Fardapaper Three Decades of Research On Loyalty Programs A Literature Review and Future Research Agenda

Journal of Business Research 124 (2021) 179–197
Contents lists available at ScienceDirect
Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres
Three decades of research on loyalty programs: A literature review and

future research agenda
Yanyan Chen a, *, Timo Mandler a, Lars Meyer-Waarden b, c
a
Department of Marketing & International Business, Toulouse Business School, 20 Boulevard Lascrosses, 31068 Toulouse, France
b
Toulouse School of Management Research-UMR 5303 CNRS, University Toulouse 1 Capitole, 2 Rue du Doyen-Gabriel-Marty, 31042 Toulouse, France
c
Business Science Institute, Château de Wiltz, 9516 Luxembourg, France
A R T I C L E I N F O A B S T R A C T
Keywords: Loyalty programs (LPs) are an important marketing instrument used to promote repeat purchases and customer
Loyalty programs relationships. Although numerous studies have shed light on the adoption, design, and outcomes of LPs, research
Reward programs that reviews the accumulated knowledge in a holistic manner is sparse. Against this background, this study
Customer relationship management
reviews 131 LP-related articles following the Theory–Context–Characteristics–Methodology (TCCM) review
TCCM
protocol. By considering the theories, contexts, characteristics, and methodologies used in LP research, this study
(1) paints the most comprehensive picture of the field to date and (2) develops a future research agenda to help
advance the field further. Our review reveals that existing studies mostly rely on status-based, inertia-based, or
relationship-based mechanisms to theoretically explain LP-related effects, while multi-theoretical perspectives
are rare. LP research focuses strongly on a few key industries, such as retail, airlines, and hotels, but lacks insights
into the design and outcomes of LPs in online and B2B contexts. Furthermore, we diagnose a need for more
research on the role of competition among LPs and the impact of recent technological advances on LP
management.
1. Introduction the primary goal of engaging customers in long-term relationships, other

