Enhancing customer participation in loyalty programs

While customers’ enrolments in loyalty programs (LPs) keeps on rising, they merely participate. This research investigates what types of LP design will be more likely to increase two forms of participation depending on customers’ initial loyalty level: card usage and point redemption. Results show that (1) hard rewards foster card usage (only for loyal customers) whereas soft rewards increase point redemption; (2) personalized communication has a positive effect on point redemption (only for loyal customers). Previous research showed mixed evidence of LP effectiveness on retailer’s outcomes. Customer participation to LPs is certainly a major issue. This research contributes to previous literature on LPs by providing insights on how to keep customers active after enrolment