Short-term Impact of Item-based Loyalty Program on Customer Purchase Behaviors
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Short‑term Impact of Item‑based Loyalty Program on Customer Purchase Behaviors Bo Wu1 · Yi Sun2 · Katsutoshi Yada3 Received: 27 February 2020 / Accepted: 2 July 2020 © The Author(s) 2020
Abstract Studies based on the analysis of a new design of loyalty program, item-based loyalty programs (IBLPs), indicate that customers are more interested in item-based reward points than in traditional price discounts. However, we are still unaware of customer responses to the different point settings on IBLP items. This study investigates an analysis with Tobit II to explore IBLPs’ short-term (4 months) impact on customers’ purchase behaviors using data from two newly opened Japanese supermarket chains that have implemented this new IBLP program from the beginning. The results showed that different types of customers are differently affected by IBLPs, and that heavy customers are more inclined to purchase more items with more spending money than others. The results also indicated that customers’ purchase behaviors are affected by IBLPs’ different point levels. Moreover, to an IBLP with different points, the responses from different types of customers are different. The findings of this study have important guiding significance in IBLP design and marketing management. Keywords Loyalty program · IBLP · Customer purchase behavior · Short-term impact analysis
* Bo Wu [email protected] Yi Sun sun‑[email protected]‑tokyo.ac.jp Katsutoshi Yada yada@kansai‑u.ac.jp 1
Faculty of Human Sciences, Waseda University, Tokorozawa, Japan
2
Department of Systems Innovation, School of Engineering, The University of Tokyo, Tokyo, Japan
3
Graduate School of Business and Commerce, Kansai University, Osaka, Japan
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The Review of Socionetwork Strategies
1 Introduction To attract and retain more customers, as part of customer relationship management strategy, various industries use loyalty programs (e.g., issue points) to make more profits. The total points issued by companies in Japan were at least worth nearly 85 billion yen in 2014, and this number may increase to 1.1 trillion yen in 2022. The loyalty programs are used by industries such as airlines and grocery stores to increase their marketing promotions by identifying customers’ performances [1]. By involving the loyalty programs, companies collect more data to enhance their targeted promotions and can further gain more repeated business [2]. Correspondingly, customers can earn reward points by their purchase rates that can help their closer to the redemption thresholds [2–4]. Some of the researches done on loyalty program suggest that it can successfully foster customer’s loyalty [2, 3, 5, 6]. However, as a loyalty program is widely used in the current marketplace, it can also become a redundant resource in businesses [4]. According to some studies, the design of loyalty program is directly related to its effectiveness [1, 4, 5, 7], which means that new designs for loyalty program are important and worth studying. For instance, a new design of loyalty program
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