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

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Abstract

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.
Original languageEnglish
JournalInternational Journal of Research in Marketing
DOIs
Publication statusE-pub ahead of print - Jul 2019

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Keywords

  • loyalty program
  • program design
  • retail positioning
  • international marketing

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