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Article
Publication date: 7 October 2020

Chanho Song, Tuo Wang, Hyunjung Lee and Michael Y. Hu

The purpose of this paper is to investigate how the effects of referral rewards in referral reward programs (RRPs) are moderated through perceived social risk of a recommender.

Abstract

Purpose

The purpose of this paper is to investigate how the effects of referral rewards in referral reward programs (RRPs) are moderated through perceived social risk of a recommender.

Design/methodology/approach

A total of 717 consumers are accessed through Amazon's Mechanical Turk worker panel. The authors use t-test and analysis of variance to test the proposed hypotheses.

Findings

The findings show that consumers with high perceived social risk balance financial rewards with social risks, while low social risk consumers largely ignore these social risk elements surrounding a referral decision.

Originality/value

The inclusion of perceived social risk provides the opportunity to fully understand how a consumer goes about balancing social risk and referral rewards in making referral decisions. The concept of social risk has not been previously applied to this context.

Details

International Journal of Bank Marketing, vol. 38 no. 7
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 8 October 2019

Chanho Song, Tuo Wang, Haakon T. Brown and Michael Y. Hu

The purpose of this paper is to investigate how referral reward programs (RRPs) utilizing scarcity messages influence bank credit holders’ referrals to and adoptions by…

Abstract

Purpose

The purpose of this paper is to investigate how referral reward programs (RRPs) utilizing scarcity messages influence bank credit holders’ referrals to and adoptions by close or distant friends.

Design/methodology/approach

A 2×2 experiment is implemented with 760 consumers solicited through Amazon’s Mechanical Turk worker panel. Logit transformation and general linear models are used to test the proposed hypotheses.

Findings

Results showed that offering RRPs with limited available referrals (quantity scarcity) increases the overall number of referrals to and adoptions by close and distant friends. The percent of strong ties also increases with RRPs. As quantity scarcity is relaxed, the percentages of referrals to and adoptions by close friends decrease.

Originality/value

The inclusion of tie strength with scarcity framing greatly enhances our understanding of the effectiveness of RRPs for bank credit cards. To the authors’ knowledge, this is the first research attempt on this topic.

Details

International Journal of Bank Marketing, vol. 38 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 6 August 2018

Qi Wang, Yan Sun, Ji Zhu and Xiaohang Zhang

The purpose of this paper is to research the effect of uncertain rewards on the recommendation intention in referral reward programs (RRPs) and investigate the interaction…

Abstract

Purpose

The purpose of this paper is to research the effect of uncertain rewards on the recommendation intention in referral reward programs (RRPs) and investigate the interaction of tie strength and reward type on the recommendation intention.

Design/methodology/approach

The research adopts a quantitative exploratory approach through the use of experiments. Study 1 adopted a 2×2 between-participants design ((reward type: certain reward vs uncertain reward)×(tie strength: strong tie vs weak tie)). Respectively, by manipulating uncertain probabilities and expected value, Studies 2 and 3 further explore the effect of uncertain rewards and tie strength on customers’ referral intention.

Findings

This paper finds the following: compared to certain rewards, customers’ referral intention under uncertain rewards is higher and positive experience has a mediating effect between reward type and recommendation intention; when only the recommender is rewarded, the tie strength between the recommender and the receiver moderates the effect of reward type on the recommendation intention; for strong ties, customers’ recommendation intention is higher in uncertain reward condition, but for weak ties, customers’ willingness to recommend is almost the same in both reward types; when both the recommender and the receiver are rewarded, although certain rewards have a higher expected value than uncertain and random rewards, for strong ties, the participants have a higher referral intention under random rewards than that under uncertain rewards, which have a higher referral willingness than that under certain rewards. Additionally, for weak ties, the reverse is true.

Originality/value

The research has both theoretical implications for research on uncertain rewards and tie strength and practical implications for marketing managers designing and implementing RRPs.

Details

Internet Research, vol. 28 no. 4
Type: Research Article
ISSN: 1066-2243

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Article
Publication date: 28 February 2019

Chanho Song, Tuo Wang and Michael Y. Hu

The purpose of this paper is to investigate how referral reward programs (RRPs) with scarcity messages influence consumer’ recommendation behavioral intentions about a…

Abstract

Purpose

The purpose of this paper is to investigate how referral reward programs (RRPs) with scarcity messages influence consumer’ recommendation behavioral intentions about a bank credit card.

