Reward More Can Referral Better? Combined New and Current Customers

Presenter Information

BAOHUAN zhou, School of Management, University of Science and Technology of China,Follow
YAOZONG ZHU, School of Management, University of Science and Technology of China,Follow
Liang Liang, Hefei University of TechnologyFollow
PINGFAN WANG, School of Management, University of Science and Technology of China,Follow
Jiantao Zhu, University of Science and Technology of ChinaFollow

Paper Number

1223

Paper Type

Complete

Abstract

Referral reward programs are a popular word-of-mouth marketing strategy, but determining the optimal reward size remains a challenge. While larger rewards incentivize referrals, they can negatively impact new customer profitability. This study addresses this trade-off by examining the combined effect of reward size on both new and existing customer profitability. We conducted a field experiment and applied a novel DEA-PSM-OLS framework to analyze data from a digital content company. Our findings reveal that a moderate reward size outperforms both small and large rewards, suggesting that maximizing referral program effectiveness requires a balanced approach that considers the value generated by both new and existing customers.

Comments

01-DigitalPlatforms

Recommended Citation

zhou, BAOHUAN; ZHU, YAOZONG; Liang, Liang; WANG, PINGFAN; and Zhu, Jiantao, "Reward More Can Referral Better? Combined New and Current Customers" (2024). ICIS 2024 Proceedings. 7.
https://aisel.aisnet.org/icis2024/digital_emergsoc/digital_emergsoc/7