Social Influence in the Adoption of a B2B Loyalty Program: The Role of Elite Status Members

Viswanathan Vijay, Sese Javier, Krafft Manfred

Abstract
This study investigates the role of elite loyalty program members in influencing other customers to adopt a hierarchical loyalty program (or HLP) in a business market. Drawing from the social psychology literature, the theoretical framework proposes that elite status members exert a disproportionate positive influence on neighboring non-members to adopt the HLP, and that this social influence has an inverse U-shaped effect. A unique dataset from a B2B loyalty program of a firm in the agribusiness industry with detailed information on members and marketing efforts from 1,378 zip codes in Germany from 2008 to 2012 is used for the analysis. The study finds that, compared to members in lower status, elite status members have a stronger social influence on non-members. Importantly, as the proportion of elite status members increases, the adoption probability of non-members increases. However, as the fraction of elite status members increases beyond a certain point, the adoption probability of non-members decreases. Overall, the results of this study advances our understanding of loyalty programs in B2B markets, particularly with regard to the drivers of loyalty program adoption and the role played by social influence in driving new member enrollment

Keywords
Hierarchical loyalty program; Business-to-Business; customer relationship management; elite status members; social influence; survival models