Towards digital loyalty programs: insights from customer medium preference segmentation

The purpose of this paper is to identify patterns of medium preference for loyalty programs (LPs) among members to support the case for segmenting customers based on their medium preference.

A survey of nearly 2,000 customers who are enrolled in at least one supermarket LP was employed. LP members are segmented based on a latent class clustering model and then profiled in terms of socio-demographic variables by means of a multinomial logit regression model.

Medium preference is heterogeneous and differs at the customer segment and at the LP touchpoint level. Five segments emerge which display different medium preference patterns. LP medium preference is associated with age, gender, affluency and number of different LPs the customer is enrolled in.

Retailers, e-tailers and brands can benefit from this customer segmentation when faced with the challenges of adding online features or migrating their LPs online. Marketers should differentiate their investment in online and offline LP touchpoints according to the medium preference for each LP touchpoint of the customer segments of interest.

Retailers, e-tailers and brands are today introducing online marketing strategies and tactics, such as LPs, that have been traditionally used offline. So far, however, they have failed to answer the question whether online and offline LPs and related touchpoints have the same preference among consumers. Literature on LPs has not explored customer preference for the LP medium or the consumer characteristics related to medium preference. This work is unique in providing an overview of medium preference for LPs and their touchpoints.