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The Role of Bonuses in Loyalty Programs – A literature review

Author

Listed:
  • Marcus, Hagström

    (Center for Retailing)

  • Rosengren, Sara

    (Marketing and Strategy)

  • Hagberg, Johan

    (University of Gothenburg, Sweden)

Abstract

Loyalty programs have become commonplace in consumer markets such as travel, hospitality, and retailing. There is extensive academic research which examine the content of loyalty programs and their effects. This working paper focuses on one key aspects of loyalty programs, namely bonuses (monetary rewards linked to purchase volume). More specifically, it answers the following research questions: “What are the effects of the introduction (RQ1), change (RQ2) and removal (RQ3) of bonuses in loyalty programs?” through a literature review of articles in scientific journals. The review suggests that introducing a loyalty program with a bonus is likely to have a positive impact on consumer and firms, but this effect will depend on the type of bonus and will vary between customer groups as well as the competitive environment, and the country in which it is introduced. Changing the bonus in loyalty program is likely to impact future purchase behavior, but the effect will depend on whether changes are made in terms of accrual or redemption as well as the current loyalty level and buying behaviors of customers. Changing the bonus can also impact firm performance, but the effects are likely to depend on the actual execution and time perspective applied. Removing the bonus in a loyalty program is likely to have a negative impact on consumer behaviors when there are competing loyalty programs on the market. However, default behaviors are less likely to be affected than behaviors that have been stimulated by the reward. No research was found on the firm effects of removing a bonus.

Suggested Citation

  • Marcus, Hagström & Rosengren, Sara & Hagberg, Johan, 2022. "The Role of Bonuses in Loyalty Programs – A literature review," SSE Working Paper Series in Business Administration 2022:1, Stockholm School of Economics.
    • Handle: RePEc:hhb:hastma:2022_001
    Note: This work was supported by a grant from the Hakon Swenson Stiftelsen.
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    References listed on IDEAS

    as
    1. Jisu J. Kim & Lena Steinhoff & Robert W. Palmatier, 2021. "An emerging theory of loyalty program dynamics," Journal of the Academy of Marketing Science, Springer, vol. 49(1), pages 71-95, January.
    2. Aîda Mimouni-Chaabane & Pierre Volle, 2010. "Perceived Benefits of Loyalty Programs: Scale Development and Implications for Relational Strategies," Post-Print halshs-00638594, HAL.
    3. repec:dau:papers:123456789/1603 is not listed on IDEAS
    4. Mimouni-Chaabane, Aîda & Volle, Pierre, 2010. "Perceived benefits of loyalty programs: Scale development and implications for relational strategies," Journal of Business Research, Elsevier, vol. 63(1), pages 32-37, January.
    Full references (including those not matched with items on IDEAS)

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