Is Socializing Loyalty Programs a Good Idea? – Empirical Evidence from a Large Quick Service Restaurant Chain

Recently, more and more companies started to develop strategies that leverage social media technologies to improve their loyalty programs. However, the question of whether such social media strategies could boost customer engagement and sales remains unknown. In this research-in-progress, we seek to shed light on this question by examining a novel extension that allows loyalty program members to forward coupons and request rewards points to/from friends, with a huge dataset provided by a large quick service restaurant chain. In addition, besides focusing on the customer’s giving behavior in social network, e.g. forwarding the message to others, we’ll also pay attention to the “help-seeking” behavior, e.g. requesting points from others. We will study when involving non-sharable monetary value, how members choose the people who they seek help from, whether the giving and the help-seeking behavior influence sales differently, and how the two types of behavior intertwine with each other. Our research seeks to make three key contributions: (1) we enrich social media literature by studying a new type of social network involving non-sharable monetary interaction and investigating how this will change consumer’s behavior. In addition, we differentiate the giving behavior and the help-seeking behavior, study their impacts on sales separately, and investigate how these two types of behavior interact with each other. (2) We also make methodological contribution to the IS field as we believe we are one of the first paper in IS field to utilize random graph model to take care of the common endogeneity problem in social network research and take into account two types of relational tie in one model, which allows us to study how the two different types of behavior interact with each other. (3) we enrich loyalty program literature by examining whether incorporating social media technologies into LPs will make a difference and provide some managerial suggestions to the marketers.