Master Thesis

What drives enrolment in a coalition loyalty program?

A conjoint approach
Preface
 Table of Contents
Executive summary .................................................................................................................. 1
Chapter 1: Introduction ...................................................................................................... 2

Chapter 2: Literature Review ............................................................................................ 9

Chapter 3: Hypotheses Development............................................................................... 26

Chapter 4 Methodology ................................................................................................... 33

Chapter 5: Research Analysis and Results .......................................................................... 41

Chapter 6: Discussion........................................................................................................ 52
Chapter 7: Conclusion, Implications, Limitations and Future Research Directions .. 57

References ............................................................................................................................... 65
Appendices .............................................................................................................................. 70
 Executive summary

to identify and analyze the drivers

of coalition LP enrolment
Chapter 1: Introduction

1.1 General Introduction

1.2 Research Motivation
1.3 Problem Statement and Subsequent Research Questions

What factors determine enrolment in a coalition LP ?

•
•

1.4 Contribution

1.4.1 Academic Contribution

1.4.2 Practical Contribution
1.5 Structure
Chapter 2: Literature Review

2.1 Origin of Loyalty Programs

2.2 LP Types
2.3 Coalition LP Benefits for Customers
2.4 Introduction to Enrolment Drivers
2.4.1 Rewards: Economic Benefits and Non-Economic Benefits
2.4.1.1 Evaluating Rewards

cash value

redemption choice

aspirational value
2.4.2 Program Design

Number of program providers

Program convenience
Program relevance

Participation effort

Program duration
2.4.3 Idiosyncratic Factors

Purchase frequency

Number of memberships in other LPs

2.4.4 Inhibiting Factors

economic costs non-economic costs

Economic costs/participation costs

Privacy issues

2.5 Excluded Factors

2.6 Factors Crucial to Coalition LP Enrolment

aspirational value

redemption range

convenien ce of a program relevance

 number of retailers

combined-currency payment
Chapter 3: Hypotheses Development

redemption choice aspirational value convenience of the

program relevance of the program combined-currency payment

3.1 Redemption Choice

 H1

3.2 Aspirational Value

H2

3.3 Convenience
 H3

3.4 Combined-Currency Payment

 H4

3.5 Relevance
 H5

3.6 Number of Participating Companies

H6

3.7 Attitude
 H7

3.8 Purchase Behaviour

H8
Chapter 4 Methodology

4.1 Research Design

4.2 Conjoint Analysis Process

Conjoint analysis procedure Current study

first step

second step
step 3
 step 4

Scenario 6
•
•

•
•

step 5
 step 6

4.3 Questionnaire Design

4.4 Questionnaire distribution
Chapter 5: Research Analysis and Results

5.1 Introduction

5.2 Sample Characteristics

5.3 Conjoint Procedure

5.3.1 Detecting and Removing Outliers

5.3.2 Conjoint Analysis

5.3.3 Accuracy of the Model
Value Sig.
Pearson's R ,986 ,000
Kendall's tau ,786 ,003
Kendall's tau for Holdouts 1,000 .

Value Sig.
Pearson's R ,987 ,000
Kendall's tau ,786 ,003
Kendall's tau for Holdouts 1,000 .
5.3.4 Utilities Values and Average Importance Values
Attribute Utility – low level Utility – high level Average Overall
Importance Rank
Redemption -,112 ,112 11,843 5
Aspirational -,585 ,585 33,262 1
Convenience -,329 ,329 18,575 2
Combined-currency -,175 ,175 12,301 4
Relevance ,023 -,023 10,663 6
Retailers -,172 ,172 13,355 3
(Constant) 2,472
5.4 LP Attitude Analysis

5.4.1 Reliability Analysis of LP Attitude and Purchase Behaviour

5.4.2 Frequency Tables
5.4.3 Overall Attitude

5.4.4 Overall Purchase Behaviour

Chapter 6: Discussion
Chapter 7: Conclusion, Implications, Limitations and Future Research Directions

7.1 Conclusion
7.2 Academic Implications
7.3 Practical Implications
7.4 Limitations and Future Research Directions
 References