Design/methodology/approach

In total, 1,599 consumers are accessed through Amazon’s Mechanical Turk worker panel. The authors use general linear models, analysis of variance and analysis of covariance to test the proposed hypotheses.

Findings

The results showed that offering RRPs with scarcity messages increases a consumer’s behavioral intentions to recommend. The limited-quantity message in RRPs has the highest positive impact on consumers’ behavioral intentions.

Originality/value

No prior studies have addressed the relationship between referral rewards and scarcity messages in the bank credit card context. The study contributes to the understanding of the effectiveness of RRPs with scarcity message in improving consumer’s referral.

Details

International Journal of Bank Marketing, vol. 37 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 16 July 2018

Depeng Zhang, Fuli Zhang, Si Liu and Helen S. Du

With the rise of customer engagement in online products and services innovation, enterprises are seeking effective referral reward program (RRP) to encourage customers…

Abstract

Purpose

With the rise of customer engagement in online products and services innovation, enterprises are seeking effective referral reward program (RRP) to encourage customers’ follow-up electronic-referral (e-referral) behaviors. Therefore, how to stimulate more customers to participate in the RRP is very important to enterprises. However, little empirical work has systemically investigated the impact of RRP on customers’ follow-up e-referral, as well as the moderating effects of customers’ characteristics. To fill those research gaps, the purpose of this paper is to explore the effects of RRP (particularly, reward amount and reward type) on customers’ follow-up e-referral, and the role of creative self-efficacy.

Design/methodology/approach

Based on the self-perception theory and the context of online customer innovation, this paper establishes a theoretical model and uses an experiment with 160 participants to test the hypotheses on the role of reward (amount and type) and the moderating effect of creative self-efficacy.

Findings

The results of the experiment suggest that both reward amount and reward type in RRP positively impact customers’ follow-up e-referral. Furthermore, customers’ creative self-efficacy moderates the relationship between rewards and customers’ follow-up e-referral. Customers with low creative self-efficacy, reward amount significantly stimulate their follow-up e-referral, but such effect is insignificant when customers’ creative self-efficacy is high. In terms of reward type, gift reward has more positive effect on customers’ follow-up e-referral when they have high (rather than low) creative self-efficacy, but cash reward has more positive effect on those with low (rather than high) creative self-efficacy.

Originality/value

First, based on the self-perception theory, the study clarifies the inconsistent relationship between reward and customers’ e-referral and contributes to related research. Second, the study broadens the existing research perspective by introducing creative self-efficacy, which shows interesting and powerful moderating effect but has been ignored in previous studies. Third, the study provides valuable advice on how enterprises design an effective RRP to enhance customers’ follow-up e-referral.

Details

Information Technology & People, vol. 32 no. 3
Type: Research Article
ISSN: 0959-3845

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Article
Publication date: 14 August 2019

Yimin Zhu and Peipei Lin

The purpose of this paper is to explore how the product type (hedonic product and utilitarian product) and reward type (hedonic gift and utilitarian gift) influence…

Abstract

Purpose

The purpose of this paper is to explore how the product type (hedonic product and utilitarian product) and reward type (hedonic gift and utilitarian gift) influence customer referral likelihood in referral reward program.

Design/methodology/approach

The authors test the effect of the product type and reward type on referral likelihood through two studies. Study 1 produces a 2 (product type: hedonic product and utilitarian product) × 2 (reward type: hedonic gift and utilitarian gift) factorial design to test H1, H2 and H3, that is, the effect of the product type and reward type on referral likelihood and their interaction effect. On the basis of study 1, study 2 will select different subjects, different products and different incentive allocation schemes to test H1, H2 and H3 again.

Findings

The results are as follow: first, the product type has significant influences on referral likelihood. Compared with a utilitarian product, customers are more likely to make referrals when consuming a hedonic product. Second, the product type and reward type have significant interactions to referral likelihood. When rewarded a hedonic gift, customers who consumed the hedonic product have great willing to make referrals; however, when rewarded the utilitarian gift, customer who consumed the utilitarian product have great willing to make referrals.

