Cross-reward effects in a coalition loyalty program: The impact of a point currency devaluation

Valeria Stourm and Eric T. Bradlow

International Journal of Research in Marketing, 2023, vol. 40, issue 2, 276-293

Abstract: While single-brand reward programs encourage customers to remain loyal to that one brand, coalition programs encourage customers to be “promiscuous” by offering points redeemable across partner stores. Despite the benefits of this “open relationship” with customers, store managers face uncertainty as to how rewards offered by partners influence transactions at their own stores. We use a model of multi-store purchase incidence and spend to show how the value of points shared among partner stores can explain patterns in customer-level purchases across them. We also allow reward spillovers to be moderated by three measures of store affinity that characterize a coalition’s portfolio: the relative popularity, geographic distance, and overlap in product categories between each pair of stores.

Keywords: Loyalty programs; Rewards; Retailing; Bayesian estimation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:40:y:2023:i:2:p:276-293

DOI: 10.1016/j.ijresmar.2022.08.003

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