The impact of multi-vendor loyalty programs on the consumers' online purchase process

Seminar paper from the year 2014 in the subject Business economics - Offline Marketing and Online Marketing, grade: 1.3, LMU Munich (Institute for Strategy, Technology and Organization), language: English, abstract: The primary aim of this paper is to address the question of how the membership of a multi-vendor loyalty program influences the consumers’ online purchase behavior and process. The issue is approached by applying it to the appropriate case of Payback, Germany’s largest and most popular multi-vendor loyalty program.To do so, I conducted open-ended interviews with informants that were experienced both concerning online purchasing as well as dealing with the loyalty program. The data analysis thereby revealed how the respective loyalty program exerts influence on the online consumers’ behavior within different phases of their purchase process. During the second stage of the analysis two prototypic extended purchase processes were established which depend on the characteristics and typology of the online consumers. These findings enlarge the comprehension about the effectiveness of such programs and extend prior research on consumers’ online decision making. It is further shown that for an operator of a multi-vendor loyalty program it is crucial to create an understanding about the motives as well as the way its members use the program differently. Through this knowledge the operator can provide better and more suitable incentives adapted for different types of program members and can thus improve the customer approach. Thereby, the effectiveness of a multi-vendor loyalty program can be influenced and increased even before the actual purchase process takes place.The paper is organized as follows: First, I will give a brief overview over the past research on multi-vendor loyalty programs and will show that the existing literature has to be extended to fully understand the effectiveness of such programs. To investigate the way consumers integrate the loyalty program within their online purchase process and thus to illustrate the divergence compared to the standard process of non-members, prior studies on consumers’ online purchase behavior are reviewed. Subsequently, the rationale and the setting of the study are described and empirical results are presented and further explained. The paper concludes with theoretical and practical contributions as well as the study limitations.