Technometrics

Psychological Bulletin

California
Management Review

Journal
of the Academy of Marketing Science

Journal of Marketing Research

Journal of the
Academy of Marketing Science

Questionnaire Design: How to Plan, Structure and Write Survey Material

for Effective Market Research

Journal of Business Research

Journal of
Consumer Marketing

Journal of
Marketing

Journal of Marketing

The
McKinsey Quarterly

Journal
of Relationship Marketing
Journal of Marketing Science

California Management Review

Sloan
Management Review

Journal of Marketing Research

Journal of Consumer Marketing

Maritz Loyalty Marketing

Journal of Consumer
Marketing

International Journal of Retail & Distribution

Management

Journal of Consumer Marketing

Journal of Marketing Research

Journal of Consumer Research

Interfaces

Econometric Methods

Journal of Marketing Research

 Journal of Marketing Research

Principles of Marketing

Journal of Consumer Marketing

Journal of Database Marketing & Customer Strategy

Managemen

Discussion Paper

International Journal of Research in Marketing

Journal of Marketing

Journal of Mathematical Psychology

Marketing Research: An Applied Approach

Journal of Marketing Management

Journal of Retailing

European Journal of Marketing

 Journal of
Marketing Management

European Retail Digest

Journal of Retailing

Harvard Business
Review

Harvard Business
Review

Marketing Intelligence &

Planning

Sawtooth Software Inc. Research Paper Series

Journal of Interactive Marketing

Handbook of marketing decision

models

Harvard
Business Review

Harvard
Business Review

The
Marketing Review

Journal of Research in Marketing

 Marketing Science

Journal of Marketing Research

British Food Journal

Manual to SPSS

Manual to SPSS

De Constructie van Profielensets voor het Schatten van Hoofdeffecten

en Interacties bij Con junct Meten

International Journal of Service Industry Management

Journal of Business Ethics

Journal of
Marketing Management

Journal of Service Research

Journal
of Marketing,

International Journal of Retail and Distribution Management

Journal of the Academy of Marketing Science

 Appendices

Appendix A Discussed variables

Economic /
Hard Non-Economic / Soft Benefits Program Design Idiosyncratic
Benefits

Rew ards Psychological Sociological Program Individual

• • • • •
•
• •
• •
•

Membership in a LP

Economic Cost Non-economic

costs

• •
Appendix B: Profiles Card List

redemption aspi rational convenience combined relevance number of

Card ID choice level level currency level retailers
1 1 small high high no high small
2 2 small low low yes high large
3 3 small low low no low small
4 4 large low high yes low small
5 5 large high low no low large
6 6 large high low yes high small
7 7 large low high no high large
8 8 small high high yes low large
9(a) 9 large high high no high large
10(a) 10 large low low yes high small

a Holdout
Appendix C: Questionnaire

Part 1

Scenario 1
• limited
• exciting desirable mo tivate

• easy simple
multiple
• no

• 3-6
• small

Scenario 2
• limited
• dull undesirable does not motivate

• difficult complicated
limited
• is possible

• 3-6
• large
Scenario 3
• limited
• dull undesirable does not motivate

• difficult complicated
limited
• no

• 6-9
• small

Scenario 4
• extended
• dull undesirable does not motivate

• easy simple
multiple
• is possible

• 6-9
• small

Scenario 5
• extended
• exciting desirable mo tivate

• difficult complicated
limited
• no

• 6-9
• large

Scenario 6
• extended
• exciting desirable mo tivate

• difficult complicated
limited,
• is

• 3-6
• small
Scenario 7
• extended
• dull undesirable does not motivate

• easy simple
multiple
• no

• 3-6
• large

Scenario 8
• limited
• exciting desirable mo tivate

• easy simple
multiple
• is

• 6-9
• large

Scenario 9
• extended
• exciting desirable

• easy simple
multiple
• no

• 3-6
• large

Scenario 10
• extended
• dull undesirable does not motivate

• difficult complicated
limited
• is

• 3-6
• small
Part 2
Part 3

o
o

o
o
o
o
o

o
o
o
o

o
o
o
o
o
o
o
Appendix D: Sample Characteristics

What is your gender

Cumulative
Frequency Percent Valid Percent Percent
Valid Male 102 43,2 43,2 43,2
Female 134 56,8 56,8 100,0
Total 236 100,0 100,0

