The Effects of Loyalty Programs on Profits and Customer Retention

The purpose of study is to do an empirical analysis of the effects of customer loyalty and how it relates to customer retention and increases overall profits, particularly in the hospitality industry. The hospitality industry is continually changing and is encompassed in a highly competitive environment. Loyalty Programs are a form of marketing strategies that are set to attract, maintain, and enhance customer relationships (Yoo, 2011). The discussion of the study indicates that there is a significant increase in company profits due to customer retention and loyal customers. In any business customer loyalty is a factor that drives the overall success of the company. It can be quite challenging because there are many other variables that affect customer loyalty which effects customer retention and profits. Variables that affect customer loyalty are increased competition and duplicate of products and services. Another variable is Customer relationship management, which is a strategic necessity for attracting and increasing loyal customers. This relationship encompasses every service related process and direct interaction ultimately enhancing the customer’s overall experience