When Loyalty Goes Mobile: Effects of Mobile Loyalty Apps on Purchase, Redemption, and Competition

Abstract

This research investigates how a shift from traditional loyalty cards to mobile-driven loyalty apps affects consumers’ reward redemption patterns, purchase behaviors, and store-level competition. The findings indicate that loyalty app adoption is associated with increased expenditure and purchase frequency as well as more active point redemption. In a multivendor loyalty program (MVLP) context, the use of loyalty apps is associated with spillover effects in which case customers visit more stores that they had not previously considered and exhibit diminished allegiance to their focal shop after they adopt a loyalty app. Finally, the adoption of loyalty apps is related to deal-prone behaviors because informed consumers tend to selectively purchase highly discounted products. Our findings provide several valuable implications for managers and platform owners who are considering launching mobile loyalty programs (LPs) and participating in an MVLP market. Although the merits of loyalty app adoption are apparent, we caution against potential downsides at individual store levels. Many customers are likely to succumb to deals, selectively purchasing highly discounted products with low margins through loyalty apps. The thrust of LPs should be directed toward fostering a strong connection with a brand, going beyond the promise of deals and promotions.

Opera participants’ perceptions of brand resonance

“…WOM has been shown to create brand communities within music fans (Cova et al., 2021). eWOM can be linked by electronic loyalty programs (eg via apps), and those who use loyalty apps are more vulnerable to accepting deals (Son et al., 2020, p.835) which BO can deploy to retain existing customers, and attract new ones. Furthermore, previous research finds that virtual interactivity is a driver of brand involvement (Elsharnouby et al., 2021).…”

Strategic behavior for hotel standby upgrade programs: Empirical evidence and pricing implications

“…At the intersection with customer loyalty, Heim and Sinha (2001) study electronic food retailers and show that ease of website navigation, more detailed product information, cheaper prices, higher product availability, timeliness of delivery, and ease of return increase customer loyalty. Leveraging data on a multi‐vendor loyalty program, Son et al (2020) show that adoption of loyalty apps may lead to deal‐susceptible behavior (i.e., selectively buying highly discounted products). Özer et al (2020) estimate the customers' stock‐out and high‐price regrets using customer clickstream data of a fashion retailer and show that more frequent website visitors have more stock‐out (and less high‐price) regret.…”

“…It has been shown that loyalty customers are more knowledgeable about product offerings (Reinartz & Kumar, 2002) and tend to be more vulnerable to deals (Son et al, 2020). In addition, it is well documented that these customers act strategic to earn rewards, attain status, or move to a higher tier (Kivetz et al, 2006; Orhun et al, 2022).…”

“…Specifically, it creates awareness for customers who did not consider staying in a premium room (i.e., upselling) and also offers a discount for customers who are not willing to pay the full upgrade price (i.e., price discrimination). On the other hand, customer familiarity with how this technology works may lead to adverse behavior (see Son et al, 2020, for an example of such behavior, that is, deal‐susceptible behavior). In turn, such behaviors may have significant revenue implications due to cannibalization of premium room sales.…”

Frequência de uso no serviço de transporte individual por aplicativo: efeitos sobre as variáveis antecedentes da lealdade online

“…Pesquisas futuras poderiam avaliar a influência da frequência de uso em variáveis antecedentes à confiança e a satisfação como a reputação do aplicativo e da empresa, e a influência da falha e da recuperação da falha na prestação de serviço na relação entre a lealdade online e seus antecedentes. Son et al (2020), por exemplo, testaram o efeito da transição de programas de fidelidade de compras off-line para uso de aplicativos online e identificaram que, a despeito do incremento de uso dos programas, a facilidade e grande variedade dos clientes os leva ao comportamento transacional -de busca de ofertas relâmpago com preços agressivos -levando ao oposto do esperado, o comportamento relacional. Nesse sentido, vale investigar como a interação entre a reputação, as falhas e recuperações de falhas e a frequência de uso opera nos diferentes formatos de programas de fidelidade on e off-line.…”