Journal of the Korean Operations Research and Management Science Society (한국경영과학회지)

The Korean Operations Research and Management Science Society (한국경영과학회)
권호 표지
DOI QR코드

DOI QR Code

The Redemption Behavior of Loyalty Points and Customer Lifetime Value

로열티 포인트 사용행동과 고객생애가치(Customer Lifetime Value) 분석

  • Received : 2014.06.16
  • Accepted : 2014.07.15
  • Published : 2014.09.30
Download PDF
⟨ Previous Next ⟩

Abstract

The main objective of this research is to investigate whether the RFM (recency-frequency-monetary value) information of a customer's redemption behavior of loyalty points can improve the prediction of future value of the customer. The conventional measurement of customer value has been primarily based on purchase transactions behavior although a customer's future behavior can be also influenced by other interactions between the customer and the firm such as redemption of rewards in a loyalty program. We theorize why a customer's redemption behavior can influence her future purchases and thereby the customer's total value based on operant learning theory, goal gradient hypothesis, and lock-in effect. Using a dataset from a major book store in Korea spanning three years between 2008 and 2010, we analyze both purchase transactions and redemption records of over 10,000 customers. The results show that the redemption-based RFM information does improve the prediction accuracy of the customer's future purchases. Based on this result, we also propose an improved estimate of customer lifetime value (CLV) by combining purchase transactions and loyalty points redemption data. Managerial implications will be also discussed for firms managing loyalty programs to maximize the total value customers.

