Coalition Loyalty Programs: Synergy or Cannibalization?
Evidence from a multi-sector coalition loyalty program
What do Air Miles, Bumped, PAYBACK, Plenti, and the S&H Green Stamps have in common?
Although these loyalty programs come from different eras and different geographic regions, they share one common design component: instead of being offered by a single or dominant firm, the programs allow members to earn points (or stamps) by buying from a large number of businesses in the alliance.
These loyalty programs are called coalition loyalty programs or multi-vendor loyalty programs. The idea is that by joining forces, companies can offer a more appealing program to members at a lower cost while enjoying cross-selling opportunities.
How do such programs affect consumers’ purchases? What do they mean to the businesses involved?
In this article, we offer some insights to these questions based on a research study recently published in the Journal of the Academy of Marketing Science. In the study, the researchers analyzed member purchases in a multi-sector coalition loyalty program in Europe. They found the program to be a mixed blessing for participating businesses.
Before diving into the research findings, let’s first take a quick look at why a coalition loyalty program may be a…
