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Room For Improvement With The Menu Choices, Promotional
Room For Improvement With The Menu Choices, Promotional
Room For Improvement With The Menu Choices, Promotional
Room for improvement with the menu choices, promotional deals for discounts or special
offers to enhance customer loyalty
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Cover Letter
Executive Summary
This study examines the potential for enhancing promotional deals by providing better discounts
or exclusive offers to customers in order to foster customer loyalty. The importance of customer
loyalty in today's business environment is well-established, and promotional deals are a common
tool businesses use to increase customer loyalty and sales. Through a literature review, interview,
and a case study of successful promotional deals, it explores the effectiveness of promotional
strategies in fostering customer loyalty, the role of discounts and exclusive offers in promotional
deals, and customer perceptions and attitudes toward these deals. The study found that discounts
and exclusive offers can significantly impact customer behaviour and loyalty and that
personalized and targeted promotional deals are more effective in driving customer loyalty and
business growth. The findings have important implications for businesses seeking to enhance
customer loyalty and grow their customer base through promotional deals and suggest further
research on this topic.
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Table of Contents
Cover Letter...............................................................................................................................................2
Executive Summary...................................................................................................................................3
Introduction...............................................................................................................................................4
Literature Review......................................................................................................................................5
Customer Loyalty....................................................................................................................................5
Effectiveness of Promotional Strategies in Fostering Customer Loyalty.................................................6
Customer Perceptions of Promotional Deals..........................................................................................7
Case Study of Successful Promotional Deals...........................................................................................9
Amazon Prime.........................................................................................................................................9
Description of the problem/situation......................................................................................................10
Summary of the Interview......................................................................................................................10
Suggested Solution/Opportunity............................................................................................................11
Recommendations...................................................................................................................................12
Conclusion................................................................................................................................................13
References................................................................................................................................................14
Figure 1.......................................................................................................................................................6
Figure 2.......................................................................................................................................................7
Figure 3.......................................................................................................................................................9
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Introduction
Context/Background: In today's hyper-competitive business environment, customer loyalty is
critical to the success of any organization. Companies invest significant resources in acquiring
and retaining customers, but many need help to keep customers engaged and loyal over the long
term. One approach to fostering customer loyalty is through promotional deals that offer
discounts and exclusive offers to customers. However, it remains to be seen whether providing
better discounts or exclusive offers can enhance the effectiveness of these promotional deals in
unlocking customer loyalty.
Purpose: This study aims to examine the potential for enhancing the effectiveness of
promotional deals by providing customers with better discounts or exclusive offers. Specifically,
it aims to investigate whether offering exclusive discounts or special offers to customers can
increase customer loyalty and, if so, what types of promotions are most effective.
Scope: To investigate the potential for enhancing promotional deals through better discounts and
exclusive offers, this study reviews existing literature on customer loyalty and promotional
strategies.
Research Methods: This study utilizes a mixed-methods approach that combines quantitative and
qualitative research methods. This study examines a case study of a company that has
successfully used these types of promotions to enhance customer loyalty. An in-depth interview
with the manager of the D-plus pizza restaurant was also conducted to gain more detailed
insights into their experiences with promotional deals.
Main Message: The main message of this study is that providing better discounts or exclusive
offers can be a powerful tool for enhancing the effectiveness of promotional deals in unlocking
customer loyalty. By creating promotions that make customers feel valued and appreciated,
businesses can build stronger relationships with their customers and increase the likelihood that
they will remain loyal over the long term.
Literature Review
Customer Loyalty
The importance of customer loyalty has been an integral aspect of business strategy for a
considerable period. According to scholarly research (Jenneboer et al, 2022), customer loyalty is
the extent customers adhere to a company regarding their demeanour and actions, even when
presented with alternative options from other vendors. For numerous enterprises, customers who
consistently engage in repeat purchases are deemed of immense worth. Acquiring a new
customer can incur expenses that are several-fold greater than retaining an existing customer.
