The Effect of Loyalty Programmes on Financial Performance of Mobile Telecommunication Firms in Kenya

Abstract

Loyalty programs serve a great purpose in most organizations across the world. To achieve constant sales a firm has to maintain and sustain a good relationship with its customers. Loyalty programs are intended to recognize loyal customers and motivate them thereby creating a culture of continuously buying the products and services. The study sought to determine the effect of loyalty programmes on financial performance of mobile telecommunication firms in Kenya. The study employed a descriptive research design to find out the linkage between the variables. The population involved three mobile Telecommunication firms in Kenya namely: Safaricom Limited, Airtel and Telkom Kenya Limited. The study used secondary data that was extracted from annual reports of these firms for a period of five years (2010-2014). Data was analyzed using descriptive statistics and inferential statistics. The study found that corporate loyalty spent, individual loyalty spent, and logarithm of assets and net assets were positively related to financial performance of Telecommunication firms in Kenya. Telecommunication firms should institute a loyalty program to attract more customers and to make them feel valued. The more a customer feels appreciated by a business, the more he or she is likely to support that company and refer it to others. It is recommended that a related research study should be executed on the effect of loyalty programmes on the financial performance of other firms such as commercial banks that face stiff competition. Then, a comparison of findings can be made upon which conclusive results can be drawn.