Coupon Redemption, Churn, and Customer Lifetime Value for a Newly-Launched Noncontractual Product: Evidence from a Large-Scale Field Experiment in Supermarkets

Customer lifetime value (CLV) is a forward-looking metric that measures each customer's profitability by balancing the costs and benefits from acquisition through retention. Even when promotional programs are directed toward achieving short-term goals (e.g., boosted sales), they can also impact CLV. However, the question remains whether such promotions can deter churn and increase post-promotion CLV in noncontractual settings, where cannibalization and switching behaviors are more prevalent than in contractual contexts. Thus, we conducted a randomized field experiment involving nearly 130,000 customers in Japan to investigate the heterogeneous effects of coupon redemption. Using the interacted two-stage least squares model, we find that coupon redemption decreases the probability of churn by approximately 12 percentage points and increases the promoted product’s CLV by more than 30%. While such uplift effects attenuate as pre-intervention CLV (pre-CLV) rises, our marginal treatment effect estimates suggest that even high pre-CLV customers experience positive gains in both outcomes. Additionally, our estimates show that while the manufacturer-level CLV increases, the retailer-level CLV experiences smaller or no gains. These findings indicate that coupon programs, which typically involve collaborations between manufacturers and retailers, may not necessarily benefit both parties equally in terms of CLV.