Synergistic and cannibalization effects in a partnership loyalty program

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

doi:10.1007/s11747-020-00759-7

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 journal › Article › Academic › peer-review

7 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 language	English
Pages (from-to)	1021-1042
Number of pages	22
Journal	Journal of the Academy of Marketing Science
Volume	49
Issue number	5
Early online date	29 Jan 2021
DOIs	https://doi.org/10.1007/s11747-020-00759-7
Publication status	Published - 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.

Access to Document

10.1007/s11747-020-00759-7

Cite this

@article{72eb41b6fc44494381ac9c606d05620d,

title = "Synergistic and cannibalization effects in a partnership loyalty program",

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).",

author = "Matilda Dorotic and Dennis Fok and Verhoef, \{Peter C.\} and Bijmolt, \{Tammo H.A.\}",

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: {\textcopyright} 2021, Academy of Marketing Science.",

year = "2021",

month = sep,

doi = "10.1007/s11747-020-00759-7",

language = "English",

volume = "49",

pages = "1021--1042",

journal = "Journal of the Academy of Marketing Science",

issn = "0092-0703",

publisher = "Springer New York",

number = "5",

}

TY - JOUR

T1 - Synergistic and cannibalization effects in a partnership loyalty program

AU - Dorotic, Matilda

AU - Fok, Dennis

AU - Verhoef, Peter C.

AU - Bijmolt, Tammo H.A.

N1 - 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.

PY - 2021/9

Y1 - 2021/9

N2 - 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).

AB - 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).

UR - https://www.scopus.com/pages/publications/85099914278

U2 - 10.1007/s11747-020-00759-7

DO - 10.1007/s11747-020-00759-7

M3 - Article

AN - SCOPUS:85099914278

SN - 0092-0703

VL - 49

SP - 1021

EP - 1042

JO - Journal of the Academy of Marketing Science

JF - Journal of the Academy of Marketing Science

IS - 5

ER -

Synergistic and cannibalization effects in a partnership loyalty program

Abstract

Bibliographical note

Access to Document

Other files and links

Fingerprint

Cite this