Coalition loyalty programs, compared with traditional standalone loyalty programs, represent an innovative customer relationship management tool. It is also known as loyalty program partnership, multi-vendor loyalty program, or universal loyalty currency program. This paper provides a framework (i.e., program design-working mechanisms-program outcomes) for understanding the effectiveness of a coalition loyalty program based on the literature review. The paper begins with the review of three most important decisions in the coalition loyalty program design, i.e., user portfolio, reward structure, and partnership portfolio. This paper then reviews three working mechanisms of the coalition loyalty program identified from literature, integrating both positive and negative effects related to each mechanism. First, perceived value, determined by the difference between perceived benefits and perceived costs, is a key mechanism of the coalition loyalty program to attract and maintain both the participating group and consumers. Consumers’ perceived benefits increase due to various opportunities to earn and redeem points, while their perceived costs increase as the program complexity and point price increase. The participating group can perceive more benefits because of the opportunities for co-marketing campaigns and market-based assets access; whereas the increasing costs for points redemption can increase their perception of program costs. Second, spillover effects occur between the participating group and the program sponsor, and can be either positive or negative. Although positive spillover effects help to keep the participating group in the program overtime, only those companies showing high fit with each other can enjoy such reinforcing effects. Negative spillover effects occur when one or some participating companies fail to serve consumers, which can be mitigated if the program offers high-level special treatment to consumers. Last, data effects indicate that both the program sponsor and the participating group can benefit from customer analytics using data collected by the coalition loyalty program. However, data privacy concerns may prevent consumers from adopting or using such a program. Furthermore, this paper reviews various outcomes of a coalition loyalty program. Consumers can develop either behavioral or attitudinal loyalty to the program or the participating group. Consumer-program loyalty and consumer-company loyalty can influence each other interactively. Although the coalition loyalty program is effective in customer acquisition, its effectiveness is relatively limited in customer retention, especially for the participating group. In closing, this paper suggests several promising avenues for future research.
/ Journals / Foreign Economics & Management
Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
Coalition Loyalty Programs: A Literature Review and Prospects
Foreign Economics & Management Vol. 41, Issue 04, pp. 85 - 97 (2019) DOI:10.16538/j.cnki.fem.2019.04.007
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References
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Cite this article
Kang Jun, Bao Jiaxin, Jiang Lin. Coalition Loyalty Programs: A Literature Review and Prospects[J]. Foreign Economics & Management, 2019, 41(4): 85-97.
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