Originality/value

The authors’ findings contribute to the literature of consumers’ recommendation in the following aspects. First, from the perspective of enterprises which launch referral reward program, the present research demonstrates the product type (hedonic product and utilitarian product) and reward type (hedonic gift and utilitarian gift) influence customer referral likelihood. Previous studies discuss attributes of product that influence consumers’ referral likelihood, such as product sensitivity (Kornish and Li, 2010), product involvement (Zhu et al., 2011), brand strength (Ryu and Feick, 2007) and price (Xiao et al., 2011). However, few studies focus on the hedonic and utilitarian attributes of products and explore their impact on the willingness to recommend. This paper makes a useful supplement to the research gap. Most previous studies simply divide the type of reward into tangible and intangible (Shi and Wojnicki, 2007), cash and coupon (Wang, 2010) or cash and gift (Huang et al., 2013). This paper enriches the research on reward types and refines the types of gifts in a referral reward program. The present research divides the type of reward into hedonic gifts and utilitarian gifts, and applies benefit congruency frameworks (Chandon et al., 2000), attitude theory (Eagly and Chaiken, 1993) and over-justification effect (Deci and Ryan, 1985).

Details

Journal of Contemporary Marketing Science, vol. 2 no. 2
Type: Research Article
ISSN: 2516-7480

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Article
Publication date: 20 September 2018

Jochen Wirtz, Chris Tang and Dominik Georgi

Referral reward programs (RRPs) incentivize existing customers (inductors) to refer new customers (inductees). The effectiveness of RRPs is not well understood as previous…

Abstract

Purpose

Referral reward programs (RRPs) incentivize existing customers (inductors) to refer new customers (inductees). The effectiveness of RRPs is not well understood as previous studies either focused on referral intent and/or ignored inductee responses. However, an RRP is only effective if inductors recommend and inductees respond with buying the service. The purpose of this paper is to examine the drivers of existing customers’ successful referral behavior.

Design/methodology/approach

This study combines a bank’s customer relationship management (CRM) data which were used to identify successful inductors and non-inductors. Then, observed behavioral and customer background data from the CRM database (including successful referrals, deposits in euros, number of products held, relationship duration, income, age, and gender) were combined with survey data capturing attitudinal variables (i.e. perceived relationship quality, reward attractiveness, referral metaperception, opportunism, and involvement). This approach allowed for the simultaneous testing of all hypothesized drivers of successful referral behavior.

Findings

Metaperception (i.e. the process by which individuals determine the impressions other might form of them and their behavior) was the strongest and most significant driver of successful RRP participation, followed by attractiveness of the reward. That is, inductors recommended successfully when they believed that their incentivized referral did not look bad (or even looked good) and incentives were perceived as attractive. This finding is important as metaperception so far has only been examined in theoretical and experimental studies with intent as dependent variables. Second, latent class analysis (LCA) revealed that there were two segments of inductors of which one was opportunistic. Opportunism as a driver of referral behavior has not been shown in past research using more traditional analyses, whereas LCA uncovered it as a driver for one-third of all respondents.

Practical implications

The findings offer managers a better understanding of the key determinants of successful referral behavior with important RRP design implications that counter frequent practice (e.g. designing RRPs with high face value but then reducing its usefulness through terms and conditions). Furthermore, managers may consider segment-specific reward structures to improve the effectiveness of their RRPs.

Originality/value

This study is the first to examine inductor determinants of successful referral behavior and identify inductor segments.

Details

Journal of Service Management, vol. 30 no. 1
Type: Research Article
ISSN: 1757-5818

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Article
Publication date: 4 June 2018

Ya-Ling Chiu, Lu-Jui Chen, Jiangze Du and Yuan-Teng Hsu

The purpose of this study is to examine the effect of perceived value on customer loyalty through affective commitment in the online group-buying (OGB) context. This paper…

Abstract

Purpose

The purpose of this study is to examine the effect of perceived value on customer loyalty through affective commitment in the online group-buying (OGB) context. This paper addressed the following questions: what are the factors affecting customer loyalty (i.e. revisit intention and buy more intention); and how do referral rewards moderate the impact of affective commitment on customer loyalty?

Design/methodology/approach

All data were collected from OGB websites’ members in Taiwan. The total number of respondents to the online survey was 403. The data were analyzed using structural equation modeling (SEM) to test a perceived value–commitment–loyalty model.

Findings

This study shows that three proposed antecedents (i.e. OGB scheme value, hedonic value and social value) can trigger customer loyalty through affective commitment. Monetary savings, a variety of merchandise and aspirational products are all critical OGB scheme value components. The results also show that referral reward importance positively moderates the relationship between affective commitment and revisit intention.

Practical implications

The findings have implications for managing people and work tasks in OGB websites. First, understanding the importance of dimensions of value should enable OGB managers to develop more accurate targeting strategies. This study provides guidance on the design of the platform and the OGB scheme, for the effective allocating of marketing resources. Second, a referral reward mechanism can be a critical CRM tool; in addition to the potential to attract new customers, they can also help to retain existing customers. This mechanism is a very effective method to enhance customer stickiness.

Originality/value

The marketing literature generally recognizes the importance of developing and maintaining long-term relationships with customers. This study is the first one to explore the importance of affective commitment in developing and sustaining loyal relationships in the OGB context. Referral rewards are an important moderator variable: affective commitment has a stronger effect on the revisit intention when the referral rewards are high. The findings of this study provide insights into how OGB website developers can create customer commitment and more effectively retain existing customers through the use of referral rewards.

Details

Journal of Business & Industrial Marketing, vol. 33 no. 5
Type: Research Article
ISSN: 0885-8624

Keywords

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Article
Publication date: 6 February 2019

Jochen Wirtz, Chiara Orsingher and Hichang Cho

This paper aims to examine the psychological consequences of a customer engagement initiative through referral reward programs (RRPs) in online versus offline environments.

Abstract

Purpose

This paper aims to examine the psychological consequences of a customer engagement initiative through referral reward programs (RRPs) in online versus offline environments.

Design/methodology/approach

The authors conducted a qualitative study followed by a scenario-based experimental study.

Findings

The authors show that recommenders’ concern about how they are viewed by recommendation recipients (i.e. their metaperception) mediates the effects of incentives on referral likelihood in both offline and online environments. However, metaperception has a stronger effect offline where recommenders show higher impression management concerns compared to online. Furthermore, tie-strength and communication environment moderate the effect of incentives on metaperception. When referrals are made to weak-ties, incentives decrease metaperception favorability offline more than online. For strong-ties, this effect is lower, and it is similar in offline and online environments.

Research limitations/implications

The study focused on an online versus offline dyadic communication and did not consider the differences among social media. Furthermore, the authors did not consider how other forms of positive metaperception, like being seen as helpful or knowledgeable, could be increased in an online incentivized referral context. It is possible that a recommender thinks others see him as more helpful or knowledgeable online because a lot more useful information and other resources could be offered here compared to offline communications.

Practical implications

The authors recommend managers to design both online and offline RRPs that minimize metaperception concerns; target strong ties in any communication environment as metaperception concerns are low; and target weak ties online where metaperception concerns are muted.

Originality/value

This work is the first to examine how recommenders’ psychological responses differ offline and online.

Details

European Journal of Marketing, vol. 53 no. 9
Type: Research Article
ISSN: 0309-0566

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Book part
Publication date: 24 November 2010

Mahima Hada, Rajdeep Grewal and Gary L. Lilien

From the supplier firm's perspective, a referral is a recommendation from A (the referrer) to B (the potential customer) that B should, or should not, purchase from C (the…

Abstract

From the supplier firm's perspective, a referral is a recommendation from A (the referrer) to B (the potential customer) that B should, or should not, purchase from C (the supplier firm). Thus, as referrals are for a specific supplier firm, they should be viewed as part of the supplier firm's marketing and sales activities. We recognize three types of referrals – customer-to-potential customer referrals, horizontal referrals, and supplier-initiated referrals – that have critical roles in a potential customer's purchase decision. We develop the concept of referral equity to capture the net effect of all referrals for a supplier firm in the market. We argue that supplier firms should view referral equity as a resource that has financial value to the firm as it affects the firm's cash flows and profits. We offer strategies firms can use to manage referrals and build their referral equity and suggest a research agenda.

Details

Review of Marketing Research
Type: Book
ISBN: 978-0-85724-475-8

1 – 10 of over 2000