Keywords

References

  1. 김지윤, "소비자의 포인트 적립 및 소진행동에 대한 재조명", 한국경영과학회지, 제38권, 제1호(2013), pp.183-199. https://doi.org/10.7737/JKORMS.2013.38.1.183
  2. 김지윤, 이장혁, 김상용, "로열티 프로그램에 있어서 소비자의 포인트 적립 노력수준이 사용행동에 미치는 영향", 마케팅연구, 제27권, 제1호 (2012), pp.85-106.
  3. 김현교, 이동일, "소비자 키워드광고 탐색패턴에 나타난 촉진지향성이 온라인 여행상품 구매확률에 미치는 영향", 한국경영과학회지, 제39권, 제1호(2014), pp.29-48. https://doi.org/10.7737/JKORMS.2014.39.1.029
  4. 송태호, 김상용, 이장혁, "고객 자산과 기업 수익성간의 관계", 마케팅연구, 제24권, 제4호(2009), pp.35-65.
  5. 안주영, 조용현, "소비자의 할인추구성향, 가격 지식, 브랜드충성도가 내적준거가격 및 준거할인의 지각에 미치는 영향", 관광학연구, 제38권, 제3호(2014), pp.143-165.
  6. 정헌수, 박성호, "고객생애가치 측정모형의 B2B 비즈니스 적용연구", 경영과학, 제27권, 제3호 (2010), pp.197-211.
  7. Allaway, A.W., R.M. Gooner, D. Berkowitz, and L. Davis, "Deriving and exploring behavior segments within a retail loyalty card program," European Journal of Marketing, Vol.40, No.11(2006), pp.1317-1339. https://doi.org/10.1108/03090560610702830
  8. Anderson, E.W. and M.W. Sullivan, "The Antecedents and Consequences of Customer Satisfaction for the Firm," Marketing Science, Vol.12, No.2(1993), pp.125-143. https://doi.org/10.1287/mksc.12.2.125
  9. Bagchi, R. and X. Li, "Illusionary Progress in Loyalty Programs : Magnitudes, Reward Distances, and Step-Size Ambiguity," Journal of Consumer Research, Vol.37, No.5(2011), pp.888-901. https://doi.org/10.1086/656392
  10. Baird, N., "Getting Loyalty Programs Back To Loyalty," Retail Systems Research, (2007), pp.1-29.
  11. Berger, P.D., R.N. Bolton, D. Bowman, E. Briggs, V. Kumar, A. Parasuraman, and C. Terry, "Marketing Actions and the Value of Customer Assets : A Framework for Customer Asset Management," Journal of Service Research, Vol.5, No.1(2002), pp.39-54. https://doi.org/10.1177/1094670502005001005
  12. Bick, Geoffrrey N.C., "Increasing shareholder value through building Customer and Brand Equity," Journal of Marketing Management, Vol.25, No.1-2(2009), pp.117-141. https://doi.org/10.1362/026725709X410061
  13. Bijmolt, Tammo H.A., M. Dorotic, and P.C. Verhoef, "Loyalty Programs : Generalizations on Their Adoption, Effectiveness and Design," Foundations and Trends in Marketing, Vol.5, No.4(2010), pp.197-258. https://doi.org/10.1561/1700000026
  14. Blattberg, R.C., E.C. Malthouse, and S.A. Neslin, "Customer Lifetime Value : Empirical Generalizations and Some Conceptual Questions," Journal of Interactive Marketing, Vol.23, No.2(2009), pp.157-168. https://doi.org/10.1016/j.intmar.2009.02.005
  15. Burnham, T.A., J.K. Frels, and V. Mahajan, "Consumer Switching Costs : A Typology, Antecedents, and Consequences," Journal of the Academy of Marketing Science, Vol. 31, No.2(2003), pp.109-26. https://doi.org/10.1177/0092070302250897
  16. Chan, T.Y., C. Wu, and Y. Xie, "Measuring the Lifetime Value of Customers Acquired from Google Search Advertising," Marketing Science, Vol.30, No.5(2011), pp.837-850. https://doi.org/10.1287/mksc.1110.0658
  17. Colombo, R. and W. Jiang, "A stochastic RFM model," Journal of Interactive Marketing, Vol.13, No.3(1999), pp.2-12.
  18. Dowling, G. and M. Uncles, "Do Customer Loyalty Programs Really Work?" Sloan Management Review, Vol.38, No.4(1997), pp. 71-82.
  19. Dreze, X. and J.C. Nunes, "Feeling Superior : The Impact of Loyalty Program Structure on Consumers' Perceptions of Status," Journal of Consumer Research, Vol.35, No.2(2009), pp.890-905. https://doi.org/10.1086/593946
  20. Fader, Peter S., Bruce G. S. Hardie, and K. L. Lee, "Counting Your Customers the Easy Way : An Alternative to the Pareto/NBD Model," Marketing Science, Vol.24, No.2 (2005), pp.275-84. https://doi.org/10.1287/mksc.1040.0098
  21. Fader, Peter S., Bruce G. S. Hardie, and J. Shang, "Customer-Base Analysis in a Discrete- Time Noncontractual Setting," Marketing Science, Vol.29, No.6(2010), pp.1086-1108. https://doi.org/10.1287/mksc.1100.0580
  22. Frisou, J. and H. Yildiz, "Consumer learning as a determinant of a multi-partner loyalty program's effectiveness : A behavior and long-term perspective," Journal of Retailing and Consumer Services, Vol.18, No.1 (2011), pp.81-91. https://doi.org/10.1016/j.jretconser.2010.10.002
  23. Furinto, A., T. Pawitra, and T.E. Balqiah, "Designing competitive loyalty programs : How types of program affect customer equity," Journal of Targeting, Measurement and Analysis for Marketing, Vol.17, No.4(2009), pp. 307-319. https://doi.org/10.1057/jt.2009.20
