Loyalty program activity: make B2B customers buy more

Abstract

Purpose -Loyalty programs (LPs) in a business-to-business (B2B) context have been under-researched when compared to consumer markets. The purpose of this paper is to investigate if and to what extent the loyalty program activity (LPA) based on recency, frequency and monetary framework reflects the effectiveness of a specific LP. Design/methodology/approach -Using the data obtained from 818 business customers enrolled in a LP, logistic regression models are run to find the impact of LPA on the company's sales. Findings -The results suggest that in a linear LP, the frequency of rewards impacts sales the most, compared to recency and amount of points redeemed. The intensity of a LPA is influencing the expected sales in a company.Research limitations/implications -The current study is not focused on the redemption patterns and the value of the rewards offered in the program. Limitation of the study only to one country and in a single company does not allow to generalize presented findings. Practical implications -Companies should focus their efforts on defining the best level of frequency rewards in their LPs. Reward timing should be considered as a factor that influences the change in customer purchasing behavior more than the amount of points accumulated. Originality/value -The research provides empirical evidence to support the highest influence of frequency of rewards on sales, compared to recency and amount of points redeemed. This is one of the few LP studies conducted in the context of the B2B market.

The role of relationship quality and loyalty programs in building customer loyalty

“…However, the collect-redeem type of LPs is more prevalent in the literature because of easily observable characteristics (Chaudhuri et al, 2019;Breugelmans and Liu-Thompkins, 2017). Customers engage in this kind of LPs, also called reward programs or frequency programs (Breugelmans et al, 2015), to earn a future reward from a supplier (Kwiatek and Thanasi-Boçe, 2019). Thus, the role of such a LP is to offer customers additional value, which can span beyond actual value being exchanged (i.e.…”

“…To test this explanation, we obtained the LP data from the supplier. We calculated the level of customer activity in a loyalty (LPA) program based on recency-frequency-monetary value framework, which takes into account reward redemption behavior: the amount of points redeemed together with frequency and recency of redemption (Kwiatek and Thanasi-Boçe, 2019). Next, LP members were split into two groups based on the average level of LPA.…”

“…The inconclusive results reported for LPs come along with a restricted number of academic contributions pertaining to business-to-business markets. Despite a few exceptions (Kwiatek and Thanasi-Boçe, 2019;Viswanathan et al, 2017;Davis-Sramek et al, 2009;Lacey and Morgan, 2008), which research the impact of LPs on business buyers, the scholarly investigation is bounded within a consumer market context. The efficacy of B2B LPs remains a practical concern for companies, yet solutions for B2B LPs are based mostly on anecdotal evidence (Collins et al, 2015).…”

“…B2B LPs appear as a promising avenue for companies to improve performance, particularly in the transaction-based part of the market (Kwiatek and Thanasi-Boçe, 2019). In transaction-based businesses, it is relatively easy for customers to weaken or even terminate a relationship with a company.…”

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“…Despite the fact that hotel companies apply loyalty schemes that include rewards with a purpose of maintaining customers, there is limited knowledge (Nastasoiu & Vandenbosch, 2019;Kwiatek & Thanasi-Boçe, 2019) regarding the ways of retaining the hotels' guest portfolio (W. Chen & M. Chen, 2014). Achieving customer loyalty precipitates long standing connections of the hotels with their customers (Pan, Sheng, & Xie, 2012) and unconditional devotion towards the hotel without being tempted and induced by similar competitor offers (So, King, Sparks, & Wang, 2013).…”