airlines and sectors (hotels, car rentals, grocery and specialized retail,
A loyalty program (LP) comprises integrated systems of personalized and credit cards) quickly imitated this marketing tool and have
marketing actions and marketing communications that offers tangible furthered the practice by personalizing rewards based on customers’
(e.g., discounts, vouchers, or gifts) or intangible (e.g., personalized purchase history. Today, LPs are a multi-billion-dollar business, and
service, status, or information) rewards (Bombaij & Dekimpe, 2020; digitalization is pushing forward their evolution (Jones, 2016). Between
Meyer-Waarden, 2007; Steinhoff & Palmatier, 2016). The launch of an 2015 and 2017, total LP enrollments in the U.S. increased by 15%,
LP helps to induce perceived value, which leads consumers to enroll and reaching almost four billion memberships (Fruend, 2017). However,
stay with an LP, and reinforces their purchase behaviors and relation only half of all U.S. customers actively use their LP cards (Berry, 2015;
ship with the firm. It involves incentives such as points, miles, or other Fruend, 2017). In light of increasing expenditures for the management
currencies that customers can accumulate and redeem for rewards of LPs, which are projected to reach $71 billion by 2026 (Perrin, 2019;
(Chaudhuri, Voorhees, & Beck, 2019; Sharp & Sharp, 1997). Thus, an LP Shaukat & Auerbach, 2011; Insights, 2019), these figures collectively
is a key customer relationship management (CRM) tool that marketers suggest that LPs do not always lead to a high return.
use to identify, award, and retain profitable customers. At the same time, recent technological advances have created new
The origins of LPs can be traced back to the 20th century when they opportunities for the management of LPs. Digitalization facilitates new
started to emerge among airlines and retailers. In 1981, American Air ways of interacting with customers and collecting rich customer data
lines launched its first electronic reward scheme called AAdvantage, (Grewal, Ahlbom, Beitelspacher, Noble, & Nordfält, 2018; Tong, Luo, &
which remains the world’s largest frequent flyer program with up to 67 Xu, 2020), which allows the delivery of highly personalized offerings (e.
million members today (Points, 2020). The principle which rewards g., incentives, rewards, products, services). Artificial intelligence (AI),
loyal customers has remained unchanged since the inception of LP. With augmented/virtual reality (AR/VR), smart displays, as well as mobile
* Corresponding author.
E-mail addresses: [email protected] (Y. Chen), [email protected] (T. Mandler), [email protected] (L. Meyer-Waarden).
https://doi.org/10.1016/j.jbusres.2020.11.057
Received 18 March 2020; Received in revised form 24 November 2020; Accepted 25 November 2020
Available online 8 December 2020
0148-2963/© 2020 Elsevier Inc. All rights reserved.
Y. Chen et al. Journal of Business Research 124 (2021) 179–197
devices and applications (Agarwal, Dugas, Gao, & Kannan, 2020) hold have received limited attention.
the potential to re-invent the customer experience and increase LP ef Second, based on gained insights and unfolding trends, we develop a
ficiency. However, these new technologies also come with new chal future research agenda that outlines a range of topics based on the TCCM
lenges (e.g., data privacy concerns, big data management) that have, structure. We suggest the use of multi-theoretical perspectives to better
thus far, received little attention. account for the complexity of LPs that often feature multiple actors and
Given that the success of LPs is not guaranteed and the technological various design elements in different contexts. Especially cultural the
environment is rapidly evolving, managers face great uncertainties ories could guide future studies that explore cross-national differences in
regarding their development, implementation, and execution (Keh & LP-related phenomena, a major gap in LP research. Likewise, more
Lee, 2006; Meyer-Waarden, 2007; Meyer-Waarden & Benavent, 2009). research is needed regarding the design and outcomes of LPs in online
To unravel the complexity of the effective management of LPs, over the and B2B contexts. Finally, new technologies offer great opportunities (e.
past three decades marketing scholars have paid considerable attention g., richer customer data, improved personalization, increased LP effi
to the adoption, design, and outcomes of LPs—both from firm and ciency) and challenges (e.g., data privacy concerns) that have so far
consumer perspectives. received little research attention.
Although several reviews of this mature field of study exist, prior In the following sections, we first introduce our review approach.
reviews are limited in at least two regards: first, existing reviews focus Then, we provide a general overview of LP research. Afterwards, we
on either (a) the design and execution of LPs (Bijmolt, Dorotic, & Ver discuss theoretical perspectives which researchers commonly adopt to
hoef, 2011; Breugelmans et al., 2015; McCall & Voorhees, 2010), or (b) explain LP-related phenomena. Next, we present our results concerning
the theoretical mechanisms underlying LP-related phenomena (Beck, the investigated contexts, specified explanatory and criterion variables
Chapman, & Palmatier, 2015; Henderson, Beck, & Palmatier, 2011; Kim, (including potential mediating and moderating variables), and methods
Steinhoff, & Palmatier, 2020). For example, Breugelmans et al. (2015) used in LP research. Finally, we address extant research gaps and outline
reviewed the role of different design elements of LPs for their adoption promising directions for future research that help advance LP research.
and success but did not embed the focal relationships in theory.
Conversely, Henderson et al. (2011) reviewed the psychological mech 2. Review approach and structure
anisms that underlie LP effectiveness, but they did not account for the
individual characteristics of the empirical studies to which their work A systematic literature review requires eligible criteria from journal
relates. Therefore, prior reviews only paint a fragmented and incomplete selection to article identification (Littell, Corcoran, & Pillai, 2008;
picture. Second, digitalization has only recently begun to reshape many Snyder, 2019). For our literature search, we adopted practices from
markets, prompting new opportunities and challenges for LPs. These Morgan, Feng, and Whitler (2018) “[t]o ensure the representativeness,
topics are not yet covered in the literature and the field lacks direction in completeness, and high quality” (p. 62) of the studies included in our
terms of which concepts and methods should be investigated in the review. First, we selected the most influential marketing and manage
future. Such future research directions are instrumental for LP research ment journals based on multiple influential ratings. Specifically, we
to keep pace with the quickly evolving reality of modern LPs. combine journal ratings reported by Theoharakis and Hirst (2002),
Against this background, this review complements and extends prior Baumgartner and Pieters (2003), and Hult, Reimann, and Schilke
reviews on LPs by (1) providing a holistic review of both the manifold (2009). This type of combined approach has been used in prior reviews
theoretical and empirical aspects of LP research, and (2) outlining future (e.g., Lehmann, 2005; Morgan et al., 2018) and enables us to maximize
research directions that support the field’s advancement. To this end we the coverage of influential LP research. We then selected the 20 most
employ the Theory–Context–Characteristics–Methodology (TCCM) re influential journals and had expert judges assess the appropriateness of
view protocol (Paul & Rosado-Serrano, 2019; Rosado-Serrano, Paul, & the list, similar to prior reviews (e.g., Katsikeas, Morgan, Leonidou, &
Dikova, 2018) which sheds light on both theoretical and empirical as Hult, 2016). The resulting list of journals includes: Journal of Marketing,
pects of a specific research domain, thus overcoming the limitations of Journal of Marketing Research, Marketing Science, Management Science,
more narrow domain-based (e.g., Martin & Murphy, 2017; Snyder, Journal of Consumer Research, Journal of Consumer Psychology, Journal of
Witell, Gustafsson, Fombelle, & Kristensson, 2016), theory-based (e.g., the Academy of Marketing Science, International Journal of Research in
Branstad & Solem, 2020; Gilal, Zhang, Paul, & Gilal, 2019), or method- Marketing, Journal of Retailing, Journal of Service Research, Journal of
based (e.g., Davis, Golicic, Boerstler, Choi, & Oh, 2013; Voorhees, Business Research, European Journal of Marketing, Harvard Business Re
Brady, Calantone, & Ramirez, 2016) systematic reviews (Palmatier, view, Californian Management Review, Industrial Marketing Management,
Houston, & Hulland, 2018). Specifically, we aim to provide answers to Journal of Advertising Research, Journal of International Marketing, Mar
the following questions: What theories have been used to explain the keting Letters, MIT Sloan Management Review, and Psychology & Marketing.
adoption and outcomes of LPs? In what contexts (e.g., industries, coun Next, in accordance with the topic of this review, we specified a set of
tries) have LPs been investigated? What independent, dependent, search terms for the identification of relevant articles. Since loyalty
mediating, and moderating variables have been studied (i.e., charac programs are often labelled differently, depending on the specific in
teristics)? What methods have been applied to study LP-related dustry, we took special care to cover all equivalent terms (e.g., “frequent
phenomena? flier program”) and related terms (e.g., “loyalty card”). As a result, we
We contribute to the literature on LPs in multiple ways. First, this used a broad set of search terms, including: “loyalty program,” “reward
study paints the most comprehensive and most recent picture of the state program,” “customer loyalty program,” “store loyalty program,”
of LP research to date. In total we review 131 articles concerning key “frequent program,” “loyalty card,” “loyalty scheme,” “customer
theoretical and empirical characteristics, many of which have not been reward,” “frequent flier program,” and “frequent buyer program” to
considered in previous reviews. Following the TCCM protocol, our re identify relevant papers in LP research from multiple databases (Web of
view reveals that existing studies mostly rely on a few single theories to Science, Google Scholar, EBSCO, JSTOR, Science Direct, and Emerald)
explain LP-related effects, mostly proposing and testing psychological and individual journal websites. We limited our search to the last three
mechanisms that are status-based, inertia-based, or relationship-based. decades (i.e., from 1989 to 20191) because LP research only began
Most LP research is set in Western countries and focuses on a few key during the 1990 s, concurrently with their increasing popularity in
industries, such as retail, airlines, and hotels, which are studied using practice. Only a few studies covered this topic before 1989 (see Kearney,
quantitative methods. Our analysis of independent, mediating, moder
ating, and dependent variables suggests that LP research has extensively
studied program- and consumer-related variables, whereas some other 1
We considered all articles that were available at that time, including an
promising groups of variables, such as competition-related variables, early access version of Bombaij and Dekimpe (2020).
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Table 1
Sampled publications on loyalty programs.
Journal No. of % Articles
articles
Journal of Retailing and Consumer 24 18.3 Arbore and Estes (2013); Azeem et al. (2018); Bridson et al. (2008); Chan et al. (2016); Cortiñas et al. (2008);
Services Danaher et al. (2016); Demoulin and Zidda (2008); Eason et al. (2015); Filipe et al. (2017); Frisou and Yildiz
(2011); García Gómez et al. (2012); Jai and King (2016); Kreis and Mafael (2014); Leenheer and Bijmolt (2008);
Mauri (2003); Meyer-Waarden (2015a); Mimouni-Chaabane and Pez (2017); Pandit and Vilches-Montero (2016);
Sharma and Verma (2014); Smith et al. (2003); Söderlund and Colliander (2015); Steyn et al. (2010); Vesel and
Zabkar (2009); Vilches-Montero et al. (2018)
International Journal of Retail & 14 10.7 Cedrola and Memmo (2010); Gable et al. (2008); Kim et al. (2012); Ieva and Ziliani (2017); Lin and Bennett
Distribution Management (2014); Meyer-Waarden et al. (2013); De Noni et al. (2014); Asiah Omar and Musa (2011); Parker and
Worthington (2000); Rowley (2005); Smith et al. (2004); Worthington (1998); Worthington and Hallsworth
(1999); Wright and Sparks (1999)
Journal of Marketing Research 10 7.6 Drèze and Nunes (2004); Drèze and Nunes (2011); Kivetz and Simonson (2002); Kivetz and Simonson (2003);
Kivetz et al. (2006); Lewis (2004); Roehm et al. (2002); Stourm et al. (2015); Van Heerde and Bijmolt (2005);
Zhang and Breugelmans (2012)
European Journal of Marketing 9 6.9 Allaway et al. (2006); Berezan et al. (2017); Esmark et al. (2016); Hutchinson et al. (2015); Melnyk and Bijmolt
(2015); Meyer-Waarden (2008); Palmeira et al., 2016; Sayman and Hoch (2014); Vesel and Zabkar (2010)
Journal of Services Marketing 8 6.1 Hansen et al. (2010); Kearney (1989); Liu and Mattila (2016); Ma et al. (2018); Meyer-Waarden (2013);
Ramaseshan and Ouschan (2017); Rosenbaum et al. (2005); Tuzovic (2010)
International Journal of Research in 7 5.3 Bombaij and Dekimpe (2020); Dorotic et al. (2014); Leenheer et al. (2007); Minnema et al. (2017); Sharp and
Marketing Sharp (1997); Viswanathan et al. (2017); Wang and Lalwani (2019)
Journal of the Academy of Marketing 7 5.3 Bolton et al. (2000); Chaudhuri et al. (2019); Daryanto et al. (2010); Evanschitzky et al. (2012); Meyer-Waarden
Science and Benavent (2009); Steinhoff and Palmatier (2016); Yi and Jeon (2003)
Journal of Retailing 7 5.3 Allaway et al. (2003); Demoulin and Zidda (2009); Keh and Lee (2006); Mägi (2003); Meyer-Waarden (2007);
Schumann et al. (2014); Taylor and Neslin (2005)
Journal of Business Research 7 5.3 Bruneau et al. (2018); Kang et al. (2015); Mimouni-Chaabane and Volle (2010); Noble et al. (2014); Septianto et al.
(2019); Smith and Sparks (2009); Stathopoulou and Balabanis (2016)
Journal of Consumer Research 5 3.8 Bagchi and Li (2010); Drèze and Nunes (2009); Kivetz (2005); Nunes and Drèze (2006); Zhang and Gao (2016)
