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When Reward Convenience Meets a Mobile App: Increasing Customer Participation in a Coalition Loyalty Program, Journal of the Association for Consumer Research

Abstract

Coalition loyalty programs (CLPs) have been gaining popularity in recent years. A CLP, such as Plenti introduced by American Express in 2015, is a third-party program that lets its customers accrue points by transacting at a variety of businesses and retailers, and customers can redeem rewards from the CLP when they have enough points. In this research, using a natural experimental setting, we investigate tactics that a CLP can implement to encourage customers’ participation through point accruals and reward redemptions. We propose that a CLP can stimulate existing customers’ participation by providing information and reward convenience. By analyzing a unique dataset, we find that the additions of a mobile app (information convenience) and a point-of-sales (POS) redemption structure (reward convenience) increase accruals and redemptions for those who adopt them, particularly for occasional customers who previously accrue at a below-average level and rarely redeem. We also find that the two tactics are synergistic for customers who previously accrue at an above-average level but rarely redeem. As for active customers, information and reward convenience encourage further redemptions, which reduces a CLP’s liability. Finally, we posit that customers follow the “Principle of Least Effort” and show that they tend to accrue the additional points by spending on convenient, high-penetration categories in light of information and reward convenience. From our findings, we recommend that a CLP should invest in increasing its convenience proposition such as building a mobile app or allowing POS redemptions to encourage customers’ continuing participation.

Type

Article

Author(s)

Rebecca Wang, Lakshman Krishnamurthi, Edward Malthouse

Date Published

2018

Citations

Wang, Rebecca, Lakshman Krishnamurthi, and Edward Malthouse. 2018. When Reward Convenience Meets a Mobile App: Increasing Customer Participation in a Coalition Loyalty Program. Journal of the Association for Consumer Research.

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