalty reward strategies are most effective in enhancing CLV?
How can fintech startups optimize their loyalty programs to improve long-term profitability?
Significance of the Study
This study is significant as it provides valuable insights into the role of loyalty rewards in boosting customer lifetime value within the fintech sector. The findings will help fintech startups in Kano refine their reward strategies, enhance customer retention, and achieve sustainable business growth (Suleiman, 2023).
Scope and Limitations of the Study
This study is limited to a fintech startup in Kano, Nigeria, focusing solely on the impact of loyalty rewards on customer lifetime value. The results may not be generalizable to other industries or regions.
Definitions of Terms
Loyalty Rewards: Incentives provided to customers to encourage repeat business and long-term engagement.
Customer Lifetime Value (CLV): The total revenue a business can expect from a customer over the entire duration of their relationship.
Fintech Startup: A new company in the financial technology sector that leverages digital tools to offer financial services.
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