اثرات رستگاری پاداش در برنامه های وفاداری زمانی که مشتریان انتخاب می کنند که چقدر و چه وقت باید از گرو در اورند

The redemption of loyalty program (LP) rewards has an important impact on LP members' behavior, particularly on purchase behavior before and after redeeming a reward. However, little is known about the interplay between members' purchase and redemption behavior when members are not pressured with point expiration and they choose for themselves when and how much to redeem. In this context, the effects of redemption are not straightforward, as little additional effort is required from an LP member to obtain the reward. Analyzing the behavior of 3094 members in such an LP, we find that the mere decision to redeem a reward significantly enhances purchase behavior before and after the redemption event, even when members redeem just a fraction of their accumulated points. Conceptually, we refer to this enhancement as the redemption momentum, which is an alternative and novel explanation of the existence of pre-reward effects that do not depend on points-pressure. In addition to the overall impact of redemption on purchases, prior purchase behavior also enhances redemption decisions. Finally, we find a number of moderating effects on purchase and redemption behavior that derive from the length of LP membership, age, income and direct mailings. Our study's most important managerial implication is that firms should avoid imposing point expiry and/or binding thresholds in order to enhance members' purchase behavior.

In recent years, loyalty programs (LPs) have become the dominant tool for loyalty marketing worldwide. In the United States alone, the number of LP memberships exceeded 2.65 billion in 2012, increasing by 26.7% since 2010 (Berry, 2013). LPs aim to engage program members by rewarding their repeated purchases of a firm's product through (the redemption of) loyalty points that members collect on their purchases. Therefore, the benefits of an LP for a member become the most salient when redeeming a reward (Nunes and Drèze, 2006 and Smith and Sparks, 2009a). Yet, as much as one-third of $48 billion worth of LP currency issued in 2010 remained unredeemed (Gordon & Hlavinka, 2011); likewise, The Economist estimated that “the total stock of unredeemed miles was worth more than all the dollar bills in circulation” ( The Economist, 2005). To reduce liability, LPs introduced minimum thresholds and/or point expiration; however, this may undermine loyalty building efforts and engender customer frustration ( Land, 2013, June 13 and Stauss et al., 2005). For example, point expiration is common in the airline industry where, due to restrictions on the availability of “award seats,” LP points often expire before members have an opportunity to cash in points (average award seat availability is only about 60% at major airlines ( McCartney, 2012)). On the other hand, LPs are increasingly opting for a no-expiration (or long-term expiration) policy to avoid negative customer experiences. For instance, 96% of credit-card programs promote “no expiration” as their key sales feature ( Land, 2013). On the other hand, without the expiration pressure to redeem points, firms fear that members' active engagement may decline and that their loyalty will fade in turn. Whether firms should encourage reward redemption and consider long-term expiration policies ranks among the least understood aspects of LPs ( CRMtrends, 2012 and Shugan, 2005). Reward redemption may have an important impact on members' behavior, particularly on purchase behavior just before and after redeeming a reward. Having to reach a pre-specified threshold on time to obtain a reward motivates members to increase their expenditures—an effect known as points pressure ( Taylor & Neslin, 2005). However, if a customer already has enough points or (s)he has too few points to be able to reach the threshold, the points pressure becomes negligible ( Hartmann and Viard, 2008 and Lewis, 2004). The question, then, is whether firms can expect redemption effects in LPs without significant binding deadlines that “require customers to jump through hoops to receive a reward” ( Blattberg, Kim, & Neslin, 2008, p. 566). Unfortunately, the prevailing theoretical mechanisms to explain such effects are equivocal. If firm-imposed motivators leading to points