Examining Customer Referral Reward Programs: Does Reward Fairness Matter?

David Dose, Gianfranco Walsh

    Research output: Chapter in Book/Report/Conference proceedingConference publication

    Abstract

    Customer referral reward programs (CRPs) are an important and widespread marketing tool in various service industries. However, the effectiveness of CRPs is contingent on the success of the recommender–receiver interaction. This research focuses on reward schemes, that is, systems that involve payments from service providers to customers that help the provider acquire new customers. Specifically, the authors investigate situations in which the referral reward is split between recommender and referral receiver, whereby both parties negotiate how much of the referral reward each party receives. In studying referral-reward allocations the present research investigates an important issue regarding the effectiveness of CRPs in general and the recommender–receiver interaction in particular. Building on equity aversion models, the authors show that rewarding only the recommender brings about perceptions of unfairness on part of the referral receiver, resulting in disruptive behavior and inefficient referral processes. The results expand the existing theoretical assumption that CRPs are continuously controlled by firms and indicate that due to biases in fairness perceptions the interaction between recommender and referral receiver remains unpredictable and difficult to control for referring firms. However, results also reveal that tie strength cushions the effect of biased fairness perceptions on successful referral processes.
    Original languageEnglish
    Title of host publicationRediscovering the Essentiality of Marketing. Developments in Marketing Science:
    Subtitle of host publication Proceedings of the Academy of Marketing Science.
    PublisherSpringer
    Pages893-893
    ISBN (Electronic)978-3-319-29877-1
    ISBN (Print)978-3-319-29876-4
    DOIs
    Publication statusPublished - 28 Jun 2016
    EventAcademy of Marketing Science World Marketing Congress - Università degli Studi di Bari "Aldo Moro", Bari, Italy
    Duration: 14 Jul 201518 Jul 2015

    Congress

    CongressAcademy of Marketing Science World Marketing Congress
    CountryItaly
    CityBari
    Period14/07/1518/07/15

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