Retail Customer Loyalty Program (member System, For Example) Study Of The Effects

With the rapid development of tertiary industry, the retail industry has occupied an increasingly important position in the life of the residents and the national economy. At the same time, forms of competition have been gradually developed into a variety of non-price competition from the initial price war, such as the "Reward Zone" in the USA and the "Fly Buys" in Australia. These Customer Loyalty Programs are designed to encourage customers’repeat purchase behavior by offering consumers with certain return to develop their inherent dependence on retailers, with the expectation of establishing long-term stable relationships with their customers. Membership cards programs are the most important and widely used form of Loyalty Programs. Through points redemption, points promotion and points rewards, it will offer extra rewards and experience to customers and in this process, they will rely and demand on the points reward, resulting in consumer loyalty for retailing enterprises, and thus their consumer behavior is affected. Then whether the membership cards program positively impact on sales and whether consumer loyalty can be cultivated as what retailers expected are not only academically worthy of exploring, but also a significant guide in practice. Currently little research is on the effect of membership cards program in China, in particular, quantitative research is virtually nonexistent. In this paper, we build a diversified consumer choice model to study the short and long effects of membership cards program by selecting proxy variables to represent the customer loyalty, inventory and customer experience to the program and taking into account the external effect. Through empirical research, we found that the membership cards program has a positive effect on the sales in short term, while the in the long run, it can only cultivate consumer loyalty on the plan, rather than the real loyalty which is the retailer expected.