A Model of Customer Reward Programs with Finite Expiration Terms
研究了客户奖励计划中普遍使用有限到期期限的经济原因，发现当消费者估值差异适中且购物概率与估值负相关时，有限到期期限能提高企业利润，并通过美国零售商数据验证了理论预测。
A little-understood phenomenon of customer reward programs is the prevalent use of finite reward expiration terms. We develop a theoretical framework to investigate the economic rationale behind this phenomenon and the trade-off between short and long expiration terms. In our model, a monopolistic firm sets the expiration term, along with the price and reward size, and interacts with consumers over an infinite horizon. Consumers are heterogeneous in shopping probabilities and product valuations and forward-looking in making purchase decisions. We find that a customer reward program with a finite expiration term can increase firm profits when (i) the valuation difference within the consumer population is intermediate and (ii) the shopping probabilities and valuations are negatively correlated among consumers. Several model extensions confirm the robustness of these results. Finally, we conduct an empirical investigation on the reward program practice of the top 100 U.S. retailers, which provides directional support for several key theoretical predictions. This paper was accepted by Gad Allon, operations management.