When do loyalty programs work? The moderating role of design, retailer-strategy, and country characteristics

Nick J.F. Bombaij and Marnik G. Dekimpe

International Journal of Research in Marketing, 2020, vol. 37, issue 1, 175-195

Abstract: Many grocery retailers carry a loyalty program (LP). However, little is known under what conditions these programs are more or less effective. We provide a contingency framework that considers various design, retailer, and country characteristics that can moderate an LP's impact on a retailer's sales productivity. We test the framework across a large sample of 358 grocery banners from a broad cross-section of 27 western and eastern European countries. We find a positive effect of the more basic LP variant that offers direct and immediate rewards. This positive effect, however, disappears when retailers operate a more complex progressive-reward system and when they are part of a multivendor program. An LP's impact also differs between retailers and countries: it is lower when operated by discounters, and higher in countries that are more individualistic and long-term oriented, and where fewer competitors also carry a loyalty program.

Keywords: Loyalty program; Program design; Retail positioning; International marketing (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:37:y:2020:i:1:p:175-195

DOI: 10.1016/j.ijresmar.2019.07.003

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