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Faculty Sponsor

Nichaya Suntornpithug

Department/Program

Management and Marketing

Abstract

In today’s competitive marketplace, it is crucial for companies to focus on keeping their existing customers since acquiring new customers costs much more than to retaining ones. An increasing usage of mobile loyalty programs has been witnessed in the past recent years to increase customer retention and to deter the customers from switching to their competitors. However, measuring the effectiveness of these programs has not been systematically substantiated. This study will fill voids in the literature by investigating the effects of mobile loyalty applications (apps) on customers’ purchase and retention in a coffee industry where many consumers prefer to customize coffee to their tastes. Mobile loyalty apps are programs implemented on one’s smartphone that can be purchased or are free of charge. In a coffee industry, the loyalty app is convenient and saves time by allowing the purchase of customized coffee directly from the mobile application. The Starbucks app, for example, was installed in late October 2013 and was bringing in 11 percent of Sales volume by mid-2014, according to the Howard Schultz, CEO of Starbucks at the time the application was launched. Then in July of 2017, it had doubled to 22 percent of all US Sales. The Dunkin Donuts app was launched at the end of January 2014. This study intends to survey customers using mobile applications of coffee companies such as Starbucks and Dunkin Donuts to ascertain the reasons behind the coffee purchases they make. Both companies allow customers to make online purchases and have a card on file which brings them more revenue. Dunkin Donuts upgraded their app to help customers earn more drinks in 2016 on the eve of the update of Starbucks app which shows their competition. Also, Dunkin Donuts has used their appreciation of the donut to lure customers to adapt a taste for their coffee products. This study explores different driving factors of effective mobile loyalty apps in increasing customer loyalty. We will investigate the role of online purchasing methods, ease of use of the apps, time to get a free item on the app, types of promotion, location, and the level of customization of the coffee. Demographic variables such as income level, gender, and ages will also be collected. Theoretical and practical implications of this study will be discussed.

Disciplines

Business

Building Brand Loyalty with Mobile Applications

Included in

Business Commons

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