Searching for Rewards

• 成果类型: Article; Early Access
• 署名作者: Ke, Tony; Shin, Tiwoong; Zhu, Xu
• 署名单位: Chinese University of Hong Kong; Yale University; Beihang University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.05203
• 发表日期: 2026
• 关键词: loyalty program; consumer search; repeated purchase; customer relationship management; competitive strategy

摘要

Loyalty programs are widespread across various markets, offering members rewards based on their past purchases for future benefits. This study offers new insights into the strategic use of loyalty programs and their impact on market competition by explor-ing the dynamics of loyalty programs within a repeated ordered search framework, in which consumers sequentially search for the optimal product across multiple firms over two peri-ods. Our findings highlight distinct roles for price discounts and rewards in influencing con-sumer decisions. Price discounts discourage further search in the current shopping period, whereas rewards encourage consumer loyalty by inducing prominence in subsequent visits. As search costs increase, firms tend to offer lower price discounts but higher rewards, and this results in a higher industry profit but lower consumer surplus. Compared with their absence, loyalty programs decrease both industry profit and consumer welfare, leading to a lose-lose outcome. Moreover, we demonstrate that, when the firms are heterogeneous in terms of their network sizes, those with larger networks tend to offer lower rewards yet achieve greater consumer loyalty in contrast to the firms with smaller networks, which com-pensate with higher rewards.