Moreover, a repeat customer guarantees an increased average customer value. This highlights the
paramount significance of customer loyalty (Jenneboer et al, 2022).
Per prior research (Pratminingsih et al., 2013), customer loyalty is influenced by three primary
factors: customer trust, customer satisfaction, and commitment. Customer satisfaction is all about
the gratification of customers with the goods, amenities, and competencies offered by a business
in the past. The future belief of consumers in a brand (Jenneboer et al, 2022) is denoted as trust.
Customer commitment pertains to the association's retention of a customer's participation or
unrelenting responsibility to return and invest in the relationship.
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Figure 1
Sustained growth is contingent upon cultivating a loyal customer base. Customer satisfaction and
repeat purchases are critical to the success of almost every business. Empirical data indicates that
customers who exhibit steadfast allegiance to a brand and its offerings yield greater returns on
investment. Research conducted by Marketing Metrics reveals that the probability of selling to
an established customer is up to 14 times higher than securing a new customer (Rioux, 2022). In
their study, Bain & Company and Harvard Business School note that a 5% increase in customer
retention rates results in a profit surge ranging from 25% to 95% (Rioux, 2022). Additional
findings indicate that existing customers are 50% more likely to sample new merchandise and
spend 31% more on average than new customers. Over the last five years, the cost of acquiring
new customers has spiked by nearly 50% (Rioux, 2022).
In today's highly competitive business landscape, cultivating customer loyalty is critical to the
long-term success of any brand. Beyond the obvious benefits of repeat purchases and increased
revenue, loyal customers also serve as powerful advocates for your company (Rioux, 2022).
With the proliferation of social media and other digital channels, anyone with a connected device
can effectively promote your brand to their network of friends and followers. Recent research
from Temkin Group has shown that a single positive experience can lead to a recommendation
from as many as 77% of customers (Rioux, 2022). These word-of-mouth endorsements are a
powerful supplement to traditional marketing and sales efforts, helping streamline the customer
acquisition process and drive growth for your business. Empowering your customers to act as
"micro-influencers" can unlock significant value while saving time and resources.
Effectiveness of Promotional Strategies in Fostering Customer Loyalty
Several studies have examined the effectiveness of promotional strategies in fostering customer
loyalty. According to a study by Souiden et al. (2019), promotional strategies such as discounts
and coupons are effective in increasing customer loyalty. The study found that customers who
received discounts or coupons were likelier to return to the same store than those who did not
receive any incentives. Another study by Le (2021) found that customer loyalty is fostered by
customers' emotional attachment to a brand. The study found that promotional strategies that
create an emotional connection with customers, such as loyalty programs, are more effective in
fostering customer loyalty than those that do not.
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Figure 2
such as consumers' tendency to invest more time and energy in searching for the best deal or to
postpone their purchases in anticipation of promotional offers.
Studies have shown that customers have a positive attitude towards discounts. According to a
study by Sheehan et al. (2019), discounts are the most influential factor that drives consumer
purchasing decisions. This is because customers perceive discounts as an opportunity to save
money and get value for their purchases. Customers also believe that discounts give them control
over their spending. They feel empowered when they can get a good deal on a product they want
to buy.
However, there is a downside to discounts. A study by Lee & Chen-Yu (2018) found that
discounts can decrease a customer's perceived product value. This is because discounts signal
that the product is worth less than the full price. This perception can lead to a decrease in
customer loyalty and future purchases. Discounts can also lead to decreased profit margins, as
businesses are forced to sell products at lower prices to attract customers.
Exclusive offers:
Exclusive offers, on the other hand, have a different effect on customer attitudes. Exclusive
offers are promotions only available to a select group of customers. These offers are designed to
make customers feel special and appreciated (Lee & Kim, 2023). One key factor influencing
customer attitudes toward exclusive offers is the perceived value of the offer. Research has
shown that customers are more likely to respond positively to exclusive offers with significant
discounts or benefits than regular offers (Lee & Kim, 2023). Furthermore, customers are more
likely to perceive the offer as valuable if it is targeted toward their needs and preferences. This
highlights the importance of personalization and segmentation in exclusive offer campaigns.
