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

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&#...

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Bibliographic Details
Published in:International journal of research in marketing 2020-03, Vol.37 (1), p.175-195
Main Authors: Bombaij, Nick J.F., Dekimpe, Marnik G.
Format: Article
Language:English
Subjects:
International marketing
Loyalty program
Program design
Retail positioning
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Summary: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.
ISSN:0167-8116
1873-8001
DOI:10.1016/j.ijresmar.2019.07.003