pressure are removed, then the presence of redemption effects depends on whether the redemption decision by itself impacts behavior. In LPs with continuous and linear rewarding schemes, members obtain a certain amount of LP currency for each dollar/euro spent and choose when to redeem (redemption timing) and what to redeem (redemption amount), based on their personal reward preferences and the collected balance of points (cf. Stourm, Bradlow, & Fader, 2013). Moreover, in continuous LPs, the program itself and/or its points typically do not expire for a longer period of time (e.g., retail LPs). This context allows us to investigate whether redemption effects on behavior in pre- and post-reward period can be evoked by the act of redeeming itself in the absence of firm-imposed thresholds. The decision to redeem points may precede the moment at which the reward is redeemed or it may occur at a point-of-sales without much prior planning, which has direct consequences on behavior. Analyzing the purchase and redemption behavior of 3094 members in a Dutch continuous LP, we find that in as much as 70% of redemptions, the decision to redeem is made a short time ahead of the redemption. Having made the decision motivates customers within the LP, resulting in an increase in purchase behavior prior to the redemption event, even when customers subsequently redeem just a small fraction of their overall point balance. We label this effect redemption momentum and note that this effect complements the points pressure effect, which may occur for members who have an insufficient amount of points in the weeks before a redemption. In the post-reward period, the redemption enhances feelings of gratitude, importance, satisfaction or obliged reciprocity, which may in turn spur purchase behavior (Palmatier, Jarvis, Bechkoff, & Kardes, 2009). However, empirical findings on the post-reward effects on members' behavior are scarce and the results are mixed in the literature. In some cases, points pressure shifts purchases in time and creates post-redemption dips due to stockpiling. This is not expected to occur when members can choose timing and redemption amounts. Our study provides support for positive post-reward effects when customers do not face binding deadlines and can choose the redemption timing and amount. Finally, redemption effects on purchase behavior may vary across LP members (Kopalle et al., 2012, Stourm et al., 2013, November 18 and Zhang and Breugelmans, 2012). In particular, the effects may be moderated by members' prior experience with the LP (length of LP membership) and various socio-demographic aspects (age, income, etc.), as well as the amount of direct mailing promotions that members obtain (Lewis, 2004). Yet, those interaction effects have not been extensively investigated. In response, we provide an integrated analysis of the main and interaction effects. In summary, the contribution of this paper is threefold. First, we explore whether LPs can foster redemption effects without imposing restrictive deadlines. To this end, we examine alternative mechanisms that drive (pre-)redemption effects and propose the novel redemption momentum mechanism, which goes beyond the traditional points pressure explanations. Second, this study tackles the interrelatedness of purchase and redemption decision-making by simultaneously modeling purchase incidence, purchase amount, redemption decision and redemption amount. Moreover, our model studies the interplay between redemption and purchases, accounting both for endogeneity of redemption and endogeneity of personalized mailings to LP members. Third, this study provides an integrated analysis of potential moderating effects, such as relationship length, socio-demographics and direct mailings, on the relationship between redemption and purchases. In this way, our paper answers the call to simultaneously model diverse LP mechanisms to better understand the underlying processes and sources of incremental sales in LPs ( Blattberg et al., 2008 and Kopalle et al., 2012). The paper proceeds by discussing the theoretical background and existing studies on the effects of reward redemption. It then continues with the model formulation, a description of the data, the empirical analyses and the results. We conclude with a discussion of key findings and managerial implications.

