Unintended reward costs: The effectiveness of customer referral reward programs for innovative products and services

David Dose, Gianfranco Walsh, Sharon E. Beatty, Ralf Elsner

Research output: Contribution to journalArticle

Abstract

To encourage customers’ referral behavior and expand their customer base, providers of innovative products and services often use customer referral reward programs (CRPs), though not all CRPs deliver on their initial promise. With one field experiment and four online experiments, this research investigates the effectiveness of rewarded referrals for recruiting new customers for more innovative (versus less innovative) offerings and outlines the conditions in which public referral rewards have unintended ramifications and decrease customers’ referral likelihood. In addition to establishing these effects for more innovative offerings, this research identifies some moderating consequences, such that the detrimental effect of referral rewards on referral behavior can be attenuated by not disclosing referral rewards (for recommenders) to referral recipients, increasing the referral reward size, and rewarding both recommenders and referral recipients. These findings have theoretical and managerial implications.
LanguageEnglish
Pages438-459
Number of pages22
JournalJournal of the Academy of Marketing Science
Volume47
Issue number3
Early online date9 Feb 2019
DOIs
Publication statusPublished - 15 May 2019

Fingerprint

Costs
Referral
Reward programs
Reward
Experiment
Field experiment
Recruiting

Bibliographical note

© The Author(s) 2019. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

Keywords

  • Customer referral reward program
  • Innovative products and services
  • Reward scheme
  • Reward size
  • Reward visibility
  • Self-enhancement theory

Cite this

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Unintended reward costs: The effectiveness of customer referral reward programs for innovative products and services. / Dose, David; Walsh, Gianfranco; Beatty, Sharon E.; Elsner, Ralf.

In: Journal of the Academy of Marketing Science, Vol. 47, No. 3, 15.05.2019, p. 438-459.

Research output: Contribution to journalArticle

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