Publications

   Dr.

      X

The Effect of Loyalty Program Divisibility on Consumer Purchase Behavior

Authors:

Xavier Drèze
Joseph C. Nunes

Publisher:

Journal of Consumer Research
under review

Abstract:

This research demonstrates how the effectiveness of a loyalty program depends on its divisibility, or the number of rewards offered and the level at which they are awarded. Three studies investigate the impact of divisibility on program participation. Study 1 demonstrates how increased divisibility can inspire loyalty by making rewards seem more attainable to consumers. Study 2 reveals how decreased divisibility helps firms create lock-in by increasing the likelihood that future purchases go where progress already has been made. Study 3 investigates the combined effects of the opposing forces of reward attainability and consumer lock-in, illustrating how firms utilizing alterative currencies must carefully choose the right amount of divisibility.