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.
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
 Bijmolt T H A, Verhoef P C. Loyalty programs: Current insights, research challenges, and emerging trends[A]. Wierenga B, van der Lans R. Handbook of marketing decision models[C]. Cham: Springer, 2017.
 Blanco-Justicia A, Domingo-Ferrer J. Privacy-aware loyalty programs[J]. Computer Communications, 2016, 82: 83-94.
 Breugelmans E, Bijmolt T H A, Zhang J, et al. Advancing research on loyalty programs: A future research agenda[J]. Marketing Letters, 2015, 26(2): 127-139.
 Cao Y H, Nsakanda A L, Diaby M, et al. Rewards-supply planning under option contracts in managing coalition loyalty programmes[J]. International Journal of Production Research, 2015, 53(22): 6772-6786.
 Chang H H, Wong K H. Consumer psychological reactance to coalition loyalty program: Price-consciousness as a moderator[J]. Service Business, 2018, 12(2): 379-402.
 Danaher P J, Sajtos L, Danaher T S. Does the reward match the effort for loyalty program members?[J]. Journal of Retailing and Consumer Services, 2016, 32: 23-31.
 de Noni I, Orsi L, Zanderighi L. Coalition loyalty-programme adoption and urban commercial-network effectiveness evaluation[J]. International Journal of Retail & Distribution Management, 2014, 42(9): 818-838.
 Demoulin N T M, Zidda P. Drivers of customers’ adoption and adoption timing of a new loyalty card in the grocery retail market[J]. Journal of Retailing, 2009, 85(3): 391-405.
 Dorotic M, Bijmolt T H A, Verhoef P C. Loyalty programmes: Current knowledge and research directions[J]. International Journal of Management Reviews, 2012, 14(3): 217-237.
 Dorotic M, Fok D, Verhoef P C, et al. Do vendors benefit from promotions in a multi-vendor loyalty program?[J]. Marketing Letters, 2011, 22(4): 341-356.
 Dorotic M, Verhoef P C, Fok D, et al. Reward redemption effects in a loyalty program when customers choose how much and when to redeem[J]. International Journal of Research in Marketing, 2014, 31(4): 339-355.
 Evanschitzky H, Ramaseshan B, Woisetschlager D M, et al. Consequences of customer loyalty to the loyalty program and to the company[J]. Journal of the Academy of Marketing Science, 2012, 40(5): 625-638.
 Frisou J, Yildiz H. Consumer learning as a determinant of a multi-partner loyalty program’s effectiveness: A behaviorist and long-term perspective[J]. Journal of Retailing and Consumer Services, 2011, 18(1): 81-91.
 Gardete P M, Lattin J M. Coalition loyalty program not working? Maybe you’re doing it wrong[R]. Working Paper No. 3645, 2018.
 Hwang J H, Chung J, Kim J W, et al. Antecedents to loyalty point redemption: Implications for customer equity management[J]. Journal of Business Research, 2016, 69(9): 3731-3739.
 Jai T M, King N J. Privacy versus reward: Do loyalty programs increase consumers’ willingness to share personal information with third-party advertisers and data brokers?[J]. Journal of Retailing and Consumer Services, 2016, 28: 296-303.
 Lara P R, de Madariaga J G. The importance of rewards in the management of multisponsor loyalty programmes[J]. Journal of Database Marketing & Customer Strategy Management, 2007, 15(1): 37-48.
 Lee M Y, Lee A S, Sohn S Y. Behavior scoring model for coalition loyalty programs by using summary variables of transaction data[J]. Expert Systems with Applications, 2013, 40(5): 1564-1570.
 Lemon K N, Wangenheim F V. The reinforcing effects of loyalty program partnerships and core service usage: A longitudinal analysis[J]. Journal of Service Research, 2009, 11(4): 357-370.
 Liu Y P, Yang R. Competing loyalty programs: Impact of market saturation, market share, and category expandability[J]. Journal of Marketing, 2009, 73(1): 93-108.
 Martin K D, Borah A, Palmatier R W. Data privacy: Effects on customer and firm performance[J]. Journal of Marketing, 2017, 81(1): 36-58.
 Meyer-Waarden L, Benavent C. The impact of loyalty programmes on repeat purchase behaviour[J]. Journal of Marketing Management, 2006, 22(1-2): 61-88.
 Moore G, Sekhon H. Multi-brand loyalty cards: A good idea[J]. Journal of Marketing Management, 2005, 21(5-6): 625-640.
 Rese M, Hundertmark A, Schimmelpfennig H, et al. Loyalty program types as drivers of customer retention: A comparison of stand-alone programs and multi-vendor loyalty programs through the lens of transaction cost economics[J]. The International Review of Retail, Distribution and Consumer Research, 2013, 23(3): 305-323.
 Schumann J H, Wünderlich N V, Evanschitzky H. Spillover effects of service failures in coalition loyalty programs: The buffering effect of special treatment benefits[J]. Journal of Retailing, 2014, 90(1): 111-118.
 Sharp B, Sharp A. Loyalty programs and their impact on repeat-purchase loyalty patterns[J]. International Journal of Research in Marketing, 1997, 14(5): 473-486.
 So J T, Danaher T, Gupta S. What do customers get and give in return for loyalty program membership?[J]. Australasian Marketing Journal (AMJ), 2015, 23(3): 196-206.
 Villacé-Molinero T, Reinares-Lara P, Reinares-Lara E. Multi-vendor loyalty programs: Influencing customer behavioral loyalty?[J]. Frontiers in Psychology, 2016, 7: 204.
 Votola N L, Unnava H R. Spillover of negative information on brand alliances[J]. Journal of Consumer Psychology, 2006, 16(2): 196-202.
 Wang R J H, Krishnamurthi L, Malthouse E C. When reward convenience meets a mobile app: Increasing customer participation in a coalition loyalty program[J]. Journal of the Association for Consumer Research, 2018, 3(3): 314-329.
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.
Previous: Political Capabilities of Senior Corporate Leaders: Concept, Integration Model and Research Prospects