This study aims to better understand the LP members' reward-redemption behavior and its impact on purchase behavior—in particular, the behavior directly preceding and following a redemption. The study examined a typical LP with a continuous and linear rewarding structure (i.e., one point per euro spent), which is common among retailers of frequently purchased items. Importantly, in LPs without point expiry deadlines, members endogenously choose when and how much to redeem from a broad spectrum of potential reward options. Little is known regarding whether redemption effects occur when no expiration or binding policies exist. Because obtaining a reward in such LPs requires only little additional effort from members, some authors have postulated that pre-reward effects would not occur (Blattberg et al., 2008). Using an extensive data set of 3094 members involved in such an LP, we simultaneously modeled purchase incidence, purchase amount, redemption decision and redemption amount (as a fraction of available balance). This allowed us to empirically investigate such pre-reward effects. We summarize and discuss our key findings below. For the majority of members (approximately 70%), the decision to redeem occurs before the actual redemption and affects their subsequent purchase decisions. Therefore, the interplay between redemption and purchases occurs in this order: (i) customer makes a decision to redeem which (ii) increases the salience of the LP and its benefits and (iii) encourages (pre-reward) purchase behavior. Once the decision to redeem is made, (iv) the redemption occurs within a short period of time (1 week). After the redemption, (v) the (post-reward) purchase behavior is enhanced by the rewarded behavior effects. Reward redemption leads to important pre-reward increases in LP members' purchase even when they do not face point expiry or binding thresholds. The drivers of such increases go beyond points pressure. Even when the majority of LP members (97%) redeem just a (small) fraction of their overall accumulated balance at a redemption incidence, we still find strong evidence for pre-reward effects. Hence, our findings counter the notion that members' purchase behavior prior to reward redemption is motivated solely by the points pressure mechanism (in other words, that members only increase purchases in order to accumulate a sufficient number of points for their preferred reward). Our findings strongly emphasize the power of redeeming a reward in LPs: The decision to redeem motivates members and reinforces their subsequent behavior. Importantly, we theoretically introduce the novel concept of redemption momentum as an additional explanation for the existence of the pre-reward effects beyond points pressure. Hence, pre-reward effects are a general phenomenon driven by multiple underlying processes (e.g., goal attainment, increased LP engagement, salience), which occur for LPs with diverse designs. That said, alternative reward mechanisms (like redemption momentum) have substantially larger influence than external thresholds (points pressure mechanism) in a context of continuous, linear LP rewarding. The effects of redemption also enhance behavior in post-reward periods. Hence, we provide empirical support for the reinforcing effects of the rewarded behavior mechanism. Members who just redeemed a reward demonstrate a higher purchase incidence and higher purchase amounts. This finding supports the notion that redeeming rewards may create positive attitudes and feelings that drive members to purchase more frequently and obtain higher amounts of LP points even in the absence of external pressures from the firm (Blattberg et al., 2008 and Palmatier et al., 2009). It also empirically supports and extends the findings of Kopalle et al. (2012) on the existence of the post-reward effect in a continuous LP, but for a broader range of LP members (we find that the effects on purchase behavior mostly hold across various customer groups). On the other hand, our findings counter the notion of the post-reward resetting mechanism reported by Drèze and Nunes (2011), at least for the retail setting with no LP tier structure. In this respect, our findings help to clarify equivocal empirical evidence on post-reward effects in continuous LPs. We also found support for the reinforcing impact of previous accumulated purchases on the redemption likelihood. Prior purchases not only positively affect subsequent purchases, but they also increase the redemption probability, which speaks in favor of the increased salience. Although accumulated purchases in a certain period enhance the likelihood of redemption, they do not affect the redemption fraction. Both the pre- and post-reward effects on purchase incidence and purchase amount substantially differ between members. An important moderator is membership length. In general, the effects on purchase and redemption behavior are less pronounced among long-term LP members. This might be due to the learning effects in tandem with the more strategic redemption behavior among such members (Lal and Bell, 2003 and Liu, 2007). These members have extensive experience with the LP and they may be less prone to change their purchase behavior when they redeem an award. We also observe some interesting moderating effects of age and income, which have not been shown before. Mailings have an overall positive impact on the purchase and redemption behaviors (both on incidence and amount of purchase and redeeming). However, the impact of mailings on purchase incidence, redemption likelihood and redeemed fraction declines with the total number of mailings received. This may indicate a worrying trend of LP members becoming increasingly unresponsive to the LP's personalized mailings, or it may be the result of the LP's targeting policy (e.g., van Diepen, Donkers, & Franses, 2009b). Those members who purchase often as well as those who purchase a lot tend to receive more mailings. By contrast, those members who are more likely to redeem tend to receive relatively fewer mailings than others. Given this finding, there is possibly some untapped potential in terms of tailoring promotional strategies to increase redemption incidence.