Publication Type

Magazine Article

Version

acceptedVersion

Publication Date

4-2022

Abstract

From Amazon Prime to Panera Bread’s Unlimited Sip Club, loyalty programs have become commonplace in a wide variety of industries. However, despite their popularity, it’s not always clear whether these programs are actually profitable. The authors analyzed data from 24,000 customers at a large Asian retailer to explore the various factors that can drive a program’s profitability, and identified three takeaways to help managers ensure their subscription programs are a net positive: They recommend that managers should go beyond averages and analyze trends on an individual level, measure the underlying factors that drive changes in revenues, and remember to account for increased costs associated with program benefits. Ultimately, they find that loyalty programs can be quite effective — but only if managers carefully track revenues and costs for different customer segments, and experiment and adapt accordingly.

Discipline

Marketing | Sales and Merchandising

Research Areas

Marketing

Publication

Harvard Business Review

First Page

1

Last Page

3

ISSN

0017-8012

Publisher

Harvard Business Review

Copyright Owner and License

Authors

Additional URL

https://hbr.org/2022/04/your-loyalty-program-might-be-losing-you-money

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