Another important factor that influences customer attitudes toward exclusive offers is the
perceived fairness of the offer. Customers are more likely to respond positively to exclusive
offers if they feel that the offer is fair and equitable. This means that the offer should be available
to all customers on an equal basis and not just a select few (Lee & Kim, 2023). Additionally, the
terms and conditions of the offer should be transparent and clear to avoid any confusion or
ambiguity. The perceived scarcity of the offer is also a key factor that influences customer
attitudes toward exclusive offers. Research has shown that customers are more likely to respond
positively to exclusive offers that have limited availability or are only available for a limited time
(Kim et al., 2021). This creates a sense of urgency and encourages customers to take immediate
action, which can lead to increased sales.
However, it is important to note that customer attitudes towards exclusive offers can also be
influenced by their previous experiences with the brand. If a customer has had a negative
experience with the brand in the past, they may be less likely to respond positively to exclusive
offers (Joseph et al., 2020). This highlights the importance of building a strong and positive
brand reputation through effective customer service and communication. Moreover, the
frequency of exclusive offers also plays a role in customer attitudes. Exclusive offers that are too
frequent may lead customers to devalue them or perceive them as a normal occurrence, thus
losing their sense of exclusivity.
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Figure 3
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Another key aspect of Amazon's promotional deal strategy is incentivizing existing members to
refer their friends and family to join Prime. The company offers a $10 credit for every successful
referral, providing a valuable incentive for members to share their positive experiences with
others (Sannon & Cosley, 2019). This referral program has been particularly effective, as it
creates a sense of trust and credibility among potential new members who are more likely to join
based on the recommendation of a friend or family member.
In addition to these promotional deals and incentives, Amazon has also used personalized offers
and recommendations to enhance customer loyalty. By analyzing customer data, the company
can provide personalized product recommendations and deals based on each customer's purchase
history and preferences. This creates a sense of personalization and value, making customers
more likely to remain loyal to the brand and continue using its services.
The impact of Amazon Prime's success can be seen in the company's overall business
performance. The program has become a significant driver of Amazon's revenue, with an
estimated $19.2 billion in revenue generated from subscription services in 2020 (Shah, 2020).
Additionally, the program has helped to drive customer retention and satisfaction, making it
more likely that customers will continue to use Amazon's services and make repeat purchases.
always prioritized offering a large variety of food to cater to people of all ages. He mentioned
that their popular 2-for-1 and 3 for one deal were a way to give back to their loyal customers
while also attracting new ones. He emphasized that their customers always come first, and they
are always looking for ways to enhance their dining experience.
When I asked him about the potential for better discounts or exclusive offers, the manager
acknowledged that it could be a viable strategy to increase promotional deals. However, he
cautioned that the discounts should not compromise the quality of their food or service. He said,
"Our customers come here because they know they will get quality food and service, and we
cannot compromise on that." He also noted that offering too many discounts could lead to
customers only coming in when they have a coupon rather than regularly.
We then discussed the impact of such deals on customer loyalty and business performance. The
manager shared that while promotions can attract new customers, it is the quality of the food and
service that keeps them coming back. He said, "Customer loyalty is built on trust, and we have
worked hard to earn that trust. We can offer deals, but it's our consistent quality that keeps our
customers loyal." He also noted that in the long run, it is not just about attracting new customers
but retaining the existing ones. He said, "We value our regulars and treat them like family. We
know their names, and their favorite dishes, and we make sure they feel welcomed and
appreciated every time they walk in. That's how you build customer loyalty."
My conversation with the manager of D-plus Pizza was enlightening and thought-provoking. It
made me realize that while promotions and deals can be a great way to attract new customers,
they should not come at the cost of quality and consistency; and that customer loyalty is built on
trust, quality, and the feeling of being valued and appreciated.
