The role of marketing channels in consumers’ promotional point redemption decisions

Abstract

Organizations employ loyalty programs to entice customers to repurchase their products and services. One popular promotional tool is the award of loyalty points. For this promotion to be effective, customers need to redeem these points. Currently, researchers opine that customers tend to stockpile these points. This study investigates customers’ point redemption behavior in an omni-channel environment and posits that point redemption is a two-stage decision: whether to redeem and how many points to redeem. In the first stage, the results show that purchasing through PC channel positively impacts the probability of redeeming the points. However, in the second stage, purchasing through the mobile channel has a positive effect on the number of points redeemed. In an omni-channel world, different channels complement each other by enhancing the effectiveness of various marketing activities. Findings of this research highlight the role played by the online channels in encouraging customers’ point redemption behavior.