Management Science 5 3.8 Chun and Ovchinnikov (2019); Kim et al. (2004); Rossi (2018); Sun and Zhang (2019); Zhang et al. (2000)
Journal of Marketing 4 3.1 Liu and Yang (2009); Liu (2007); Verhoef (2003); Wagner, Hennig-Thurau, and Rudolph (2009)
Psychology & Marketing 4 3.1 Ivanic (2015); Kim and Ahn (2017); Kim et al. (2009); Sajtos and Chong (2018)
Marketing Letters 4 3.1 Breugelmans and Liu-Thompkins (2017); Dorotic et al. (2011); Melnyk and van Osselaer (2012); Montoya and
Flores (2019)
Journal of Service Research 3 2.3 Eggert et al. (2015); Lemon and Wangenheim (2009); Wirtz et al. (2007)
Journal of Service Management 3 2.3 Noordhoff et al. (2004); Rehnen et al. (2017); Stauss et al. (2005)
Journal of Consumer Psychology 2 1.5 Kwong et al. (2011); Van Osselaer et al. (2004)
Journal of International Marketing 2 1.5 Beck et al. (2015); Thompson and Chmura (2015)
Marketing Science 2 1.5 Kopalle et al. (2012); Wang et al. (2016)
Industrial Marketing Management 1 0.8 Keeling et al. (2013)
Journal of Advertising Research 1 0.8 Wansink (2003)
Journal of Business & Industrial 1 0.8 Lacey and Morgan (2009)
Marketing
Journal of Strategic Marketing 1 0.8 Palmer et al. (2000)
Total 131 100
1989). This approach yielded a total of 84 papers. Research (10 papers), European Journal of Marketing (9 papers), Inter
Then, we excluded articles that do not constitute original studies (e. national Journal of Research in Marketing (7 papers), Journal of the
g., reviews) and those that contain mere descriptions of LPs in the Academy of Marketing Science (7 papers), Journal of Retailing (7 papers),
market (2 in Harvard Business Review, 1 in Californian Management Re and Journal of Business Research (7 papers). Despite the lower ranking
view, 1 in Journal of Consumer Psychology and 1 in MIT Sloan Management (ABS 2), we decided to include work published in the Journal of Retailing
Review). At this stage, 79 papers in 17 journals remained for review. and Consumer Services, the International Journal of Retail & Distribution
Next, we checked each article’s reference list and its citations for any Management, and the Journal of Services Marketing because much LP
additional relevant articles; this pointed to a substantial body of relevant research is conducted in the retail context, a main interest of these
work in less influential journals. Thus, to minimize the risk of excluding journals. These three journals account for another third (35.1%) of all
relevant studies (Paul & Rialp Criado, 2020), we broadened the search papers in our review. The remaining 38 articles (29.0%) were published
scope to consider any journal with a 2018 ABS (Association of Business in various other outlets in the field of marketing and management.
Schools) rank of at least 2 and an Impact Factor greater than 2. We then
repeated the same procedures as earlier (i.e., keyword search, paper 3. General overview
exclusion, and extant research identification). This led to the inclusion
of 52 articles in six additional journals: Journal of Retailing and Consumer The literature on LPs addresses a variety of aspects that determine
Services, International Journal of Retail & Distribution Management, Journal consumers’ adoption of LPs and their subsequent attitudes and behavior
of Services Marketing, Journal of Service Management, Journal of Strategic that ultimately drive firm performance (i.e., LP efficiency). To consoli
Marketing, Journal of Business & Industrial Marketing. date and visualize existing knowledge, we developed a comprehensive
Overall, this stepwise approach led to the identification of 131 arti map of LP research that provides a general overview (see Fig. 1). This
cles (see details in Appendix A), published in 23 different journals (see map depicts theories and different types of concepts that are relevant to
details in Table 1). Among the 23 journals identified, 17 are ranked as LP research which can be found at the theoretical or empirical level. The
2018 ABS 4*, 4, or 3. About a third of all papers in our review (35.9%) theoretical level comprises various theories that underpin the concep
were published in six of these leading outlets, i.e., Journal of Marketing tual frameworks that are tested at the empirical level. These theories are
181
reviewed in Chapter 4. The empirical level can be structured along two we analyzed, fifteen papers applied in total, either social identity theory
dimensions. On the one hand, LP research can be distinguished based on (7 articles, 5.3%; e.g., Esmark, Noble, & Bell, 2016) or social comparison
the stage(s) to which it pertains, i.e., the adoption, execution, or out theory (8 articles, 6.1%; e.g., Steinhoff & Palmatier, 2016).
comes of LPs. On the other hand, LP studies differ in their units of
analysis and the levels to which the associated concepts relate. While 4.1.1. Social identity theory
some studies investigate certain concepts and associated effects at the Social identity theory (Tajfel & Turner, 1979) argues that people
consumer level (e.g., economic, cognitive, and psychological motiva define themselves based on their membership to a relevant social group.
tions), others may incorporate constructs at the program level (e.g., A social group is “a collection of individuals who perceive themselves to
design characteristics), industry level (e.g., product characteristics), be members of the same social category [and] share some emotional
and/or country level (e.g., cultural and economic factors). Fig. 1 depicts involvement in this common definition of themselves” (Tajfel & Turner,
this structure, linking various classes of concepts at different levels and 1979, p. 40). Social groups provide their members a sense of identity
stages. through social comparison, i.e., they define themselves as similar to, or
Below, we systematically review the literature on LPs following the different from, members of other social groups. These relational iden
TCCM framework (Paul & Rosado-Serrano, 2019). Accordingly, we first tifications are referred to as the “social identity” of a person (Tajfel &
discuss the theoretical realm of LP research, reviewing the theoretical Turner, 1979). According to social identity theory, a person’s social
frameworks/lenses that are most frequently used to explain LP-related identity, and the value and emotional importance he or she ascribes to
phenomena, namely social identity theory, social comparison theory, the membership of a specific social group, is directly linked to his or her
prospect theory, behavioral learning theory, social exchange theory, and self-concept (i.e., beliefs about his or her own attributes, such as values,
equity theory. Then we review the empirical realm of LP research traits, competencies, and social roles; Mittal, 2006). Thus, social iden
starting with an assessment of the different contexts, i.e., industries and tities are closely related to people’s need to belong and their sense of
countries, in which LP research was carried out. Next, we shift the community (Ivanic, 2015).
spotlight from the macro-perspective (countries and industries) to the The membership of an LP often provides such communal benefits and
micro-perspective and turn to the various LP concepts related to promotes a shared social identity among members (Rosenbaum, Ostrom,
different actors and entities (e.g., firm, program, and consumer char & Kuntze, 2005). For some consumers, such a sense of community can be
acteristics) that play a role during the adoption, execution, and outcome a primary motivation to engage in a LP and can even outweigh the
stages of LPs. Specifically, we review the types of variables that have importance of financial incentives (Rosenbaum et al., 2005). Conse
been studied and provide a differentiated analysis of independent, quently, social identity theory is often used to explain the power of
mediating, moderating, or dependent variables in LP research. Finally, status-related incentives in LPs and the psychological mechanism of
we assess key methodological aspects of the field including the research customers’ adoption of hierarchical or open LPs (Eggert, Steinhoff, &
approach, data types, and analytical tools that have been used to derive Garnefeld, 2015; Esmark et al., 2016). Such status-related incentives
insights about LPs. Based on this systematic review, we outline a help customers to signal their (non-)belonging to a certain social group.
comprehensive agenda for future research following the same structure. For example, Melnyk and Bijmolt (2015) found that non-monetary re
wards that are better adapted to customers’ needs increase their
4. Theory commitment to firms and the adoption of their LPs. Similarly, Kang,
Alejandro, and Groza (2015) show that customer-company identifica
LP research draws on various theoretical frameworks and paradigms tion helps to convert program loyalty into company loyalty. Moreover,
to explain relevant effects. In general, the term theory refers to a set of open programs often lead to higher in-group identification than selective
statements that are systematically related and empirically testable LPs (Esmark et al., 2016). Other studies relate social identity to
(Rudner, 1966; Hunt, 2002). Thus, in an applied context, theories can be perceived prestige and status, demonstrating that degrading customers
understood as reasoned propositions on how a set of relevant constructs from a top tier (e.g., gold) to a lower tier status (e.g., silver) has negative
(e.g., LP design characteristics and purchasing behavior) relate to one consequences in terms of loyalty intentions and share-of-wallet (Ivanic,
another with the aim to explain and/or predict empirical phenomena. 2015; Ramaseshan & Ouschan, 2017).
Table 2 provides an overview of the most frequently used theories in LP
research. These theories can be roughly categorized into three groups 4.1.2. Social comparison theory
according to their similarity in terms of the core psychological mecha Social comparison theory (Festinger, 1954) explains the psycholog
nism that is presumed to underlie the investigated effects, i.e., status- ical processes of how individuals define themselves and determine their
based mechanism, inertia-based mechanism, or relationship-based worth by comparison with others. It is humans’ innate motivation to
mechanism (Henderson et al., 2011). In the following sections, we compare themselves with others to form accurate appraisals of them
discuss these mechanisms and related theories as well as less frequently selves. Thus, social comparisons require the evaluation of others (Marsh,
used theories. 1987), starting with the selection of a target and the observation of
similarities and differences between the target and the self. This evalu
4.1. Status-based mechanism ation occurs across domains such as attractiveness, social status, intel
ligence, wealth, and success. Social comparisons can have an impact on
To explain the status-based mechanism, LP researchers often apply individuals’ cognition (e.g., comparative judgments), affect (e.g., pride
social identity theory and social comparison theory (e.g., Kivetz & and envy), and behavior (e.g., status consumption) (Richins, 1991;
Simonson, 2003; Sajtos & Chong, 2018). For most consumers, status is Wood, 1996).
highly desirable as it is associated with privileges and feelings of supe LPs often offer special treatments to their members which can serve
riority. Thus, the status-focus of many LPs comes as no surprise (Hen as potential criteria for social comparisons. Furthermore, in hierarchical
derson et al., 2011). In general, LPs create perceived value through programs (e.g., silver, gold, and platinum), the offered treatments often
social, informational, and hedonic rewards, as well as through utili differ between tiers (Drèze & Nunes, 2009). Thus, social comparisons
tarian discounts and convenience (Mimouni-Chaabane & Volle, 2010). can occur between members and non-members (Liu & Mattila, 2016;
Studies relating to social, informational, and hedonistic rewards often Steinhoff & Palmatier, 2016), as well as between members in different
place an emphasis on status (Liu & Mattila, 2016). Because consumers tiers (Esmark et al., 2016; Palmeira, Pontes, Thomas, & Krishnan, 2016).
define themselves in relation to others, selective programs, or tiered The review of studies using social comparison theory suggests a pre
programs, that involve special treatments, such as queue exclusivity, can dominant focus on issues related to the exclusivity and visibility (to
serve status signaling purposes (Ivanic, 2015). Among the 131 articles others) of special treatments and associated status perceptions (Drèze &
182
Fig. 1. Overview of loyalty program research.
Table 2
Theories employed in loyalty program studies.
Theory No. of articles % Exemplary studies
Social identity theory 7 5.3 Esmark et al. (2016); Ivanic (2015); Kang et al. (2015)
Social comparison theory 8 6.1 Kivetz and Simonson (2003); Liu and Mattila (2016); Viswanathan et al. (2017)
Prospect theory 7 5.3 Kwong et al. (2011); Melnyk and Bijmolt (2015); Stourm et al. (2015)
Behavioral learning theory 7 5.3 Drèze and Nunes (2011); Kivetz and Simonson (2002); Taylor and Neslin (2005)
Social exchange theory 6 4.6 Evanschitzky et al. (2012); Ma et al. (2018); Vesel and Zabkar (2010)
(Customer) equity theory 6 4.6 Kim et al. (2009); Ramaseshan and Ouschan (2017); Verhoef (2003)
Other theories 61 46.6 Demoulin and Zidda (2009, diffusion of innovations theory); Rossi (2018, moral
harzard); Schumann et al. (2014, information integration theory);
No guiding theory 51 38.9 Kearney (1989); Lewis (2004); Zhang et al. (2000)
Note: Number of articles amount to more than 131 because several articles draw on multiple theoretical perspectives (e.g., Esmark et al., 2016; Steinhoff & Palmatier,
2016); relative frequencies are based on 131 articles.
Nunes, 2009; Steinhoff & Palmatier, 2016). The satisfaction of cus repeat purchases, and increase switching costs for consumers. That is,
tomers in different tiers depends on their feelings of being special, the developing a consumption pattern which relies on individuals’ asym
degree of status they attained, and the difficulty for others to earn a metric reactions to benefits and losses is the main focus in these inertia-
similar status. Likewise, the number and size of LP tiers also affects based LPs. Among the reviewed articles, fourteen applied either pros
members’ status perceptions (Arbore & Estes, 2013; Drèze & Nunes, pect theory (7 articles, 5.3%; e.g., Nunes & Drèze, 2006), or behavioral
2009). learning theory (7 articles, 5.3%; e.g., Kivetz & Simonson, 2002).
4.2.1. Prospect theory