What is your age

Cumulative
Frequency Percent Valid Percent Percent
Valid 18-25 153 64,8 64,8 64,8
26-34 51 21,6 21,6 86,4
35-49 16 6,8 6,8 93,2
50-59 9 3,8 3,8 97,0
60+ 7 3,0 3,0 100,0
Total 236 100,0 100,0

What is your montly income after taxes

Cumulati ve
Frequency Percent Valid Percent Percent
Valid Below 999 € 134 56,8 56,8 56,8
1000-1999 € 55 23,3 23,3 80,1
2000-2999 € 28 11,9 11,9 91,9
3000 € and more 19 8,1 8,1 100,0
Total 236 100,0 100,0

What is your nationality

Cumulative
Frequency Percent Valid Percent Percent
Valid Dutch 159 67,4 67,4 67,4
German 45 19,1 19,1 86,4
American 4 1,7 1,7 88,1
British 3 1,3 1,3 89,4
Irish 4 1,7 1,7 91,1
Belgian 8 3,4 3,4 94,5
Other 13 5,5 5,5 100,0
Total 236 100,0 100,0
In how many single retailer loyalty programs do you participate?

Cumulative
Frequency Percent Valid Percent Percent
Valid None 64 27,1 27,1 27,1
1 75 31,8 31,8 58,9
2 46 19,5 19,5 78,4
3 23 9,7 9,7 88,1
More than 3 28 11,9 11,9 100,0
Total 236 100,0 100,0
In how many coalition loyalty programs do you participate?

Cumulative
Frequency Percent Valid Percent Percent
Valid None 143 60,6 60,6 60,6
1 66 28,0 28,0 88,6
2 19 8,1 8,1 96,6
3 7 3,0 3,0 99,6
More than 3 1 ,4 ,4 100,0
Total 236 100,0 100,0
Appendix E: Initial Conjoint Output

Utilities

Utility
Estimate Std. Error
redemption small -,108 ,119
large ,108 ,119
aspirational low -,571 ,119
high ,571 ,119
convenience low -,322 ,119
high ,322 ,119
com_cur no -,175 ,119
yes ,175 ,119
relevance low ,020 ,119
high -,020 ,119
retailers small -,165 ,119
large ,165 ,119
(Constant) 2,482 ,119

Importance Values

redemption 12,065
aspirational 32,861
convenience 18,349
com_cur 12,360
relevance 10,633
retailers 13,288

Averaged Importance Score

Correlations(a)

Value Sig.
Pearson's R ,986 ,000
Kendall's tau ,786 ,003
Kendall's tau for Holdouts 1,000 .

a Correlations between observed and estimated preferences

Appendix F: Final Conjoint Output 222 Respondents

Utilities

Utility
Estimate Std. Error
redemption small -,112 ,117
large ,112 ,117
aspirational low -,585 ,117
high ,585 ,117
convenience low -,329 ,117
high ,329 ,117
com_cur no -,175 ,117
yes ,175 ,117
relevance low ,023 ,117
high -,023 ,117
retailers small -,172 ,117
large ,172 ,117
(Constant) 2,472 ,117

Importance Values

redemption 11,843
aspirational 33,262
convenience 18,575
com_cur 12,301
relevance 10,663
retailers 13,355

Averaged Importance Score

Correlations(a)

Value Sig.
Pearson's R ,987 ,000
Kendall's tau ,786 ,003
Kendall's tau for Holdouts 1,000 .

a Correlations between observed and estimated preferences

Appendix G: Pearson’s R Holdout Scenario 9 and 10

Correlations

Scenario 9
Scenario 9 Pearson Correlation 1 ,544(**)
Sig. (2-tailed) ,000
N 222 222
Pearson Correlation ,544(**) 1
Sig. (2-tailed) ,000
N 222 222

** Correlation is significant at the 0.01 level (2-tailed).

Correlations

Scenario 10
Scenario 10 Pearson Correlation 1 ,417(**)
Sig. (2-tailed) ,000
N 222 222
Pearson Correlation ,417(**) 1
Sig. (2-tailed) ,000
N 222 222

** Correlation is significant at the 0.01 level (2-tailed).

Appendix H: Table of Pearson’s R for all 10 Profiles

Estimated score correlated observed score Pearson’s R

Appendix I: Reliability Analysis of LP Attitude

Single Retailer LP Attitude Items

Case Processing Summary Reliability Statistics

N %
Cronbach's
Cases Valid 168 75,7
Alpha Based
Excluded(a) 54 24,3 on
Cronbach's Standardized
Total 222 100,0
Alpha Items N of Items
a Listwi se deletion based on all variables in the
,723 ,735 5
procedure.

