The Influence of Loyalty Programmes on Customer Loyalty in Banking Essay

The Influence of Loyalty Programmes on Customer Loyalty in Banking Sector - Essay Example Due to globalised competition the strategic importance of satisfaction, loyalty and quality has been the core structure in winning over the consumer’s preferences and maintain competitive advantage. Thus the higher the quality of service, the more satisfied and loyal the customers would be. Since customer loyalty is still in a flux in the financial service sector, banks have an opportunity to strengthen the customer relationship by means of rewards programs which are relevant to its customers. About 20% of the banking customers are likely to change the primary institutions and also almost half of the percentage of customers prefers relationship with multiple institutions. Therefore a successful loyalty program would get customers invested in the relationship by rewarding the customers on the most optimal products and services (BAI, 2011). Aims and Objective The aim of the research is to find out the influence of loyalty programmes on customer loyalty in banking sector. The obj ectives of the project are to Analyses the factors that influences the loyalty of the customers in the banking sector To analyses the influence of quality on satisfaction Any changes in the customers loyalty patterns Recommendations on how banks can improve customer loyalty. Research questions The following are the research questions associated with the project: 1. What will be the impact of customers loyalty towards the banks brand image and positioning? 2. Does customer loyalty influences consumer behaviour? 3. How would customer loyalty affect the competitive advantage of the banking sector? 4. What is the influence of loyalty programs in the banking sector? 5. What factors influences the customer’s loyalty in the banking industry?. Literature Review Customer loyalty is about attracting right customers, getting the customers to buy often, allow the customers to buy in higher quantities and brings in more customers for the organization. it is build through means of keeping in touch with the customers, showing the customers that the organization cares for them and rewarding the customers for choosing a particular bank over its competitors. Thus treating the customers the way they want it to be treated (Customer Loyalty Institute, n.d). There are many different approaches towards customer loyalty. Theories of behavioural loyalty were considered as the function of total purchase; function of buying pattern, or of buying probability. These are the approaches that look at the brand loyalty rather than reasons. Loyalty should be evaluated both attitudinal and behavioural criteria (Akhter et.al, 2011, p. 1168). With the availability of ample banking facilities the customers gets influenced and this leads to customer loyalty towards its bank (Fry et.al, 2011). The managers are aware of the fact that quality superiority provides a competitive advantage for the banks and leads to customer loyalty, growth of market share and productivity of the banks. Culture ha s been identified as the key variable that influences the service quality perception that examines the banking sector (Sigala & Christou, 2006, p.381). Brand plays an important role in bank marketing in order to attract as well as retain its customers. Brand building is a costly activity but its benefits