A survey of customer loyalty programs applied by petrol stations in Nairobi

Abstract

Liberalization of the Kenyan economy has allowed several new players to locally market petroleum products. Moreover, in this sector physical factors such as convenience, location, quality and price affect customers and their purchases. One way for these petrol stations to remain profitable in the competitive market is to ensure that they have customers that remain with them for longer. However, the customer loyalty programs applied by these stations were not known. The objectives of the study were to establish the customer loyalty programs applied by petrol stations and determine the extent to which the loyalty programs had resulted in customer loyalty. This was a descriptive study, whose population of interest consisted of all branded petrol stations in Nairobi. A sample size of 100 petrol stations was used, with non-proportionate stratified sampling method being used to select sample sizes for the oil stations from each oil firm. The study used primary data collected by use of semi-structured questionnaires administered to all the branded petrol stations in Nairobi, which was analyzed by use of descriptive statistics. The study's response rate was 72%. The study established that the loyalty programs applied by these stations include various types of loyalty cards, maintaining databases of customers, utilizing various kinds of communication modes, giving customers different bonuses and maintaining collaborative partnerships with other non-competing organizations. It was further established that that loyalty cards had to a greater extent led to the stations having loyal customers than the other programs, while creation of customer databases had only led to the stations having loyal customers to a moderate extent. This study faced different limitations. Some of the target respondents were unwilling to be interviewed. Secondly, in some stations target respondents could not respond without the required authority from their Head Offices, which was lacking. From the research findings, further research was suggested to establish the perception of the customers to the loyalty programs applied by the petrol stations in influencing customer loyalty to the respective stations and the relationships between loyalty programs and the performance of these petrol stations.