Do loyalty programs enhance behavioral loyalty?
Author InfoLeenheer, J. Bijmolt, T.H.A. Heerde, H.J. van Smidts, A. (Tilburg University, Center for Economic Research) Abstract This paper studies the effects of loyalty programs on share-of-wallet using market-wide household panel data on supermarket purchases. We find that loyalty programs relate positively to share-of-wallet, but the programs differ in effectiveness and some are ineffective. Both a saving component and a multi-vendor structure enhance the effectiveness of a loyalty program, but high discounts do not lead to higher share-of-wallets. Further, if households have multiple loyalty cards, the effectiveness of a specific loyalty program is much smaller. The positive loyalty program effects on share-of-wallet entail substantial additional customer revenues. However, given the high number of loyalty programs already available in the market, our model predicts that a new loyalty program introduction will only lead to small effects on share-of-wallet. Download InfoTo download:
