Drivers and consequences of in-store promotion-execution shortfalls: Insights from a temporary loyalty program

Retailers increasingly adopt temporary loyalty programs (TLPs). While the success of such promotional campaigns hinges on their proper execution of in-store support, industry reports suggest that commitment to execution standards is often poor. Our study sheds light on the magnitude and drivers of execution shortfalls in TLPs, and on the impact that these have on store sales. We use a unique dataset that tracks in-store execution during a TLP and create a panel dataset with sales data before, during and after the program. We show that poor execution of in-store promotional instruments (signage, displays, staff support, and reward availability) is ubiquitous, and uncover its link with demand-intensity and operational factors that drive store engagement. We also document the pattern of sales losses from execution shortfalls, across instruments and stores, and illustrate that poor execution affects reward redemption in the TLP. Our results can guide retailers and external parties in optimizing the sales effectiveness of in-store promotional execution.