Suggested Solution/Opportunity
In today's competitive market, businesses are always looking for ways to attract and retain
customers. One strategy that many businesses use is offering promotional deals, such as
discounts or exclusive offers. However, businesses often need help finding the right balance
between providing attractive deals and maintaining their profit margins. Here are five viable
solutions that businesses can consider to achieve this:
1. Personalized Offers: Businesses can use customer data to create personalized offers that
are tailored to the specific needs and preferences of each customer. This can improve the
effectiveness of the promotional deal, increase customer loyalty and satisfaction, and
ultimately drive more sales.
2. Tiered Discounts: Businesses can offer tiered discounts to customers based on their
spending habits. For instance, customers who spend a certain amount or purchase a
certain number of products can get higher discounts than those who spend less or
purchase fewer products. This approach can encourage customers to spend more to
qualify for better discounts.
3. Limited-Time Offers: Offering discounts or exclusive offers for a limited time period can
create a sense of urgency and encourage customers to take action quickly. This approach
can be particularly effective for seasonal or holiday sales, where customers are already in
a buying mindset.
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Recommendations
Based on the suggested solutions and viable solutions, here are some recommendations that
businesses can consider:
1. Develop a Clear Strategy: Businesses should develop a clear strategy for their
promotional deals, taking into account their goals, target audience, and budget. This will
help them to ensure that their promotional deals are effective, sustainable, and aligned
with their overall business objectives.
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2. Leverage Data Analytics: Businesses can leverage data analytics tools to gain insights
into customer behaviour and preferences. This will help them create personalized offers,
tiered discounts, and loyalty programs tailored to their customers' needs.
3. Communicate Effectively: Clear communication is key to the success of any promotional
deal. Businesses should communicate the terms and conditions of their promotional deals
clearly and effectively to avoid customer confusion and dissatisfaction.
4. Monitor and Measure Performance: Businesses should regularly monitor and measure the
performance of their promotional deals to determine their effectiveness and make
necessary adjustments. They should track key metrics such as sales, customer acquisition,
and retention to ensure that their promotional deals deliver the desired results.
5. Balance Discounts with Profit Margins: While discounts and exclusive offers can
effectively drive sales and customer loyalty, businesses should balance them with their
profit margins to ensure long-term sustainability. They should set clear pricing and
discount policies that take into account the cost of goods sold and profit margins.
The benefits of implementing these recommendations include the following:
1. Improved Customer Satisfaction and Loyalty: By offering personalized and targeted
promotional deals, businesses can improve customer satisfaction and loyalty, leading to
repeat business and positive word-of-mouth recommendations.
2. Increased Sales and Revenue: Effective promotional deals can drive more sales and
revenue for the business, leading to increased profitability and growth.
3. Enhanced Brand Reputation: By offering promotions that are valuable, fair, and
transparent, businesses can enhance their brand reputation and build trust with their
customers.
4. Better Use of Resources: By developing a clear strategy and leveraging data analytics,
businesses can make better use of their resources and ensure that their promotional deals
are targeted and effective.
Conclusion
This study highlights the importance of discounts and exclusive offers in creating effective
promotional deals to enhance customer loyalty. This study confirms that customers value
discounts and exclusive offers and that providing better discounts or exclusive offers can
significantly impact customer behaviour and loyalty. Furthermore, the analysis of a successful
case study demonstrates that businesses can effectively leverage discounts and exclusive offers
to foster customer loyalty and drive sales. Companies must deeply understand their customers'
needs and preferences to create promotions that resonate with their target audience. They must
also carefully consider the discounts and exclusive offers most likely to appeal to their customers
and personalize promotions accordingly. By leveraging these insights, businesses can create
effective promotional deals that drive sales and foster long-term customer loyalty while
maintaining great profit margins.
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References
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bring-consumers-back-to-your-brand
DynamicWeb. (2022). The Art of Discounts: Discount Pricing Strategy for eCommerce.
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