  24. Gupta, S., D. Hanssens, B. Hardie, W. Kahn, V. Kumar, N. Lin, and N. Ravishanker, S. Sriram, "Modeling Customer Lifetime Value," Journal of Service Research, Vol.9, No.2 (2006), pp.139-155. https://doi.org/10.1177/1094670506293810
  25. Johnson, K., "Choosing the right program," Direct marketing, Vol.61, No.2(1998), pp. 36-45.
  26. Keh, H.T. and Y.H. Lee, "Do Reward Programs Build Loyalty for Services? The Moderating Effect of Satisfaction on Type and Timing of Rewards," Journal of Retailing, Vol.82, No.2(2006), pp.127-136. https://doi.org/10.1016/j.jretai.2006.02.004
  27. Kim, B.-D., M. Shi, and K. Srinivasan, "Reward Programs and Tacit Collusion," Marketing Science, Vol.20, No.2(2001), pp.99-120. https://doi.org/10.1287/mksc.20.2.99.10191
  28. Kivetz, R., O. Urminsky, and Y. Zheng, "The Goal-Gradient Hypothesis Resurrected : Purchase Acceleration, Illusionary Goal Progress, and Customer Retention," Journal of Marketing Research, Vol.43, No.1(2006), pp. 39-58. https://doi.org/10.1509/jmkr.43.1.39
  29. Klemperer, P., "Markets with consumer switching costs," The Quarterly Journal of Economics, Vol.102, No.2(1987), pp.376-394.
  30. Koo, M. and A. Fishbach, "Dynamics of selfregulation : How (un)accomplished goal actions affect motivation," Journal of Personality and Social Psychology, Vol.94, No.2 (2008), pp.183-195. https://doi.org/10.1037/0022-3514.94.2.183
  31. Kumar, V. and M. George, "Measuring and maximizing customer equity : a critical analysis," Journal of the Academy of Marketing Science, Vol.35, No.2(2007), pp.157-171. https://doi.org/10.1007/s11747-007-0028-2
  32. Kumar, V., L. Aksoy, B. Donkers, R. Venkatesan, T. Wiesel, and S. Tillmanns, "Undervalued or Overvalued Customers : Capturing Total Customer Engagement Value," Journal of Service Research, Vol.13, No.3(2010), pp. 297-310. https://doi.org/10.1177/1094670510375602
  33. Lee, Jonathan, J.H. Lee, and L. Feick, "Incorporating word-of-mouth effects in estimating customer lifetime value," Database Marketing and Customer Strategy Management, Vol.14, No.1(2006), pp.29-39. https://doi.org/10.1057/palgrave.dbm.3250033
  34. Lewis, M., "The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention," Journal of Marketing Research, Vol.41, No.3(2004), pp.281-292. https://doi.org/10.1509/jmkr.41.3.281.35986
  35. Liu, Y. and R. Yang, "Competing Loyalty Programs : Impact of Market Saturation, Market Share, and Category Expandability," Journal of Marketing, Vol.73, No.1(2009), pp.93-108. https://doi.org/10.1509/jmkg.73.1.93
  36. Reinartz, W.J., Understanding customer loyalty programs, Retailing in the 21th century, Springer, (2006), pp.361-395.
  37. Rust, R.T., V.A. Zeithaml, and K.N. Lemon, Driving Customer Equity : How Customer Lifetime Value is Reshaping Corporate Strategy, Free Press, 2000.
  38. Schmittlein, D.C. and R.A. Peterson, "Customer base analysis : An industrial purchase process application," Marketing Science, Vol. 13, No.1(1994), pp.41-67. https://doi.org/10.1287/mksc.13.1.41
  39. Schmittlein, D.C., D.G. Morrison, and R. Colombo, "Counting Your Customers : Who Are They and What Will They Do Next?," Management Science, Vol.33, No.1(1987), pp.1-24. https://doi.org/10.1287/mnsc.33.1.1
  40. Sharp, B. and A. Sharp, "Loyalty Programs and Their Impact on Repeat-Purchase Loyalty Patterns," International Journal of Research in Marketing, Vol.14, No.5(1997), pp. 473-86. https://doi.org/10.1016/S0167-8116(97)00022-0
  41. Taylor, G.A. and S.A. Neslin, "The current and future sales impact of a retail frequeny reward program," Journal of Retailing, Vol. 81, No.4(2005), pp.293-305. https://doi.org/10.1016/j.jretai.2004.11.004
  42. Wirtz, J., A.S. Mattila, and M.O. Lwin, "How Effective Are Loyalty Reward Programs in Driving Share of Wallet?" Journal of Service Research, Vol.9, No.4(2007), pp.327-334. https://doi.org/10.1177/1094670506295853
  43. Yi, Y.J. and H.S. Jeon, "Effects of Loyalty Programs on Value Perception, Program Loyalty, and Brand Loyalty," Journal of the Academy of Marketing Science, Vol.31, No. 3(2003), pp.229-240. https://doi.org/10.1177/0092070303031003002
  44. Yoo, S.J., D.M. Hanssens, and H. Kim, "Marketing and the Evolution of Customer Equity of Frequently Purchased Brands," Working paper, (2011).
  45. Zhang, J. and E. Breugelmans, "The Impact of an Item-Based Loyalty Program on Consumer Purchase Behavior," Journal of Marketing Research, Vol.49, No.1(2012), pp.50-65. https://doi.org/10.1509/jmr.09.0211