Joint modeling of effects of customer tier program on customer purchase duration and purchase amount

Abstract

Nowadays, many supermarkets implement a customer tier program to increase their profits because it is expected to raise customers' willingness to purchase by setting thresholds. However, designing an appropriate program is difficult because each customer's heterogeneous purchase behavior is difficult to capture. Therefore, we simultaneously modeled purchase frequency and amount through a marked point process approach while considering program effects and customer characteristics. The results clarified that the points pressure effect was particularly strong among customers who originally visited the store infrequently and had not attained the threshold set up in the customer tier program many times in the past. In addition, we found that the three-tier customer tier program was superior to the two-tier program with respect to the operating income in supermarkets.