The cross-buying effect in a multi-vendor loyalty program in Korea

Abstract

This study investigates the factors weakening the relationship between a customer's cross-buying and firm sales in a multi-vendor loyalty program (MVLP) in Korea. The findings indicate that cross-buying has a positive impact on purchase frequency, transaction size, and further cross-buying in the subsequent periods. However, this impact is attenuated when customers are inclined to deal proneness or spending limit. The findings give academics and managers the opportunity to reconsider the conventional assumptions about cross-buying. Instead of emphasizing cross-selling for random customers, firms must identify customers whose cross-buying behavior affects firm performance positively. This study has managerial implications for MVLP operators for the effective acquisition and retention of participating vendors.