The Impact of Co-Branded Credit Card Adoption on Customer Loyalty

Ms. Nan ZHAO, Ph.D. Candidate in Marketing, Olin Business School, Washington University in St. Louis

Date:         8 February 2023 (Wednesday)
Time:        10:00am – 11:00am
Venue:      Online via Zoom
Host:         Prof. Kao SI, Assistant Professor of Marketing
Zoom Link: https://umac.zoom.us/j/91240479624 


In this study, we estimate the treatment effects of adopting a co-branded credit card on spending and loyalty behaviors using a comprehensive longitudinal dataset from a North American airline. Our data set contained detailed records of both airline credit card adopters and non-adopters, including their travel and loyalty program activities over a four-year horizon. We deal with the self-selection of card adopters by (1) using propensity score matching, (2) conducting difference-in-differences estimation on the matched sample with a two-way fixed effects specification, and (3) dividing treatment effects into three phases of time and argue that the endogenous timing of card adoption will most likely manifest in the short term effect. We find statistically significant and economically meaningful effects of card adoption on a multitude of behaviors. Specifically, flight spend was lifted by 42% when considering spend more than 12 months after adoption, demonstrating the persistence of the effect. These flight spend increases were largely driven by more flights purchased rather than higher prices paid per flight, which is indicative of increasing share-of-wallet among adopters. Card adopters also increased award flight redemption to a greater extent than redeeming loyalty program points with airline partners. Finally, card adopters who experienced the highest increase in spend, tended to live near hub airports of the airline firm or were already existing members of the loyalty program.


Ms. Nan ZHOU is a final-year Ph.D. candidate in Marketing (Quantitative) at Olin Business School, Washington University in St. Louis, and She is joining Scheller College of Business, Georgia Institute of Technology as an Assistant Professor of Marketing starting the summer 2023. Her research interests broadly cover the areas of program/policy evaluations and customer relationship management (CRM).

All are welcome!