Coalition LP attitude Items

Case Processing Summary Reliability Statistics

N %
Cronbach's
Cases Valid 91 41,0 Alpha Based
Excluded(a) 131 59,0 on
Cronbach's Standardized
Total 222 100,0
Alpha Items N of Items
a Listwi se deletion based on all variables in the
,771 ,776 5
procedure.
Appendix J: Frequency Tables Attitude and Purchase Behaviour

Attitude Single Retailer LP

Statistics

Please rate the Please rate the

Please rate the following following
following statements - If statements - I
statements - Please rate the a retailer does Please rate the am paying
Having a si ngl e following not have a following more attention
retai ler loyalty statements - I single retailer statements - A to special
card makes me enjoy loyalty single retailer offers because
feel like a participation in program, I miss loyalty program of the single
regular a single retailer important offers attractive retai ler loyalty
customer loyalty program benefits benefits card
N Val id 168 168 168 168 168
Missing 54 54 54 54 54

In how many single retailer loyalt y programs do you participate?

Cumulative
Frequency Percent Valid Percent Percent
Valid None 54 24,3 24,3 24,3
1 74 33,3 33,3 57,7
2 46 20,7 20,7 78,4
3 21 9,5 9,5 87,8
More than 3 27 12,2 12,2 100,0
Total 222 100,0 100,0

Please rate the following statements - Having a single retailer loyalty card makes me feel like a regular
customer

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 6 2,7 3,6 3,6
Disagree 23 10,4 13,7 17,3
Neutral 43 19,4 25,6 42,9
Agree 90 40,5 53,6 96,4
Totally agree 6 2,7 3,6 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0
Please rate the following statements - I enjoy participation in a single retailer loyalty program

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 4 1,8 2,4 2,4
Disagree 16 7,2 9,5 11,9
Neutral 67 30,2 39,9 51,8
Agree 75 33,8 44,6 96,4
Totally agree 6 2,7 3,6 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0

Please rate the following statements - If a retailer does not have a single retailer loyalty program, I miss
important benefits

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 27 12,2 16,1 16,1
Disagree 74 33,3 44,0 60,1
Neutral 34 15,3 20,2 80,4
Agree 30 13,5 17,9 98,2
Totally agree 3 1,4 1,8 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0

Please rate the following statements - A single retailer loyalty program offers attractive benefits

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 2 ,9 1,2 1,2
Disagree 12 5,4 7,1 8,3
Neutral 42 18,9 25,0 33,3
Agree 101 45,5 60,1 93,5
Totally agree 11 5,0 6,5 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0

Please rate the following statements - I am paying more attention to special offers because of the single
retailer loyalty card

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 6 2,7 3,6 3,6
Disagree 26 11,7 15,5 19,0
Neutral 24 10,8 14,3 33,3
Agree 87 39,2 51,8 85,1
Totally agree 25 11,3 14,9 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0
Attitude Coalition LP
Statistics

Please rate
Please rate the following
the following statements - If Please rate Please rate the
statements - a retailer does the following fol lowing
Having a Please rate the not participate statements - statements - I
In how many coalition following in coalition A coalition am paying
coalition loyalty card statements - I loyalty loyalty more attention
loyalty makes me enjoy program, I program to special
programs do feel like a participation in miss offers offers because
you regular a coalition important attractive of the coaliti on
participate? customer loyalty program benefits benefits card
N Val id 222 91 91 91 91 91
Missing 0 131 131 131 131 131

In how many coalition loyalty programs do you participate?

