The Reinforcing Effects of Loyalty Program Partnerships and Core Service Usage A Longitudinal Analysis

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 oil investments ill improvements in product quality, service quality, and customer satisfaction; and more broadly, the dynamics Of customer purchase behavior.