Synergistic and cannibalization effects in a partnership loyalty program

Matilda Dorotic (), Dennis Fok, Peter C. Verhoef () and Tammo H. A. Bijmolt ()
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Matilda Dorotic: BI Norwegian Business School
Peter C. Verhoef: University of Groningen
Tammo H. A. Bijmolt: University of Groningen

Journal of the Academy of Marketing Science, 2021, vol. 49, issue 5, No 10, 1042 pages

Abstract: Abstract The implicit promise of a partnership in a loyalty program (LP) is that the partners will gain new customers and the LP will reinforce the loyalty to focal partners. Although customers may be encouraged to cross-purchase from partners (which may create positive synergies), they can also switch among partners without forfeiting rewards (which may lead to the cannibalization of sales among partners). To explore these cross-partner effects, we analyze the evolution of customer purchases in a partnership LP across 33 partners from 16 industry sectors. We find that cannibalizations arise more frequently than synergies among partners, contributing to a “rich-get-richer” effect for high-penetration partners; e.g., 10% increase in transactions at department stores reduce transactions at apparel partners (by .04% for new transactions and by 1.18% for recurring customers); but in turn, they attract positive synergies from apparel (.11% increase in transactions by new customers and .37% for recurring transactions).

Keywords: Loyalty programs; Partnership; Coalition; Cross-buying; Synergy; Cannibalization; Customer purchases; Purchase reinforcement (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11747-020-00759-7

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