Document Type

Thesis or dissertation

Date of this Version

2019

Advisor

Peter Fader

Abstract

There is expansive research into customer loyalty programs (LPs) ranging from design factors to customer behavior as LP members, as LP adoption increases between customers and companies alike. However, while corporate players are experimenting with paid LPs, which often integrate accumulated rewards with a “membership fee” payment and premium service, there is a comparative lack of academic research on the subject. Moreover, there is a lack of consensus understanding on the drivers behind customer behavior in paid loyalty schemes, from conversion to engagement to retention, all of which differ from standard LPs due to the payment or fee required for the customer to invest in the relationship. This paper looks to better understand paid LPs through applying existing marketing, behavioral economics, and loyalty program research. Defining these paid LPs to require accumulated rewards (and thus excluding premium membership-style programs), it examines this new dimension of customer loyalty for both frequency and tier-based programs and provides insights on future ideas for paid LP research and corporate design.

Keywords

loyalty program, paid loyalty, frequency rewards, tier programs, loyalty program design, customer retention, accumulating rewards

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Date Posted: 15 October 2019

 

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