Synergistic and cannibalization effects in a partnership loyalty program

Matilda Dorotic*, Dennis Fok, Peter C. Verhoef, Tammo H.A. Bijmolt

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

4 Citations (Scopus)

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).

Original languageEnglish
Pages (from-to)1021-1042
Number of pages22
JournalJournal of the Academy of Marketing Science
Volume49
Issue number5
Early online date29 Jan 2021
DOIs
Publication statusPublished - Sept 2021

Bibliographical note

Funding Information:
The authors would like to thank the corporate sponsor for making the data available and Wharton Customer Analytics at University of Pennsylvania for the research opportunity given to us as data awardees. Academic researchers are granted full authority to publish the results of their research. The authors also are grateful to participants of a special session on loyalty programs at EMAC 2016, Challenges of Europe 2019, and seminar participants at BI Norwegian Business School for their valuable suggestions.

Publisher Copyright:
© 2021, Academy of Marketing Science.

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