Cumulative
Frequency Percent Valid Percent Percent
Valid None 131 59,0 59,0 59,0
1 65 29,3 29,3 88,3
2 19 8,6 8,6 96,8
3 6 2,7 2,7 99,5
More than 3 1 ,5 ,5 100,0
Total 222 100,0 100,0

Please rate the following statements - Having a coalition loyalty card makes me feel like a regular
customer

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 2 ,9 2,2 2,2
Disagree 21 9,5 23,1 25,3
Neutral 33 14,9 36,3 61,5
Agree 32 14,4 35,2 96,7
Totally agree 3 1,4 3,3 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0
Please rate the following statements - I enjoy participation in a coalition loyalty program

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 2 ,9 2,2 2,2
Disagree 8 3,6 8,8 11,0
Neutral 37 16,7 40,7 51,6
Agree 42 18,9 46,2 97,8
Totally agree 2 ,9 2,2 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0

Please rate the following statements - If a retailer does not participate in coalition loyalty program, I miss
important benefits

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 9 4,1 9,9 9,9
Disagree 35 15,8 38,5 48,4
Neutral 23 10,4 25,3 73,6
Agree 23 10,4 25,3 98,9
Totally agree 1 ,5 1,1 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0

Please rate the following statements - A coalition loyalty program offers attractive benefits

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 1 ,5 1,1 1,1
Disagree 4 1,8 4,4 5,5
Neutral 28 12,6 30,8 36,3
Agree 49 22,1 53,8 90,1
Totally agree 9 4,1 9,9 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0

Please rate the following statements - I am paying more attention to special offers because of the
coalition card

Cumulative
Frequency Percent Vali d Percent Percent
Valid Totally disagree 5 2,3 5,5 5,5
Disagree 17 7,7 18,7 24,2
Neutral 29 13,1 31,9 56,0
Agree 34 15,3 37,4 93,4
Totally agree 6 2,7 6,6 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0
Purchase Behaviour Single Retailer LP

Please answer the following two questions - Do you buy more often at the retailer of the program in
which you participate

Cumulative
Frequency Percent Valid Percent Percent
Valid A lot less 3 1,4 1,8 1,8
A little less 1 ,5 ,6 2,4
The same 69 31,1 41,1 43,5
A little more 76 34,2 45,2 88,7
A lot more 19 8,6 11,3 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0

Please answer the following two questions - Do you spend more at the retailer in whose program you
participate

Cumulative
Frequency Percent Valid Percent Percent
Valid A lot less 2 ,9 1,2 1,2
A little less 4 1,8 2,4 3,6
The same 90 40,5 53,6 57,1
A little more 62 27,9 36,9 94,0
A lot more 10 4,5 6,0 100,0
Total 168 75,7 100,0
Missing 8888888 54 24,3
Total 222 100,0

Purchase Behaviour Coalition LP

Please answer the following two questions - Do you buy more often at the retailers of the coalition
program of which you are a member

Cumulative
Frequency Percent Valid Percent Percent
Valid A lot less 1 ,5 1,1 1,1
A little less 2 ,9 2,2 3,3
The same 54 24,3 59,3 62,6
A little more 30 13,5 33,0 95,6
A lot more 4 1,8 4,4 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0
Please answer the following two questions - Do you spend more at the retailers of the coalition program
of which you are a member

Cumulative
Frequency Percent Valid Percent Percent
Valid A lot less 1 ,5 1,1 1,1
A little less 3 1,4 3,3 4,4
The same 60 27,0 65,9 70,3
A little more 24 10,8 26,4 96,7
A lot more 3 1,4 3,3 100,0
Total 91 41,0 100,0
Missing 8888888 131 59,0
Total 222 100,0
Appendix K: Paired Samples T Test

Paired Samples T test Attitude

Paired Samples Statistics

Std. Error
Mean N Std. Deviation Mean
Pair 1 total_single_att 3,3452 84 ,62506 ,06820
total_coal_att 3,2286 84 ,65207 ,07115

Paired Samples T test Purchase behaviour

Paired Samples Statistics

Std. Error
Mean N Std. Deviation Mean
Pair 1 total_pur_single 3,5893 84 ,70352 ,07676
total_pur_coal 3,3155 84 ,61006 ,06656