4.2. Inertia-based mechanism Prospect theory (Kahneman & Tversky, 1979) explains individuals’
asymmetric reactions to gains and losses. It suggests that individuals
To explain the inertia-based mechanism, which refers to a duplica prefer lower gains with higher certitude, rather than the prospect of
tion of previous actions, LP researchers often use prospect theory and higher gains with greater risk. According to this theory, a cumulative
behavioral learning theory (e.g., Keh & Lee, 2006; Kim, Shi, & Srini view discusses uncertainty and risky prospects, and takes different
vasan, 2004; Stourm, Bradlow, & Fader, 2015). The major aim of an LP weighting functions into consideration (Tversky & Kahneman, 1992). In
is to enhance consumers’ repeated purchase and foster a habit of this case, the decision is cumulative rather than separate, following both
participation and engagement (Keh & Lee, 2006; Kivetz, Urminsky, & the diminishing sensitivity principle and the loss aversion principle. The
Zheng, 2006). Generally, the LP offers rewards such as gifts, discounts, intuitive nature of invested efforts and monetary or non-monetary gains,
and convenience. Costs and benefits, as well as inputs and outcomes, are and how individuals respond to these (perceived) losses and gains, ex
often rationally evaluated following the perceived value of these utili plains the popularity of prospect theory in LP research (Bolton, Kannan,
tarian rewards (Danaher, Sajtos, & Danaher, 2016; Meyer-Waarden, & Bramlett, 2000; Drèze & Nunes, 2009; Kivetz et al., 2006).
2015a). These economic incentives help build basic habits, reinforce
183
To explain customers’ motivation/de-motivation to pursue and dyadic relationships. It suggests that the formation of the relationship is
achieve a redemption goal, LP research mainly applies prospect theory. based on the interaction between two parties. The exchange is often not
Because customers need to invest significant budgets and efforts (e.g., a one-shot transaction and it considers the implementation of cost-
repeat purchases, collection of points, etc.), this theoretical angle fo benefit analysis (Kingshott, 2006). Social exchange theory relies on
cuses on their evaluations of the costs and benefits associated with a several key assumptions (Cook, Cheshire, Rice, & Nakagawa, 2013). The
given reward. Generally, the closer customers get to completion, the first is the individual’s desire to increase gains and avoid losses during
perceived costs and risks are lower (Garland & Conlon, 1998). As a the exchange. Second, the exchange is structured by mutual depen
result, there is a stronger motivation to continue the investment. For dence; i.e., it only occurs when one party has something which another
example, in Nunes and Drèze (2006) research, prospect theory is used to party values. Third, the exchange and mutual benefits require long-term
explain consumers’ decisions in their investment efforts to reduce or cooperation, while the perceived value of the exchange will diminish
recoup past losses when completing tasks in certain LPs. Similarly, following the law of marginal utility.
Melnyk and Bijmolt (2015) argue that the termination of LPs has a Generally, continuous exchange helps building reciprocal relation
negative influence on customer loyalty as the accompanied removal of ships that are characterized by trust, commitment, and loyalty. Personal
benefits is considered a loss from the customer’s point of view. Stourm interactions within an LP play a vital role for customers’ loyalty towards
et al. (2015) use prospect theory to explain how consumers perceive both the program (Vesel & Zabkar, 2010) and the company (Evan
gains and losses of cash relative to gains and losses of points. schitzky et al., 2012). Other studies connect social exchange to program
structure (Septianto, An, Chiew, Paramita, & Tanudharma, 2019) and
4.2.2. Behavioral learning theory reward type (Ma, Li, & Zhang, 2018), suggesting that customers’ de
Behavioral learning theory (Haleblian & Finkelstein, 1999) predicts cisions on whether to maintain or to terminate a relationship are based
individuals’ behavior by considering the influence of the environment, on their subjective benefits and sacrifices with different program
both in the past and the present. Although the present environment is structures, as well as different configurations of rewards. Furthermore,
seen as an important predictor, present behavior could also be impacted Esmark et al. (2016) applied the social exchange theory to explain the
by the consequences of past behavior. More importantly, behavioral mechanism of how different LPs (open vs. selective programs) trigger
learning theory provides a future prospect view and argues that different levels of gratitude, which in turn increases customers’ loyalty
behavior can be changed and learned through stimuli (Rothschild & to the company.
Gaidis, 1981). In this context, reinforcement is considered a key
element. Two major principles suggest that (1) individuals will persist in 4.3.2. Equity theory
behaviors that help them gain rewards, and (2) will avoid those be Equity theory (Adams, 1965) postulates that parties in exchange
haviors that lead to punishment. relationships compare their ratios of exchange inputs to outcomes.
In LP research, this theory is used to explain consumers’ responses to Inequity exists when the perceived inputs and/or outcomes in an ex
rewards and the reinforcement of their repeated purchases. It is often change relationship are psychologically inconsistent with the perceived
applied in the context of reward types (Taylor & Neslin, 2005) and inputs and/or outcomes of the referent (Huppertz, Arenson, & Evans,
reward timing (Keh & Lee, 2006), or both simultaneously (e.g., Yi & 1978). Perceived inequities lead exchange parties to feel under or over-
Jeon, 2003). Taylor and Neslin (2005) identify the process of repeated rewarded, angry or resentful. This can affect their behaviors in subse
behavior and link it to different types of rewarding behaviors: points quent periods and encourage them to change their contributions to the
pressure and rewarded behavior. Keh and Lee (2006) use the theory to relationship, potentially resulting in suspicion and mistrust of the ex
justify the stronger impact of immediate rewards on customers’ loyalty. change partner (Ganesan, 1994).
Customers may experience a cognitive form of inertia over time. Cus In some circumstances, LPs might cause different reactions among
tomers’ learning-based preferences for certain behavioral patterns (i.e., different consumers, including feelings of (un-)fairness, gratitude, or
habits) can be fostered by rewards (Henderson et al., 2011; Meyer- skepticism (Eggert et al., 2015; Esmark et al., 2016; Söderlund & Col
Waarden, 2013). Moreover, substantial rewards in a program can liander, 2015). For example, Söderlund and Colliander (2015) find that
impose significant switching costs. Even disregarding the amount or under-rewarding customers can lead to lower levels of satisfaction and
value of their reward balance (Hartmann & Viard, 2008), customers repurchase intentions due to perceptions of injustice. Similarly, Eggert
might accrue psychological costs of switching if they feel dependent on et al. (2015) show that endowed elevated status can elicit both gratitude
or accustomed to the program, so much so that they become locked in and skepticism. Specifically, if customers receive unearned status re
(Klemperer, 1995). wards, they might become skeptical about the motive for the reward,
despite feeling somewhat grateful (Eggert et al., 2015).
4.3. Relationship-based mechanism
4.4. Multi-theory application
To explain the relational mechanism, LP researchers often use equity
theory and social exchange theory. One fundamental aim of LPs is to Notably, some studies use multiple theories to support their con
form, maintain, and strengthen the relationship between brands and ceptual models. For example, Steinhoff and Palmatier (2016) combined
their customers. Strong customer-brand relationships, which are forged social comparison theory (to explain effects related to status), equity
through interaction and exchange (that are ideally fair for all involved theory (to explain effects related to perceived [un-]fairness), and attri
parties), are strongly tied to positive word of mouth, increased revenue, bution theory (to explain effects related to contractual/non-contractual
share of wallet, and customer retention (Hansen, Deitz, & Morgan, 2010; rewards based on rule clarity) to investigate the impact of three com
Ramaseshan & Ouschan, 2017; Verhoef, 2003). Against this back parison mechanisms on LP members and bystander customers. Using
ground, researchers have investigated the role that social, hedonic, and this multi-theoretical perspective, the authors uncover opposing effects
utilitarian benefits play in converting general customers into patrons of on customers’ attitudinal loyalty and sales, which could not be
a brand for the sake of long-term success. Among the reviewed articles, explained by a single theory alone. Another example is Evanschitzky
twelve applied either equity theory (6 articles, 4.6%; e.g., Kim, Lee, Bu, et al. (2012) study that combined social exchange theory and equity
& Lee, 2009), or social exchange theory (6 articles, 4.6%; e.g., Vesel & theory to shed light on the drivers of company loyalty and program
Zabkar, 2010). loyalty. On the one hand, they use social exchange theory to explain how
commitment, trust, and satisfaction shape customers’ affective bonds
4.3.1. Social exchange theory with company. On the other hand, they use equity theory to explain the
Social exchange theory (Blau, 1964) explains the exchange within role of customers’ cost-benefit evaluations and trade-off decisions for
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Table 3
Industries investigated in loyalty program research.
Industry No. of studies % Exemplary studies
Retailing
Offline retailing 101 50.0 Bombaij and Dekimpe (2020); Mimouni-Chaabane and Volle (2010); Taylor and Neslin (2005)
Online retailing 9 4.5 Kivetz (2005); Wang and Lalwani (2019); Zhang and Breugelmans (2012)
Hospitality
Airlines 38 18.8 Liu and Yang (2009); Palmeira et al. (2016); Van Osselaer et al. (2004)
Hotels 23 11.4 Berezan et al. (2017); Hansen et al. (2010); Liu and Mattila (2016)
Restaurants 12 5.9 Bagchi and Li (2010); Keh and Lee (2006); Kwong et al. (2011)
Coffee shops 7 3.5 Kim and Ahn (2017); Kivetz et al. (2006); Esmark et al. (2016)
Other hospitality services 8 4.0 Chaudhuri et al. (2019); Dorotic et al. (2011); Esmark et al. (2016)
Other service industries

