Psychological drivers of referral reward program effectiveness
ISSN: 0887-6045
Article publication date: 27 November 2017
Issue publication date: 23 April 2018
Abstract
Purpose
Empirical research presents conflicting findings with regards to the effectiveness of referral reward programs (RRPs) and supports two alternative and conflicting views on the effectiveness of incentivizing recommendations. They are, first, a positive effect via perceived attractiveness of the incentive, and second, a negative effect via metaperception of the recommendation. The purpose of this paper is to examine these two opposing psychological mechanisms to reconcile the conflicting findings.
Design/methodology/approach
The authors conducted three experiments. Study 1 tests the base model. Studies 2 and 3 add moderators to test whether each mediating variable operates exclusively on its intended relationship.
Findings
Incentive size enhanced the attractiveness of an incentive, but reduced the metaperception favorability of the recommendation. These two opposing mechanisms operated in parallel, independently and fully mediated the effects of incentive size to likelihood of making a recommendation. Thus, the net impact of incentives on recommendation behavior depended on the relative strengths of these two opposing forces.
Practical implications
The study recommends managers to design RRPs with incentives that recommenders perceive as highly useful (i.e. to increase attractiveness) but have a low face value (i.e. to reduce metaperception concerns) and to target RRPs to strong rather than weak ties.
Originality/value
Our work offers an integrated theoretical account of consumers’ responses to incentivized recommendations and provides managerially relevant guidelines for the design of effective RRPs.
Keywords
Citation
Orsingher, C. and Wirtz, J. (2018), "Psychological drivers of referral reward program effectiveness", Journal of Services Marketing, Vol. 32 No. 3, pp. 256-268. https://doi.org/10.1108/JSM-07-2017-0247
Publisher
:Emerald Publishing Limited
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