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Which retailers adopt a loyalty program? An empirical study

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  • Leenheer, Jorna
  • Bijmolt, Tammo H.A.

Abstract

This paper examines antecedents of retailers’ loyalty program adoption and their perceptions regarding loyalty program effectiveness. The investigated antecedents consists of sector, competitive and demand, and firm characteristics. To test the hypotheses, we surveyed 180 retail companies active in 15 retail sectors, 37% of which have a loyalty program. The survey data are complemented with expert judgements on sector characteristics. We estimate multi-level models for both loyalty program adoption and perceived effectiveness (tobit-2 specification). We find that the sector characteristics assortment homogeneity and average purchase frequency stimulate loyalty program adoption considerably. Further, customer-oriented firms are most likely to adopt loyalty programs. Contrary to loyalty program adoption, the effectiveness of a loyalty program in terms of additional customer knowledge and customer loyalty is hardly affected by market and organizational factors. But it appears that retail companies should better take into account their technological skills necessary for obtaining useful information from the customer loyalty program data.

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  • Leenheer, Jorna & Bijmolt, Tammo H.A., 2008. "Which retailers adopt a loyalty program? An empirical study," Journal of Retailing and Consumer Services, Elsevier, vol. 15(6), pages 429-442.
    • Handle: RePEc:eee:joreco:v:15:y:2008:i:6:p:429-442
    DOI: 10.1016/j.jretconser.2007.11.005
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    Cited by:

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    2. Chen, Yanyan & Mandler, Timo & Meyer-Waarden, Lars, 2021. "Three decades of research on loyalty programs: A literature review and future research agenda," Journal of Business Research, Elsevier, vol. 124(C), pages 179-197.
    3. Fazal e Hasan, Syed & Lings, Ian & Neale, Larry & Mortimer, Gary, 2014. "The role of customer gratitude in making relationship marketing investments successful," Journal of Retailing and Consumer Services, Elsevier, vol. 21(5), pages 788-796.
    4. Demoulin, Nathalie T.M. & Zidda, Pietro, 2009. "Drivers of Customers’ Adoption and Adoption Timing of a New Loyalty Card in the Grocery Retail Market," Journal of Retailing, Elsevier, vol. 85(3), pages 391-405.
    5. Alina Filip, 2011. "Loyalty Programs. Role, Structure and Potential Benefits," International Journal of Economic Practices and Theories, Academy of Economic Studies - Bucharest, Romania, vol. 1(2), pages 88-93, September.
    6. Bombaij, Nick, 2021. "Effectiveness of loyalty programs," Other publications TiSEM 095c506d-5b5c-4ea3-9b41-a, Tilburg University, School of Economics and Management.
    7. Gázquez-Abad, Juan Carlos & Canniére, Marie Hélène De & Martínez-López, Francisco J., 2011. "Dynamics of Customer Response to Promotional and Relational Direct Mailings from an Apparel Retailer: The Moderating Role of Relationship Strength," Journal of Retailing, Elsevier, vol. 87(2), pages 166-181.
    8. Faramarzi, Ashkan & Bhattacharya, Abhi, 2021. "The economic worth of loyalty programs: An event study analysis," Journal of Business Research, Elsevier, vol. 123(C), pages 313-323.
    9. Bombaij, Nick J.F. & Dekimpe, Marnik G., 2020. "When do loyalty programs work? The moderating role of design, retailer-strategy, and country characteristics," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 175-195.
    10. Alex Belli & Anne-Maree O’Rourke & François A. Carrillat & Ljubomir Pupovac & Valentyna Melnyk & Ekaterina Napolova, 2022. "40 years of loyalty programs: how effective are they? Generalizations from a meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 50(1), pages 147-173, January.
    11. Dewani, Prem Prakash & Sinha, Piyush Kumar & Mathur, Sameer, 2016. "Role of gratitude and obligation in long term customer relationships," Journal of Retailing and Consumer Services, Elsevier, vol. 31(C), pages 143-156.
    12. Rehnen, Lena Marie, 2016. "Exit strategies of loyalty programs," jbm - Journal of Business Market Management, Free University Berlin, Marketing Department, vol. 9(1), pages 564-596.
    13. Helgesen, Øyvind & Ivar Håvold, Jon & Nesset, Erik, 2010. "Impacts of store and chain images on the “quality–satisfaction–loyalty process†in petrol retailing," Journal of Retailing and Consumer Services, Elsevier, vol. 17(2), pages 109-118.
    14. Jaeho Jeong & Dongeon Kim & Xinzhe Li & Qinglong Li & Ilyoung Choi & Jaekyeong Kim, 2022. "An Empirical Investigation of Personalized Recommendation and Reward Effect on Customer Behavior: A Stimulus–Organism–Response (SOR) Model Perspective," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    15. Vesel, Patrick & Zabkar, Vesna, 2009. "Managing customer loyalty through the mediating role of satisfaction in the DIY retail loyalty program," Journal of Retailing and Consumer Services, Elsevier, vol. 16(5), pages 396-406.
    16. Suhaily M. Ramly & Nor A. Omar, 2015. "The relative contribution of loyalty programs and store attributes to store engagement and equity," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 1(1), pages 42-52.
    17. Lee, Wei-Long & Liu, Chih-Hsing & Tseng, Tzu-Wen, 2022. "The multiple effects of service innovation and quality on transitional and electronic word-of-mouth in predicting customer behaviour," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).

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