Information-oriented services 11 5.4 Bolton et al. (2000); Verhoef (2003); Wirtz et al. (2007)
Good-oriented services 9 4.5 Kivetz and Simonson (2002); Melnyk and Bijmolt (2015); Nunes and Drèze (2006)
Person-oriented services 6 3.0 Daryanto et al. (2010); Esmark et al. (2016)
Products
Consumer non-durables 5 2.5 Chaudhuri et al. (2019); Rosenbaum et al. (2005); Wansink (2003)
Consumer durables 4 2.0 Keeling et al. (2013); Rosenbaum et al. (2005)
Other industries 7 3.5 Kivetz et al. (2006); Rosenbaum et al. (2005); Viswanathan et al. (2017)
Industry not explicitly stated 13 6.4 Sayman and Hoch (2014); Thompson and Chmura (2015); Zhang and Gao (2016)
Note: The reported frequencies are based on 202 individual studies in 127 empirical articles (we excluded conceptual and simulation-based articles, i.e., Beck et al.,
2015; Chun & Ovchinnikov, 2019; Kearney, 1989; Kim et al., 2004).
building program loyalty. retail industry, most studies (101 of 110 studies; 91.8%) focus on offline
retail stores and grocery outlets (e.g., Allaway, Berkowitz, & D’Souza,
4.5. Other theories 2003; Demoulin & Zidda, 2009; Meyer-Waarden & Benavent, 2009).
Only a few studies (9 studies, 8.2%) focus on online retailing (e.g.,
It is noteworthy that a large share of studies (50.9%) rely on theories Chaudhuri et al., 2019; Ivanic, 2015; Wang & Lalwani, 2019), mostly
other than the “leading” theories. A closer analysis suggests that some published during the last decade. Although the limited number of
studies (a) draw on specialized theories due to their focus on specific, studies can be explained by the relatively recent emergence of e-com
more narrow phenomena, or (b) occasionally use more generic theories. merce and the time it takes for research to catch up with such a quickly
Examples for the singular application of a theory to explain a niche evolving market, the crucial importance of this sector clearly demands
phenomenon include: Daryanto and colleagues’ (2010) investigation of more research on the transferability of prior findings to this new context.
regulatory fit in the context of health clubs, using regulatory focus The hospitality industry covers a series of sub-industries ranging
theory; Schumann, Wünderlich, and Evanschitzky (2014) investigation from airlines (38 of 88 studies, 43.2%; e.g., Palmeira et al., 2016), hotels
of spillover effects in coalition LPs, using information integration theory; (23 studies, 26.1%; e.g., Liu & Mattila, 2016), restaurants and coffee
and, Tuzovic (2010) study of the effect of frustration in frequent-flier shops (19 studies, 21.6%; e.g., Kim & Ahn, 2017), to other hospitality
programs on dysfunctional behaviors, using frustration theory. Exam services such as theme parks and theaters (8 studies, 9.1%; e.g., Esmark
ples for the occasional use of rather generic theories include Thompson et al., 2016). Hotels have especially gained in popularity as a study
and Chmura (2015) reference to cultural values theory that explains context. While in the 2000s only four studies investigated LPs in a hotel
differences in customers’ reward preferences. Importantly, our analysis context, 19 studies have emerged in this context since 2010. This
suggests that, in many cases, researchers merely refer to certain theories research trend reflects the rapid growth of global tourism over the past
without extensively discussing them nor drawing on them when devel two decades (UNWTO, 2020). Due to the fact that hospitality services
oping specific hypotheses. Notably, more than a third of the studies tend to provide experiential benefits, the effectiveness of certain LP
(38.9%) do not mention any theories, nor do they use theoretical ele design features differs from other industries that place a primary
ments to conceptualize their research framework. emphasis on functional benefits (e.g., discount retailing). Therefore,
non-monetary rewards, such as upgrades and additional services that
5. Context improve program members’ service experience, play a significant role in
enhancing customer loyalty. Another explanation for why LPs are so
Tables 3 and 4 summarize our findings regarding the contexts widespread in the airline and hospitality industries is that services (such
investigated in LP research. These reported results are based on 202 as hotel rooms and airplane seats) are highly perishable. This crucial
studies reported in 127 empirical articles. As some studies cover mul feature makes it attractive for LP operators to reward loyal customers
tiple industries and/or countries, the total count of industries and with upgrades if those offers are not already booked by paying cus
countries exceeds the number of studies. The reported relative fre tomers. As these capacities would otherwise perish, upgrade rewards
quencies relate the absolute number of studies that feature a given in increase the (perceived) value for the customer at low marginal costs.
dustry or country to the total number of individual studies (not articles). Also, research on customer tiers is often set in hospitality contexts as this
sector often involves situations in which the special treatment of cus
5.1. Industries tomers is visible to others. However, it is noteworthy that the hospitality
industry is very diverse, which implies that findings from a specific sub-
Our analysis demonstrates that LP research is mostly set in the retail sector cannot necessarily be transferred to another sub-sector.
(110 studies, 54.5% of all individual studies) and hospitality industries Other service industries account for 12.9% (26 studies), including
(88 studies, 43.6%). This is not surprising given the fact that LPs origi information-oriented services (e.g., financial services; Bolton et al.,
nated in the airline industry and have been rapidly adopted by the retail 2000), good-oriented services (e.g., car rentals; Kivetz & Simonson,
industry. Another possible explanation is that retailer scanner data and 2002), and person-oriented services (e.g., health club; Daryanto, de
consumer panel data are more easily available in the retail sector. In the Ruyter, Wetzels, & Patterson, 2010). By contrast, manufacturing and
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Table 4
Countries investigated in loyalty program research.
Country No. of studies % Exemplary studies
Americas
United States 96 47.5 Allaway et al. (2003); Lemon and Wangenheim (2009); Sajtos and Chong (2018)
Latin America 2 1.0 Montoya and Flores (2019); Thompson and Chmura (2015)
Europe
United Kingdom 14 6.9 Hutchinson et al. (2015); Keeling et al. (2013); Smith et al. (2003)
Benelux (Netherlands & Belgium) 14 6.9 Leenheer et al. (2007); Minnema et al. (2017); Van Heerde and Bijmolt (2005)
France 11 5.4 Bruneau et al. (2018); Meyer-Waarden and Benavent (2009); Mimouni-Chaabane and Volle (2010)
Germany 9 4.5 Schumann et al. (2014); Thompson and Chmura (2015); Viswanathan et al. (2017)
Other European countries 9 4.5 Demoulin and Zidda (2009); Mägi (2003); Vesel and Zabkar (2010)
Non-disclosed European countries 10 5.0 Bolton et al. (2000); Bombaij and Dekimpe (2020); Sayman and Hoch (2014)
Asia
East-Asia (China, Hong Kong, Taiwan, South Korea) 15 7.4 Kwong et al. (2011); Ma et al. (2018); Yi and Jeon (2003)
South-East Asia (Singapore, Malaysia, Thailand) 14 6.9 Septianto et al. (2019); Wirtz et al. (2007); Zhang and Gao (2016);
India 1 0.5 Thompson and Chmura (2015)
Russia 1 0.5 Thompson and Chmura (2015)
Oceania
Australia 8 4.0 Keh and Lee (2006); Ramaseshan and Ouschan (2017); Sharp and Sharp (1997)
New Zealand 2 1.0 Chan et al. (2016)
Country not reported 5 2.5 Wang et al. (2016); Daryanto et al. (2010); Kang et al. (2015)
Note: The reported frequencies are based on 202 individual studies in 127 empirical articles (we excluded conceptual and simulation-based articles, i.e., Beck et al.,
2015; Chun & Ovchinnikov, 2019; Kearney, 1989; Kim et al., 2004).
other industries account for only 4.5% (9 studies including consumer card use in the world (Nielsen, 2018). Finally, it is noteworthy that there
durables and non-durables) and 3.5% (7 studies; e.g., agricultural are five individual studies (2.5%) in which country setting is not
products), respectively. A few studies do not explicitly state the exam identifiable.
ined industry (13 studies, 6.4%). The results of our in-depth analysis further revealed that most of the
studies were conducted within a single country (e.g., Berezan, Krishen,
Tanford, & Raab, 2017; Kivetz et al., 2006; Mägi, 2003; Minnema, Bij
5.2. Countries molt, & Non, 2017). Only six articles explore LPs in a multinational
context or use samples that include multi-national respondents (i.e:
As shown in Table 4, most of the reviewed studies are conducted in Bolton et al., 2000, 3 (unspecified) European countries; Bombaij &
the United States (96 studies, 47.5% of all studies) and Europe (67 Dekimpe, 2020, 27 Western & Eastern European countries; Melnyk &
studies, 33.2%), with the UK, Benelux states, and France jointly ac van Osselaer, 2012, Netherlands and New Zealand; Noordhoff, Pauwels,
counting for more than half (58.2%) of these European studies. The & Odekerken-Schröder, 2004, Netherlands and Singapore; Steyn, Pitt,
dominant focus on the U.S. over the past three decades can be explained Strasheim, Boshoff, & Abratt, 2010, Singapore, Malaysia, Hong Kong,
by the fact that the new generations of LPs were first introduced in the U. Taiwan, and Thailand; Thompson & Chmura, 2015, Brazil, Russia, India,
S. market. Another explanation is that most management science China, and Germany). The focus on individual countries might be due to
research is principally focused on mature markets in North America and the fact that, traditionally, LPs have been limited to a specific
Europe. In particular, research tends to overemphasize theories devel geographic area or region. However, the lack of cross-national LP
oped for U.S. contexts that are insufficiently adapted for local circum research is problematic in light of the border-spanning operations of
stances and businesses elsewhere (Tsui, Nifadkar, & Ou, 2007). Indeed, multi-national retailers (MNRs) and online retailers. Managers need to
only 31 of the reviewed LP studies (15.3%) are set in Asia. These studies understand what LP design elements can be standardized across mar
are set in various countries and regions with a similar number of studies kets, and what elements need to be adapted to achieve the desired
in East-Asia (15 studies), such as mainland China (6), Hong Kong (6), customer responses in local markets (Thompson & Chmura, 2015).
Taiwan (1), and South Korea (2), as well as in South-East Asia (14 Single-country studies only provide limited insights in this regard
studies), such as Singapore (7), Malaysia (6), and Thailand (1). India and because their findings cannot be directly compared. Likewise, due to the
Russia have only been considered in a cross-national study by Thompson increased integration of global markets, consumers are increasingly
and Chmura (2015). Importantly, we observe an increasing interest in becoming members of foreign LPs. This implies an increasing hetero
Asian country contexts over time, which shows a certain emancipation geneity of program members and amplifies the importance of under
in academia from the U.S. domination of the management literature. In standing the role of cultural differences in the design of LPs.
the period between 2000 and 2009, a mere four studies were set in East
and South-East Asia. This number increased to 25 studies between 2010 6. Characteristics
and 2019, which represent 21.6% of all studies conducted in that period
and makes Asia the second most frequent context after the U.S. in the In general, LP research investigates the antecedents and conse
last decade. This is not surprising given the rapid economic and tech quences of LP adoption and execution (see Fig. 1). Researchers have
nological developments that have taken place in Asia over the past two investigated a variety of variables relating to the firm, program,
decades. These changes, together with increased consumer spending, customer, and competition along the different stages (adoption-execu
lead to significant growth of the retail and hospitality sector, both of tion-outcomes). Table 5 provides an overview of variables that have
which represent LP-intensive industries. been examined in LP research. We grouped variables according to their
Furthermore, ten studies (5.0%) are set in Australasia, i.e., Australia role in each study, i.e., we distinguish between independent, mediating,
(8 studies) and New Zealand (2 studies). To date, studies on LPs in Af moderating, and dependent variables. Within each group of variables,
rican countries are non-existent. Importantly, the lack of studies set in we further classified them according to the entity to which they are
Africa should not be misinterpreted as an indication of the non-existence primarily related, i.e., firm-related variables, LP-related variables,
of LPs. In fact, South Africa has one of the highest incidences of loyalty
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Table 5 distance (13 articles, 11.1%); and firms’ decisions to set up a particular
Variables investigated in loyalty program research. type of program (6 articles, 5.1%). Studies focusing on market share and
Variables No. of articles % competitive situations show that lower market shares go hand in hand
with lower purchases and lower loyalty (i.e., double jeopardy phe
Independent variables
Firm-related variables nomenon), leading to reduced LP efficiency (Meyer-Waarden & Bena
Program adoption 6 5.1 vent, 2006; Sharp & Sharp, 1997). Furthermore, customers’ possession
Product/brand/service characteristics 17 14.5 of competitors’ loyalty cards is an obstacle to LP efficiency (Azeem,
Firm/store characteristics 13 11.1 Baker, Villano, Mounter, & Griffith, 2018; Leenheer, van Heerde, Bij
LP-related variables
Perceived value and benefits 24 20.5
molt, & Smidts, 2007; Meyer-Waarden & Benavent, 2009).
Promotion 10 8.5 Our review suggests that most studies include program-related and
Redemption requirements and mechanisms 27 23.1 consumer-related IVs (see details in Table 5). Program-related charac
Reward status and characteristics 29 24.8 teristics concern the programs’ specific structure and content, and
Customer tiers 11 9.4
include: redemption requirements and mechanisms, such as point
Consumer-related variables
