Paper Type

ERF

Abstract

The online referral reward program (ORRP) is a popular marketing strategy where existing users (i.e., referrers) advocate products or services to their peers (i.e., referees) via online social networks in exchange for financial incentives. However, introducing incentives conflicts with the social essence of ORRPs, resulting in referrers being reluctant to make referrals. Particularly, the incentive comparison between referrer and referee potentially serves as a primary source of the conflict. Hence, devising an effective incentive split strategy to enhance referrers' referral intention is crucial. Through an online experiment, the paper proposes that the uncertain (vs. certain) incentive split enhances referrers' referral intention by reducing the psychological barriers arising from benefit comparisons. This effect is moderated by the social relationship between the two parties. The study highlights the positive role of uncertainty in the social e-commerce context and offers suggestions for designing an effective incentive split mechanism for businesses.

Paper Number

1691

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Aug 16th, 12:00 AM

Embracing the Power of Uncertainty: The Positive Impact of Uncertain Incentive Split in Online Referral Reward Programs

The online referral reward program (ORRP) is a popular marketing strategy where existing users (i.e., referrers) advocate products or services to their peers (i.e., referees) via online social networks in exchange for financial incentives. However, introducing incentives conflicts with the social essence of ORRPs, resulting in referrers being reluctant to make referrals. Particularly, the incentive comparison between referrer and referee potentially serves as a primary source of the conflict. Hence, devising an effective incentive split strategy to enhance referrers' referral intention is crucial. Through an online experiment, the paper proposes that the uncertain (vs. certain) incentive split enhances referrers' referral intention by reducing the psychological barriers arising from benefit comparisons. This effect is moderated by the social relationship between the two parties. The study highlights the positive role of uncertainty in the social e-commerce context and offers suggestions for designing an effective incentive split mechanism for businesses.

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