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1 – 10 of over 2000Chanho 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 close or…
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.
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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.
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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 of tie…
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.
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Xiaojing Zhang and Yulin Zhang
This study highlights the effect of an inductee's altruism on referral reward programs (RRPs) on an online shopping guide platform to determine the optimal RRP and referral reward…
Abstract
Purpose
This study highlights the effect of an inductee's altruism on referral reward programs (RRPs) on an online shopping guide platform to determine the optimal RRP and referral reward allocation under a Cashback and Referral RRP.
Design/methodology/approach
The authors consider a Stackelberg game with a platform, seller, inductor and inductee, where the inductee's altruism plays a vital role in determining the optimal RRP in equilibrium.
Findings
The authors show that the conditions under which it is optimal to reward the inductor only or reward both inductor and inductee are equal or unequal depending on the degree of the inductee's altruism. Suppose the platform is unable to dynamically decide the commission fee. In that case, the platform may not always be involved in RRPs and will gradually reduce the rewards for inductees as the altruism increases.
Research limitations/implications
This study focuses on a free-to-consumers model where sellers pay membership fees. Thus, this study has limitations regarding other pricing schemes such as a model in which consumers pay a fee while sellers do not or a model in which both types of users pay fees.
Practical implications
This analytical work can help platforms optimize referral reward strategies and referral reward allocation considering the influence of an inductee's altruism.
Originality/value
In a Cashback and Referral RRP on a shopping guide platform, the authors provide applicable conditions for the platform to involve in the RRPs when rewarding an equal bonus for the inductor and inductee first. Further, the authors show the optimal referral reward strategy and referral reward allocation when giving the different bonuses to the inductor and inductee.
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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 bank credit…
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.
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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’ follow-up…
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.
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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 customer…
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).
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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 studies…
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.
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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.
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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.
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