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Journal of Service Research
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The Reinforcing Effects of Loyalty Program Partnerships and Core Service Usage

A Longitudinal Analysis

Katherine N. Lemon

Boston College, kay.lemon{at}bc.edu

Florian v. Wangenheim

Technische Universitaet München

In this research, the authors develop a dynamic model of cross-buying across loyalty program partnerships and test the model using data from a European airline. They identify a reinforcing mechanism that operates when loyalty program partnerships are operating effectively. The results suggest that customer usage of (and satisfaction with) the core service influences customer cross-buying from loyalty program partners. The cross-buying behavior then reinforces the customer's relationship with the core service, as cross-buying positively influences future purchases of the core service. Furthermore, the authors find that these reinforcing effects are influenced by the type of cross-buying service (partner) being considered. This dynamic reinforcement mechanism has not been shown in prior research. These findings have implications for understanding and management of loyalty programs and brand partnerships; valuating return on investments in improvements in product quality, service quality, and customer satisfaction; and more broadly, the dynamics of customer purchase behavior.

Key Words: loyalty programs • brand partnerships • customer management • cross-buying • dynamic models

This version was published on May 1, 2009

Journal of Service Research, Vol. 11, No. 4, 357-370 (2009)
DOI: 10.1177/1094670508330451
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