Program membership 17 14.5 accumulation and expiry policies (27 articles, 23.1%); reward status and
Purchasing behavior 19 16.2 reward characteristics, such as rewarded members vs. bystanders,
Relationship characteristics 15 12.8 reward type and rate (29 articles, 24.8%); and, the perceived value and
General characteristics, cognition, and affect 16 13.7 benefits that the LP offers (24 articles, 20.5%). These three types of
Competition-related variables 11 9.4
Other variables 10 8.5
variables are the most common IVs used over time and are included in
more than two thirds of all studies (a combined 68.4%).
Mediating variables 42 35.9
Reward requirements and mechanisms induce consumers to actively
LP-related variables
Perceived value and benefits 7 16.7
engage with the brand. Most reward mechanisms are transaction-based,
Redemption process 4 9.5 awarding customers for making purchases. The reward rate and
Reward characteristics 3 7.1 redemption time are particularly important for LP adoption in early
Consumer-related variables customer lifecycle stages as customers take into account the distance
Program membership 2 4.8
(points needed) and step size (points/dollars/euros) of the LP (Bagchi &
Purchasing behavior 3 7.1
Relationship characteristics 17 40.5 Li, 2010; Liu, Lamberton, & Haws, 2015). If LP members perceive quick
General characteristics, cognition, and affect 12 28.6 (artificial) advancement towards the goal of reward redemption, they
Other variables 4 9.5 show greater persistence towards achievement (Nunes & Drèze, 2006).
Moderating variables 55 47.0 Contrarily, in advanced and mature customer relationship cycles, he
LP-related variables donic, relational, status, and even delayed rewards are more appropriate
Program type 6 10.9 to maintain customers’ achievement motivation (Nunes & Drèze, 2006;
Promotion 3 5.5
Steinhoff & Palmatier, 2016). With increasing digitalization, LP rewards
Redemption requirements and mechanisms 8 14.5
Reward characteristics 10 18.2 mechanisms are also based on consumers’ engagement-behaviors as
Customer tiers 3 5.5 reflected in writing reviews, social sharing, or downloading an LP app
Consumer-related variables (Bruneau, Swaen, & Zidda, 2018). Reward status refers to the number of
Program membership 10 18.2 hierarchical levels or tiers, depending on the customers’ input/purchase
Purchasing behavior 8 14.5
Relationship characteristics 5 9.1
levels (e.g., platinum, gold, and silver), that are offered in an LP
General characteristics, cognition, and affect 14 25.5 (Steinhoff & Palmatier, 2016). Rewards might be linear, hierarchical (e.
Competition-related variables 3 5.5 g., rewards increase with greater spending levels), offer-related (e.g.,
Other variables 2 3.6 only during a specific time period, such as promotional activities), or
Dependent variables cyclical (e.g., special occasions, birthdays, or Christmas). The variable
Firm performance (financial, strategic) 17 14.5 reward type, which mainly refers to tangible (hard benefits) and
Consumer-related variables intangible (soft benefits) rewards, is also categorized in this sub-group.
Program membership 17 14.5
Redemption behavior 15 12.8
Hard benefits tend to have a stronger impact on LP satisfaction, whereas
Reward preferences and choice 6 5.1 soft benefits tend to affect brand loyalty (Bridson, Evans, & Hickman,
Perceptions, attitudes, and motivations 16 13.7 2008). Social and psychological (intangible) rewards can induce positive
Purchasing behavior 56 47.9 emotions, such as gratitude (Steinhoff & Palmatier, 2016), and enhance
Relationship characteristics 41 35.0
customers’ affective commitment and, subsequently, the relationship/
Other variables 7 6.0
customer lifetime value (Melancon, Noble, & Noble, 2011). Further
Note: The reported frequencies are based on 117 articles (we excluded con more, relational rewards, such as preferential treatment, tend to have
ceptual articles and studies that do not include quantitative examinations of bi/ positive effects on customers in higher tiers (Nunes & Drèze, 2006), but
multi-variate relationships). can also backfire due to bystander effects related to perceptions of un
fairness by lower tier members (Steinhoff & Palmatier, 2016; Söderlund
consumer-related variables, competition-related variables, and other & Colliander, 2015). It is noteworthy that redemption requirements and
variables. We consider 117 empirical articles in our analysis (excluding mechanisms, as well as reward status and characteristics, are closely
conceptual articles and studies that do not involve bi/multi-variate connected to each other and often investigated together (Nunes & Drèze,
relationships). 2006; Yi & Jeon, 2003; Zhang & Gao, 2016).
Finally, LP perceived value refers to customers’ evaluation of their
6.1. Independent variables benefits relative to the costs (Meyer-Waarden, 2015b). To evaluate the
perceived value of a program membership, consumers simultaneously
With respect to typically investigated independent variables (IVs), consider the different types of rewards and the effort they have to make
Table 5 shows different groups of variables and their sub-groups to meet the redemption requirements (i.e., weighing benefits against
accordingly. Firm-related variables capture various characteristics costs). This assessment depends on how easy it is for customers to
related to different intra-firm units covering: characteristics of firms’ compute the value of the potential benefits they could obtain and the
(core) products/services and brands (17 articles, 14.5%); general firm or time needed to collect and redeem them (Bagchi & Li, 2010; Kwong,
(if applicable) store characteristics, such as market share and store Soman, & Ho, 2011). High perceived value positively affects LP and
187
brand loyalty (Yi & Jeon, 2003). Other program-related IVs include the that are relevant in the context of tiered programs and positively
number and structure of customer tiers (11 articles, 9.4%), and pro mediate the effects of IVs on outcomes (Esmark et al., 2016). In contrast,
motional activities associated with LPs (10 articles, 8.5%). only a few articles specify consumers’ memberships (2 articles, 4.8% of
Consumer-related IVs include: customers’ memberships in an LP (17 all articles which include mediators) or purchasing behaviors (e.g.,
articles, 14.5%); their purchasing behaviors (19 articles, 16.2%); their repeat purchasing behaviors such as purchase frequency, amount, and
relationships to the firm, such as attitudinal loyalty (15 articles, 12.8%); recency; 3 articles, 7.1%) as mediating variables.
their general characteristics, such as socio-demographics; and cognitive Over time, we observe that consumers’ LP memberships, as well as
and affective variables (16 articles, 13.7%). Customer membership in an the programs’ perceived value and benefits, were common mediators in
LP refers to LP adoption from customers’ perspectives. It includes the 2000s (4 out of 10 articles which include mediators in that period).
whether customers choose to enroll in a particular LP, their possession of In the 2010s, the focus shifted towards the mediating role of consumers’
a loyalty card, or their selection of different payments for annual fees if characteristics, cognition and affect, as well as relationship
they participate in a tiered program (Azeem et al., 2018; Eason, Bing, & characteristics.
Smothers, 2015; Filipe, Marques, & Salgueiro, 2017). Purchase behavior
refers to the variables relating to actual behavior in LPs, such as 6.3. Moderating variables
spending, or the number of items purchased per shopping trip, or in total
(Allaway, Gonner, Berkowitz, & Davis, 2006; Lemon & Wangenheim, Concerning moderating variables, our analysis indicates about half
2009). Change in shopping patterns, often observed in transactional of all studies (55 articles; 47.0%) consider moderating effects. Similar to
scanner data, can help predicting future consumption patterns and the mediators, most moderators are related to (1) consumer character
customer loyalty to the LP or the program sponsor. The customer’s istics or (2) LP design characteristics. Variables related to the consumer
relationship with a firm encompasses positive attitudes towards the cover customers’ general characteristics in the form of cognition and
brand (or store) and willingness to maintain a value-added relationship affect (14 articles, 25.5%), membership in a program (10 articles,
in the future. Therefore, this sub-group includes relational constructs 18.2%), their purchasing behaviors (8 articles, 14.5%), and character
such as attitudinal loyalty, commitment, and trust. Consumers’ general istics describing their relationships with the firms/brands (5 articles,
characteristics, cognitive, and affective variables refer to customers’ 9.1%). General characteristics, as well as cognition and affect, are the
individual characteristics and their cognitive and emotional pre most popular moderating variables in LP research, especially socio-
dispositions. Customers’ evaluation of benefits received and overall demographics (e.g., age, gender, income) and other household-related
experience (Keh & Lee, 2006; Yi & Jeon, 2003), sensitivity to price variables which are plausible given that, in retailing and hospitality (i.
(García Gómez, Gutiérrez Arranz, & Gutiérrez Cillán, 2012), perceived e., the two dominating contexts), a large amount of consumption is done
pride or happiness (Septianto et al., 2019) all positively influence cus on a family basis (Dorotic, Verhoef, & Bijmolt, 2014; Leenheer et al.,
tomers’ decisions to continue to use or to quit the LP. When consumers’ 2007). Moreover, cognitive and emotional traits, such as personal
perceptions of cognitive or affective switching costs are high, “lock-in involvement, the relevance of the purchases, and the psychological
effects” may occur. Regarding the customer-related IVs, each sub- benefits which consumers derive from membership, regulate their atti
category is equally investigated. Specifically, consumers’ general char tudes towards LPs, and their participation, accordingly (Vesel & Zabkar,
acteristics gain in popularity in recent years. We observe an increase in 2010).
use, rising from only two articles (4.7%) in the 2000s to 14 articles The second most frequently used moderators are program-related
(19.2%) in 2010s, making it one of the most popular IV categories of the variables. This category includes reward characteristics (10 articles,
period. 18.2% of all articles which include moderators), redemption re
Less utilized IVs include competition-related variables, such as cus quirements, and mechanisms (8 articles, 14.5%), the type of program (6
tomers’ possession of competitors’ loyalty cards and the attractiveness articles, 10.9%), promotional activities (3 articles, 5.5%), and the
of competitors that negatively affect the focal store’s/brand’s LP effi number and structure of customer tiers (3 articles, 5.5%). Reward
ciency (Azeem et al., 2018; Leenheer et al., 2007; Meyer-Waarden & characteristics can be classified into several types following their ex
Benavent, 2009), as well as other variables, such as engagement, in clusivity, visibility, tangibility, as well as the rate of reward (Esmark
formation searching, and communication style in an LP (Berezan et al., et al., 2016; Schumann et al., 2014; Steinhoff & Palmatier, 2016).
2017; Bruneau et al., 2018). Notably, researchers started to investigate the moderating effects of
reward characteristics in the 2010s, accounting for one third of all
6.2. Mediating variables moderators used during the period from 2010 to 2019.
We also observe an increasing consideration of program membership
Regarding mediating variables, we find that only 42 of the 117 over time, making it one of the most common moderators in the period
assessed articles (35.9%) include mediators. Most of these mediators are of 2010–2019 (7 articles, 18.9%), after reward characteristics (10 arti
related to (1) design characteristics of the program, or (2) characteristics cles, 27.0%), general characteristics, cognition, and affect (8 articles,
of the customer. Program-related variables are less frequently used as 21.6%). Furthermore, relationship characteristics (e.g., attitudinal loy
mediators compared to consumer-related variables. Program-related alty, trust, and commitment) form another noteworthy category, one
variables include perceived value and benefits (7 articles, 16.7%), which was frequently studied during the 2000s. Its popularity declined
redemption processes (4 articles, 9.5%), and reward characteristics, from 22.2% of all moderators used in the 2000s to 2.7% in the 2010s,
such as reward rarity (3 articles, 7.1%). In contrast, two of the most which could be an indication of the maturity of relationship marketing
popular categories of mediators are customers’ relationship character research. Indeed, new concepts such as customer engagement – an active
istics (17 articles, 40.5% of all articles which include mediators), and interaction between customers and the firm (Kumar & Pansari, 2016), or
their general characteristics, cognition, and affect (12 articles, 28.6%), its LP (Bruneau et al., 2018) – have emerged and attract increasing
used in nearly a third of studies that consider one or more mediators. attention in marketing research. Only three articles (Azeem et al., 2018;
Typical relationship characteristics that mediate the effects of IVs on Bombaij & Dekimpe, 2020; Liu & Yang, 2009) consider competition-
outcomes are customers’ attitudinal loyalty (e.g., resistance to counter- related variables, e.g., market saturation due to the number of existing
persuasion from competitors), such as trust and commitment, repre LPs, and entry of new competitors. For example, Bombaij and Dekimpe
senting a motivation to maintain a valued relationship toward the focal (2020) find that LP efficiency is lower when operated by discounters,
firm and a willingness not to be betrayed (Morgan & Hunt, 1994). and higher in markets with weak competition. Very few other variables
Customers’ in/out-group identification, perceptions of (un-)fairness, (2 articles, 3.6% of these articles) are studied as moderators, including
and feelings of gratitude represent common cognitions and emotions industrial exclusivity and LP duration.
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6.4. Dependent variables Table 6

