Synergistic and cannibalization effects in a partnership loyalty program

The implicit promise of a partnership in loyalty program (LP) is that the partners will gain new customers and LP reinforce to focal partners. Although may be encouraged cross-purchase from (which create positive synergies), they can also switch among without forfeiting rewards lead cannibalization sales partners). To explore these cross-partner effects, we analyze evolution customer purchases across 33 16 industry sectors. We find cannibalizations arise more frequently than synergies partners, contributing “rich-get-richer” effect for high-penetration partners; e.g., 10% increase transactions at department stores reduce apparel (by .04% by 1.18% recurring customers); but turn, attract (.11% .37% transactions).