Many firms engage customers using coalition loyalty programs. One unique characteristic of these programs is that one partner’s performance can affect the performance of other partners (cross-partner effect). While previous research discusses cross-partner effects from the program sales perspective, the role of point redemptions in cross-partner effects is unknown to marketers. This study aims to investigate this role and discusses its variations among stores of the same chain and those of different chains.
Using the data of a popular coalition loyalty program, this paper estimates an empirical model that accounts for the dynamics of program sales and point redemptions and the heterogeneity among different partners in the program.
Cross-partner effects are different between point redemption and program sales. In particular, program sales (point redemptions) in other stores of different chains positively (negatively) affect the focal store’s point redemptions. However, point redemptions in other stores of the same chain as the focal store positively affect the focal store’s program sales.
Coalition loyalty programs are becoming popular around the globe. This research investigates the cross-partner effects of coalition loyalty programs. This is of immense value to practitioners and researchers alike.
This research gives marketing managers insights into the workings of coalition loyalty programs.
This research contributes to loyalty program literature in three ways. First, it complements the literature by investigating the role of point redemption in cross-partner effects. Second, it discusses cross-partner effects in the competing stores from the same chain of the focal store and those from different chains. Third, it explores the dynamic effects of program sales and point redemptions at other stores on program sales at the focal store.