Research approach and methods used to study loyalty programs.
Finally, our review of the investigated dependent variables (DVs) Research approach & method No. of % Exemplary studies
shows that most studies focus on customer-related outcomes, only articles
14.5% (17 articles) of the articles reviewed focus on investigating LPs Quantitative approach 121 94.5 Drèze and Nunes (2009);
effectiveness in terms of firm performance. These studies consider both Kivetz (2005); Vesel and
financial and strategic performance outcomes, employing measures of Zabkar (2010)
(future) sales, sales productivity, profitability, or financial risk (e.g., Experimental (primary) 41 32.0 Liu and Mattila (2016);
data Steinhoff and Palmatier
Chaudhuri et al., 2019; Kang et al., 2015). Compared to these financial (2016); Wagner et al. (2009)
measures, other measures of intangible assets, such as brand or customer Correlational (primary) 56 43.8 Melnyk and Bijmolt (2015);
equity, are more difficult to be measured and causally attributed to a data Sharp and Sharp (1997);
particular LP. This is because they are created gradually and their Wang and Lalwani (2019)
Secondary data 37 28.9 Liu and Yang (2009); Rossi
ramifications may only manifest slowly over time.
(2018); Zhang and
Referring to the customer-related DVs, researchers specially focus on Breugelmans (2012)
(1) purchasing behavior (56 articles, 47.9% of all articles), and/or (2) Qualitative approach 13 10.2 Bruneau et al. (2018);
relationship outcomes (41 articles, 35.0%). Purchasing behavior-related Hutchinson et al. (2015);
outcomes include repeat purchases, purchase quantities, frequencies, Tuzovic (2010)
Regression analysisa 69 53.9 Allaway et al. (2006);
total spending, and share of wallets (Azeem et al., 2018; Breugelmans & Breugelmans and Liu-
Liu-Thompkins, 2017; Wang, Lewis, Cryder, & Sprigg, 2016). Mean Thompkins (2017); Kivetz
while, relationship outcomes reflect, for example, customers’ attitudinal et al. (2006)
loyalty, trust, and commitment toward the LP or firm, their levels of (Multivariate) Analysis of 30 23.4 Bagchi and Li (2010); Keh and
(co-)varianceb, t-Test, Lee (2006); Ramaseshan and
satisfaction, and consequent word of mouth intentions (Meyer-Waarden,
Sobel test Ouschan (2017)
2015b; Noble, Esmark, & Noble, 2014). Due to the inherent objectives of Structural equation modeling 24 18.8 Berezan et al. (2017); Esmark
loyalty programs, i.e., stimulating repurchases and fostering attitudinal (covariance/variance- et al. (2016); Kang et al.
and behavioral loyalty among customers, these two categories are the based) (2015)
prevailing DVs and have been studied consistently over time (88.4% of (Bayesian) Hierarchical 6 4.7 Drèze and Nunes (2011);
(linear) models (incl. meta- Stourm et al. (2015); Van
all articles in the 2000s, 79.5% in the 2010s).
analysis) Heerde and Bijmolt (2005)
Other frequent consumer-related DVs are LP membership (e.g., (Hierarchical) Cluster 5 3.9 Hansen et al. (2010);
adoption likelihood and timing, decision to stay or cancel; 17 articles, analysis, latent class Rosenbaum et al. (2005);
14.5%), redemption behavior (e.g., decision to spend points, dynamics analysis, and mixture Vesel and Zabkar (2010)
models
of spending points, redemption amounts; 15 articles, 12.8%), percep
Scale developmentc 5 3.9 Bruneau et al. (2018); Meyer-
tions, attitudes, and motivations (e.g., sense of pride, perceived justice; Waarden (2013); Mimouni-
16 articles, 13.7%). Our results indicate increasing trends in focus on (1) Chaabane and Volle (2010)
consumers’ redemption behaviors and (2) their perceptions, attitudes, Other methodsd 28 21.9 Chun and Ovchinnikov
and emotions, rising from 9.3% in the 2000s to 15.1% in the 2010s, and (2019); Lewis (2004); Sayman
and Hoch (2014)
4.7% in the 2000s to 19.2% in the 2010s, respectively. During the same
period, we observe a decreasing trend regarding the focus on LP Note: Number of articles amount to more than 128 studies (excl. conceptual
membership-related DVs, from 20.9% in the 2000s to 11.0% in the work) because several studies employ multiple methods (e.g., Hansen et al.,
2010s. Other non-classified DVs (7 articles, 6.0%) include, market price 2010; Keeling et al., 2013; Meyer-Waarden & Benavent, 2009); relative fre
and total consumer (social) welfare. quencies are based on 128 studies. a Includes, among others, (multinomial) lo
gistic/logit regressions (Drèze & Nunes, 2009), tobit and probit models (e.g.,
Kivetz et al., 2006), seemingly unrelated regressions (e.g., Dorotic et al., 2011),
7. Methodology
generalized linear models (e.g., Ivanic, 2015), diff-in-diff models (e.g., Chaud
huri et al., 2019), vector autoregressive models (Meyer-Waarden & Benavent,
To assess the literature in terms of methodology, we reviewed 128 2009), and event history/hazard models (e.g., Viswanathan et al., 2017); b in
empirical articles (excluding three conceptual articles) according to the cludes repeated measure (M)ANOVAs (e.g., Daryanto et al., 2010); c we desig
research approach (quantitative or qualitative) and the analytical nate scale development procedures as a distinct class, typically involving the use
method(s) used to investigate the relationships of interest. Table 6 of other methods, i.e., qualitative interviews, exploratory factor analysis,
summarizes our findings. confirmatory factor analysis, and structural equation modeling; d includes
various methods which were mostly applied in singular studies, ranging from
7.1. Research approach qualitative methods (e.g., case studies, Hutchinson et al., 2015; fsQCA, Ma et al.,
2018; critical incident technique, Tuzovic, 2010) to mathematical proof (Drèze
& Nunes, 2004) and numeric simulations (Chun & Ovchinnikov, 2019).
Our review clearly indicates that quantitative approaches dominate
the field, with 121 articles that include quantitative studies compared to
13 articles that include qualitative studies (note that the overall number among (1) managers responsible for LPs (for exceptions, see Leenheer &
exceeds 128 due to several mixed methods articles, e.g., for scale Bijmolt, 2008; Wansink, 2003) or (2) commercial customers in B2B re
development procedures). Among the articles that include quantitative lationships (for exceptions, see Keeling, Daryanto, de Ruyter, & Wetzels,
studies, 97 articles (80.2%) use primary data from surveys and experi 2013; Viswanathan, Sese, & Krafft, 2017). This is surprising given that
ments (e.g., Bagchi & Li, 2010; Drèze & Nunes, 2004). The use of these populations represent important key information sources that
experimental and survey data is distributed quite evenly, with 41 arti probably hold valuable insights for the advancement of the field. The
cles (42.3%) focusing on exploring causal relationships and 56 articles remaining 37 articles (28.9%) use secondary data, either longitudinal
(57.7%) focusing on exploring correlational relationships. In most cases, consumer panel data (e.g., Meyer-Waarden, 2007; Meyer-Waarden &
these articles report results that are based on heterogeneous consumer Benavent, 2009), or longitudinal transactional scanner data from LPs (e.
samples (83.2%), yet 24 articles use student samples either exclusively g., Leenheer et al., 2007; Viswanathan et al., 2017) which are occa
(10 articles; e.g., Ivanic, 2015; Ma et al., 2018) or in addition to con sionally combined with geo-coded address information (e.g., Allaway
sumer samples (14 studies; e.g., Breugelmans & Liu-Thompkins, 2017; et al., 2006; Meyer-Waarden & Benavent, 2009).
Kivetz & Simonson, 2003). Very few studies use survey data collected
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7.2. Analytical methods 8.1. Theory
Researchers use various analytical methods that are applied ac With respect to theory, our review shows that researchers have used
cording to the data used (see Table 6). As most LP studies use quanti diverse theories to explain the mechanisms associated with LPs. These
tative data sets, regression analysis is the most popular analytical theories often take a particular angle, focusing on status-based mecha
method (69 articles, 53.9%). Studies based on transactional LP scanner nisms (e.g., social comparison theory), inertia-based mechanisms (e.g.,
data predominantly use regression-based (panel) analyses such as behavioral learning theory), or relationship-based mechanisms (e.g.,
(multinomial) logistic/logit regressions (e.g., Drèze & Nunes, 2009), equity theory). As a result, most of the reviewed articles use a single
tobit and probit models (e.g., Kivetz et al., 2006), generalized linear theory to underpin their conceptual framework. However, a single
models (e.g., Ivanic, 2015), diff-in-diff models (e.g., Chaudhuri et al., theoretical perspective is unlikely to account for the complexity of LPs
2019), vector autoregressive models (Meyer-Waarden & Benavent, that often feature multiple actors (firm, coalition partner, competitors,
2009), and event history models/hazard models (e.g., Allaway et al., and customers) and various design elements (accumulation and
2003) to explain why some customers are more likely to engage in redemption mechanisms, reward type, rate, and timing) in different
certain behaviors, e.g., signing up for an LP. contexts (industries and countries). Therefore, LP studies should adopt a
The second most frequently used group of methods apply to studies multi-theoretical perspective to account for this complexity.
based on survey data. This group includes different forms of mean Given the lack of cross-cultural studies, the adoption of cultural
comparisons such as (multi-variate) analyses of (co-)variance or t-Tests theories in LP research is scant. However, the effectiveness of many
(30 articles, 23.4%) and structural equation modeling (SEM) (24 arti design features of LPs could be contingent on culture. This notion is
cles, 18.8%; e.g., Ma et al., 2018; Steinhoff & Palmatier, 2016). supported by initial evidence from Bombaij and Dekimpe (2020) who
Compared to these conventional volatile methods, other more special find that LPs have a stronger impact on retail sales in countries with
ized methods are used less frequently. Examples of more specialized more individualistic and short-term oriented cultures. At the same time,
methods include (1) hierarchical models, such as meta-analysis, to ac it is conceivable that the performance of a community-based LP may be
count for the nested structure of observational units, e.g., customers in more effective in a collectivistic culture than in an individualistic cul
programs or studies in articles (6 articles, 4.7%; e.g., Bombaij & ture. Future research should adopt established cultural theories, such as
Dekimpe, 2020), and (2) cluster analysis, latent class analysis, or Hofstede (2001) dimensions of national culture, Schwartz (1992) theory
mixture models to uncover latent structures, e.g., a distinction of LPs of basic values, or Trompenaars (1993) model of national culture dif
based on the perceived sense of community (5 articles, 3.9%; e.g., ferences, when investigating the moderating role of specific cultural
Rosenbaum et al., 2005). Furthermore, we designate scale development dimensions.
procedures as a distinct category, which includes five articles (3.9%) For example, power distance is likely to play a role in the acceptance
that involve a qualitative analysis of interviews, exploratory and and perceived value of tiered/hierarchical LPs, in that the degree to
confirmatory factor analyses, and SEM. This group includes, for which a society accepts hierarchies and inequalities might have impli
example, Mimouni-Chaabane and Volle (2010) development of a multi- cations for the optimal number of tiers and the extent to which differ
dimensional scale to measure the perceived benefits of LPs. Other ential treatments are perceived to be fair. Also, indulgence, and long-
methods (28 articles, 21.9%) that are typically used in singular studies term orientation are likely to be related to the types of rewards con
include, for example, mathematical proof (Drèze & Nunes, 2004), sumers prefer and how rewards should be timed. For example, indul
numeric simulations (Chun & Ovchinnikov, 2019), fsQCA (Ma et al., gence, which stands for a society that allows free gratification and
2018), and critical incident technique (Tuzovic, 2010). enjoyment of life, suggests a preference for hedonic and relational re
It is noteworthy that there is no single analytical method that is wards over utilitarian and altruistic rewards. Similarly, a culture’s long-
inherently superior to others. In fact, several studies employ multiple term (short-term) orientation suggests a preference for delayed (imme
methods to account for different types of data sets from multiple sources diate) rewards. Finally, uncertainty avoidance appears to be of partic
(e.g., Hansen et al., 2010; Keeling et al., 2013; Meyer-Waarden, 2007) in ular interest for LP research because little is known about how customers
order to increase the generalizability of their findings and reduce com endow their efforts in LPs in which their progress is more or less difficult
mon method variance (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). to assess and predict. Insights into the role of uncertainty avoidance for
customers’ endowment and perceived progress would help to adapt the
8. Future research agenda requirements and processes of reward redemption to local
idiosyncracies.
Over the past three decades, LP research has generated a vast body of Furthermore, Schwartz (1992) and Trompenaars (1993) cultural
research that, collectively, has improved our understanding of why and frameworks could be used to explain cross-national differences in cus
how LPs work. Despite prior attempts to summarize empirical or theo tomers’ LP-related value perceptions. For example, Schwartz’s stimu
retical aspects of this literature, it has not been reviewed in a holistic lation (excitement or feeling of novelty) and hedonism (pleasure and
manner. To structure and consolidate existing knowledge, we provided a sensuous gratification for oneself) dimensions are likely to be related to
general overview of LP research, followed by an in-depth review of the hedonic value of a given LP. Achievement (demonstrating compe
theories that have been used to explain phenomena related to LPs; con tence according to social standards) and power (social status and pres
texts in which these phenomena have been investigated; characteristics (i. tige, or control), just as Trompenaars (1993) achievement vs. ascription
e., variables) that have been studied; and methods that have been used to dimension, could be linked to the value-creation of tiered programs.
draw conclusions about the investigated relationships. Based on this Finally, Schwartz’s benevolence dimension (enhancing the welfare of
systematic review of what has been done, we outline an agenda for others), or Trompenaars (1993) communitarianism vs. individualism
future research to stimulate further advancement of the field. In corre dimension, could be used to explain the perceived altruistic value of an
spondence with the structure of our main section, and other reviews LP that donates points or miles to good causes.
following the same protocol (e.g., Paul, Parthasarathy, & Gupta, 2017), We therefore encourage future studies to investigate cross-cultural
we again distinguish between theory, context, characteristics, and differences and similarities related to the adoption, execution, and
methodology. It is noteworthy that, although we provide several di outcomes of LPs. Future research could encompass both the validation of
rections for future research, the presented research questions are not existing models, for which generalizability has not yet been established,
exhaustive. and the hypothesizing and testing of new relationships involving
country and culture-related factors.
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8.2. Context various competing programs. Therefore, it is important to understand

