Increasing participation rates in customer referral programs: The surprising power of disclosing referrer-incentive

Abstract：   

Customer referral program (“refer a friend, reward yourself!”) is a popular means of acquiring new customers. Referral programs usually reward the referrer (i.e., their current customer) and the referee (i.e.,the current customer’s friend) together, contingent on the referee’s purchase. However, currently most companies only include referee-incentive in the referral message (e.g., “You will get $10 off your first order!”) that customers send to their friends. We propose and show that adding referrer-incentive into the referral message (“I will get $10 off my next order too!”) can increase customers’ likelihood of sending the referral message, because it changes the perception of the referral message from a sales pitch (“It’s good for you!”) to an invitation to cooperate (“It’s a win-win for us!”), which is more acceptable in communal relationships. Five studies lend support to this framework, in the context of different product/service domains (e.g., a meal delivery service, a music streaming service, a coffee shop). 

Speaker Biography：

Yanping Tu is an Assistant Professor of Marketing at the University of Florida. She studies social influence, judgment and decision making, motivation, and happiness. Her work has been published in major marketing and psychology journals, such as the Journal of Consumer Research and the Journal of Personality and Social Psychology, and been covered by major media, such as the New York Times, Harvard Business Review, The Economist, Scientific American, NPR, and so on. She holds a PhD in Marketing and an MBA from the University of Chicago, and a BS in Psychology and BA in Economics from Peking University.