When Reward Convenience Meets a Mobile App: Increasing Customer Participation in a Coalition Loyalty Program

Coalition loyalty programs (CLPs) have been gaining popularity in recent years. A CLP (e.g., Air Miles in Canada, the Middle East, and the Netherlands) is a third-party program that lets its customers accrue points by transacting at a variety of businesses and retailers, and customers can redeem rewards from the CLP when they have enough points. In this research, we propose that a CLP can stimulate existing customers’ participation by providing information convenience and reward convenience. By analyzing a unique data set, we find that the additions of a mobile app (information convenience) and a point-of-sales (POS) redemption structure (reward convenience) increase accruals and redemptions for those who adopt them, particularly for occasional customers. We also find that the two tactics are synergistic for customers who accrue but rarely redeem. As for active customers, information convenience and reward convenience encourage further redemptions, which reduce a CLP’s liability. Finally, we posit that customers follow the principle of least effort, as they tend to accrue the additional points by spending on convenient, high-penetration categories. From our findings, we recommend that a CLP should invest in increasing its convenience proposition, such as building a mobile app or allowing POS redemptions, to encourage customers’ continuing participation.