these complex dynamics and the intense competition among multiple
With respect to the investigated contexts, we identified that a large market actors. It would also be interesting to study the impact of the
number of LP studies are set in specific industries, such as retail, airlines, discontinuation of an LP on customer purchase behavior, and on the
and hotels. Studies exploring other industries remain scarce. For competitive structure and dynamics of the market. For future LP
example, there is only one study found in the literature that investigates research, researchers may apply more competition-related variables,
LPs in a B2B context (Viswanathan et al., 2017). Generally, relationships such as memberships in competing LPs, as well as attractiveness of
between companies are often well-established and long-term oriented in competing programs, and may consider theories that explain strategic
a B2B context. Facing increasing competition, B2B companies are interactions among decision-makers, such as game theory (e.g., Fuden
intensifying their efforts to build and maintain strong relationships with berg & Tirole, 1991).
their customers (Lilien, 2016). Furthermore, digitalization and new technologies present important
Additionally, our review revealed that most LP research has been opportunities for the development of LPs and draw attention to new
carried out in Western countries, while very limited attention has been concepts that future research should investigate (Agarwal et al., 2020).
paid to emerging markets in Asia, Africa, and Latin America (Thompson First of all, LPs are expected to move from plastic cards to intangible and
& Chmura, 2015; Yi & Jeon, 2003). Yet, as globalization and digitali virtual accounts that are managed through mobile applications. The
zation enable expanded global LP management and operations, there is digitalization of LPs is said to be more cost-efficient and minimizes the
greater need for research emerging countries in Asia, Africa, and Latin problem of data input errors known to occur with paper registrations.
America (Burgess & Steenkamp, 2006; Kumar & Srivastava, 2019). Such mobile LP application can be easily integrated into a larger
Therefore, future research should study the adoption, design, and network of connected objects that form an LP application ecosystem.
execution of LPs in varying market settings, including emerging coun These connected objects, such as wearables, smart home appliances,
tries, to generalize prior findings and theories, as well as to learn more personal assistants (e.g., chatbots, voicebots), and other sensors, provide
about the moderating role of contextual factors, such as economic access to LP members’ “quantified self,” including physiological mea
conditions, cultural particularities, and technological infrastructure. sures, such as heart rate, blood pressure, dietic information (e.g. allergic
Another research gap results from the rapid technological de information), sleep quality, sports performance, and other health-
velopments in recent years that have led to more purchases being related indicators that are associated with personal well-being. Such
concluded via websites or mobile applications. Consequently, revenues information, derived from the LP application ecosystem, facilitates the
increasingly shift from offline towards online channels. Although a few delivery of highly personalized LP incentives, rewards, products, and
studies have considered the online retail industry (i.e., Ivanic, 2015; services that contribute to customers’ quality of life and well-being,
Kivetz & Simonson, 2002; Lewis, 2004; Zhang & Breugelmans, 2012), concepts that are attracting increasing attention in marketing science
more research is needed to understand the effectiveness of LPs in the (Mogilner, Aaker, & Kamvar, 2012; Munzel, Meyer-Waarden, & Galan,
quickly evolving context of new digital business models. Apart from 2018; Sirgy, 2012).
emerging e-retailers, some traditional retailers, such as Macy’s, Bloo In addition, advances in artificial intelligence provide multinational
mingdale’s, and Neiman Marcus recently started their online businesses corporations with enhanced analytical capabilities that enable them to
(Han, Fu, Cao, & Luo, 2018). As a result, the frontiers of LPs will expand, gain insights from the large amounts of data they collect on a daily basis.
and future research should focus more on online retailing to support and For example, AI-powered tools enable LP managers to estimate mem
improve marketing practices. bers’ individual product preferences and price sensitivities. Such in
Also, LP managers have new advanced technologies, such as sights offer tremendous opportunities for personalizing the
augmented/virtual reality (AR/VR), artificial intelligence (AI), and ro communication with, and offers made to, LP members where the aim is
botics, at their disposal to increase convenience and strengthen re to stimulate customer engagement, increase perceived value, and
lationships with their members (Agarwal et al., 2020; Rauschnabel, He, strengthen customer-firm relationships.
& Ro, 2018). For example, IKEA allows their LP members to upload However, the large amount of data collected through LPs raises
pictures of a room to a mobile app and then insert different IKEA ethical issues related to data security and privacy risks. Specifically,
products to determine how to achieve the look they desire (Joseph, risks linked to the consequences of privacy concerns, loss of control, and
2017). Moreover, embodied or disembodied service robots, such as risks from hackers, are all sources for potential doubt, stress, and
Alexa or Siri, can be integrated into LPs to evoke feelings of presence and decrease in well-being that might inhibit LP adoption and usage
to provide customers with immediate information and recommenda (Cloarec, 2020; Martin et al., 2020). IT-literature refers to the “privacy-
tions, thus enhancing the customer experience (Grewal et al., 2018; Van personalization paradox” to show that perceived benefits of personali
Doorn et al., 2017). More research is needed to understand how LPs can zation can outweigh the perceived risk of privacy loss resulting in higher
effectively leverage these new technologies with the aim of fostering levels of trust (e.g., Awad & Krishnan, 2006; Hong & Thong, 2013).
stronger customer relationships and increasing LP efficiency. Future Indeed, also in the marketing literature, personalization-privacy issues
investigations could also focus on customers’ motivations and the are gaining importance (Aguirre, Mahr, Grewal, de Ruyter, & Wetzels,
behavioral consequences of using these innovative and interactive 2015). To the best of our knowledge, very few studies examine the
technologies in online and offline LPs. privacy aspects of LPs. Future research should shed light on LP mem
bers’ trade-off between privacy risks (e.g., the potential loss associated
8.3. Characteristics with the release of personal information to the firm) and personalization
benefits (e.g., satisfaction with targeted emails, tailored services, or
With respect to the investigated constructs, our review reveals that individualized offers; Martin et al., 2020; Rust, 2020). For example,
LP research has addressed related phenomena from various angles, future research should investigate the types of data LP members are
employing explanatory variables related to the firm, its LP, current and willing to share using opt-in and opt-out options, which could help LP
potential customers, and competitors. Compared to the remarkable va managers find the right balance between using customer data to deliver
riety of firm, LP, and consumer-related characteristics studied as personalized LP offerings and satisfying members’ privacy rights (Mar
explanatory, mediating, moderating, and criterion variables, we di tin & Murphy, 2017). Finding this balance is crucial as it takes time to
agnose a need to incorporate competition-related variables. To date, few build customer trust while it can be destroyed very quickly if customer
studies have explicitly considered the competitive context (for excep data are “exploited” without permission, or are inadequately protected
tions see Kim et al., 2004; Liu & Yang, 2009; Liu & Ansari, 2020). LPs are (Dekimpe, 2020). Consumer traits, including technology readiness and
not executed in an isolated manner, but rather in saturated markets with openness, past experiences, and level of education, could be considered
191
as factors that potentially influence consumers’ privacy-personalization equity (Villanueva & Hanssens, 2007), as these measures capture both
trade-off. the effects of LPs and the costs at all stages of a customer’s life cycle
(Rust, 2020).
8.4. Methodology Finally, future research should adopt stochastic and probabilistic
retention and churn models (e.g., Pareto/NBD, BG/NBD and explana
Finally, with respect to methods used in LP research, the findings of tory Pareto/NBD models) for analyzing LP customer bases and fore
our review attest to the healthy state of the field. We find a clear casting customers’ future purchasing behavior and CLV (Castéran,
dominance of quantitative research that relies strongly on primary data Meyer-Waarden, & Reinartz, 2017; Fader, Hardie, & Lee, 2005). Based
from experiments and surveys, as well as secondary data from retailers on large longitudinal databases, these models help LP managers to un
(i.e., transaction records). These data types inform the choice of method, derstand why their programs work, or not, and how they can improve
in that survey data (including experiments) tends to be analyzed by the allocation of resources among different LP customer segments.
using SEM or conventional multivariate tests, and panel data such as LP However, research has to consider the difficult balance between the
scanner data tends to be analyzed using regression-based methods. technical complexity of big data analyses and managerial relevance
While experiments offer high levels of internal validity and are (Dekimpe, 2020; Wübben & Wangenheim, 2008).
instrumental in establishing the causality of investigated relationships,
secondary data on real behavior (e.g., transaction records) offer high Declaration of Competing Interest
levels of external validity and are key to test the generalizability of
findings in real-world settings. However, many studies rely on a single The authors declare that they have no known competing financial
data source to test their propositions, especially in the context of sur interests or personal relationships that could have appeared to influence
veys. This raises the issue of common method variance, i.e., “variance the work reported in this paper.
that is attributable to the measurement method rather than the con
structs the measures represent” (Podsakoff et al., 2003, p. 879). Com Appendix A
mon method variance can undermine the validity of estimated
parameters and reduce the opportunities to detect interactive/moder
ating effects. Aside from ex-ante remedies to reduce the amount of List of all papers
common method variance and ex-post statistical tests to assess it, using
multiple data sources for different model constructs is an effective way 1. Allaway et al. (2003)
to circumvent such bias (Podsakoff et al., 2003). Likewise, the use of 2. Allaway et al. (2006)
secondary data has been limited due to the fact that access to corporate 3. Arbore and Estes (2013)
data tends to be more restricted. However, as more retailers monetize 4. Asiah Omar and Musa (2011)
and share their data (e.g., to enrich suppliers’ business intelligence), LP 5. Azeem et al. (2018)
scanner data becomes increasingly easier and more affordable to obtain. 6. Bagchi and Li (2010)
Such data provides reliable behavioral information that does not suffer 7. Beck et al. (2015)
from the same biases associated with experiments and surveys (e.g., 8. Berezan et al. (2017)
demand artifacts). 9. Bolton et al. (2000)
Against this background, we believe that future studies should use 10. Bombaij and Dekimpe (2020)
mixed-method approaches to leverage the unique strength of both pri 11. Breugelmans and Liu-Thompkins (2017)
mary and secondary data. By combining more reliable real-world data 12. Bridson et al. (2008)
with primary data from experiments and surveys, studies can reduce the 13. Bruneau et al. (2018)
risk of common method variance, thus safeguarding internal validity. 14. Cedrola and Memmo (2010)
This also helps reduce the divergence of self-reported loyalty intentions 15. Chan, Kemp, and Finsterwalder (2016)
and actual behavior, thus enhancing external validity. In the retail 16. Chaudhuri et al. (2019)
sector, there is a long history of scanner-data availability which has 17. Chun and Ovchinnikov (2019)
given a strong impetus to econometric research in the sector (Inmann & 18. Cortiñas, Elorz, and Múgica (2008)
Nikolova, 2017; Wedel & Kannan, 2016). Therefore, future studies 19. Danaher et al. (2016)
could, for example, combine real-world behavioral scanner data with 20. Daryanto et al. (2010)
declarative attitudinal data from customer surveys to assess the impact 21. Demoulin and Zidda (2008)
of LP design features on objective performance measures at the firm or 22. Demoulin and Zidda (2009)
program-level, such as sales and profits, to enhance their theoretical, 23. Dorotic, Fok, Verhoef, and Bijmolt (2011)
methodological, and managerial contributions. 24. Dorotic et al. (2014)
Another untapped, rich source of data are customers’ posts and 25. Drèze and Nunes (2004)
comments on social media and other textual data from consumer 26. Drèze and Nunes (2009)
interface platforms (Berger et al., 2019; Humphreys & Wang, 2018). 27. Drèze and Nunes (2011)
These textual data could be used to measure customers’ LP-related 28. Eason et al. (2015)
sentiments and attitudes on a large scale while avoiding some biases 29. Eggert et al. (2015)
of conventional surveys, such as social desirability. Advanced text 30. Esmark et al. (2016)
mining tools are able to identify the latent structure of narratives and 31. Evanschitzky et al. (2012)
text by means of sentiment analysis (e.g., Kumar & Paul, 2016; Naldi, 32. Filipe et al. (2017)
2019). 33. Frisou and Yildiz (2011)
Furthermore, our review shows that only a few investigations have 34. Gable, Fiorito, and Topol (2008)
analyzed longitudinal data (Bolton et al., 2000; Kopalle, Sun, Neslin, 35. García Gómez et al. (2012)
Sun, & Swaminathan, 2012; Meyer-Waarden, 2007). While the short- 36. Hansen et al. (2010)
term effects of LPs are well-established in the literature, the long-term 37. Hutchinson, Donnell, Gilmore, and Reid (2015)
effects are less clear. Future research should thus integrate long-term 38. Ieva and Ziliani (2017)
customer profit streams and financial data to investigate LP efficiency 39. Ivanic (2015)
in terms of customer lifetime value (CLV; Gupta et al., 2006) or customer 40. Jai and King (2016)
192
41. Kang et al. (2015) 107. Steyn et al. (2010)

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Journal of Business Research 124 (2021) 179–197

Contents lists available at ScienceDirect

Journal of Business Research

Three decades of research on loyalty programs: A literature review and

1. Introduction the primary goal of engaging customers in long-term relationships, other

Total 131 100

Fig. 1. Overview of loyalty program research.

4.2.1. Prospect theory

Other service industries

6.4. Dependent variables Table 6

7.2. Analytical methods 8.1. Theory

8.2. Context various competing programs. Therefore, it is important to understand

41. Kang et al. (2015) 107. Steyn et al. (2010)

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