Bank customer loyalty programs and its ability in creating loyalty amongst diverse individuals at a non-profit company in Durban, KwaZulu-Natal.

Abstract

Customer loyalty programs in banks were introduced to develop a loyal customer base by offering rewards or points in return for continuous banking with their chosen bank. In recent years, there has been fierce rivalry amongst South African banks, each using unique customer loyalty strategies to win customers into their system. However due to the current financial climate in South Africa, loyalty programs have showed signs of becoming drivers for discounts, rather than creating loyalty. The aim of this study was to determine whether customer loyalty programs are creating loyal customers, by understanding the perceptions of employees of a non-profit company, with regards to the level of importance given to customer loyalty programs. The employees of the non-profit company was used as the sample for the study, out of convenience, because it was the researcher’s place of work. A quantitative method was used in the study, making use of a survey questionnaire to gather data from respondents. Overall results of the study from 57 participants, showed that most employees of the non-profit company said they strive to earn maximum points per month in order to reach a higher loyalty status and that they keep up to date with the latest changes made to their bank loyalty program. Most employees showed that they will not consider switching banks for a bank that offers better rewards for its loyal customers and their decision to remain with the bank is not influenced by the number of points that they earn from their banks customer loyalty program. The major conclusion of the study was that bank customer loyalty programs in South African banks do create loyalty amongst employees at the non-profit company in Durban KwaZulu-Natal. It was also found that bank loyalty programs do not have an effect on customer switching behavior. It is recommended that South African banks should continue in their efforts to reward loyal customers as the results of study have shown that loyalty programs do create loyalty amongst the employees of the non-profit company. South African banks should measure loyalty internally to gain customer data through their own databases. This information would provide a better understanding of customer needs which may have an effect on how loyal they will be towards their bank