Electronic word of mouth: The effects of incentives on e‐referrals by senders and receivers

Purpose – The purpose of this work is to test several incentive strategies for attaining new customers via electronic referrals, or e‐referrals. The paper aims to examine: the roles of both the magnitude of the incentive offered to the sender and the magnitude of the incentive offered to the receiver; and the effect of equity versus inequity of financial incentives for the two parties.Design/methodology/approach – The study consisted of a large‐scale field experiment conducted with 45,000 members of an online mall. The participants were divided into eight conditions in an incomplete two‐factor 4×4 between‐subjects design, where not every combination of incentive magnitudes was utilized and the magnitude of the incentive offered the receiver and sender varied in size such that sometimes rewards were equal, sometimes receivers of the e‐referral had larger rewards, and sometimes senders of the e‐referral s received more. Dependent measures included the number of e‐referrals sent, the number of those e‐referr...

[1]  J. S. Adams,et al.  TOWARD AN UNDERSTANDING OF INEQUITY. , 1963, Journal of abnormal psychology.

[2]  Adams Js.  Towards an understanding of inequity , 1963 .

[3]  George S. Day,et al.  Attitude change, media and word of mouth. , 1971 .

[4]  G. W. Walster,et al.  New directions in equity research. , 1973 .

[5]  William R. Swinyard,et al.  Information Response Models: An Integrated Approach , 1982 .

[6]  Linda L. Price,et al.  The market maven: A diffuser of marketplace information. , 1987 .

[7]  Marsha L. Richins,et al.  The Role of Evolvement and Opinion Leadership in Consumer Word-Of-Mouth: an Implicit Model Made Explicit , 1988 .

[8]  E. Anderson.  Customer Satisfaction and Word of Mouth , 1998 .

[9]  Cynthia M. Webster,et al.  Word-Of-Mouth Communications: a Motivational Analysis , 1998 .

[10]  Eyal Biyalogorsky,et al.  Customer Referral Management: Optimal Reward Programs , 2000 .

[11]  Jochen Wirtz,et al.  The effects of incentives, deal proneness, satisfaction and tie strength on word‐of‐mouth behaviour , 2002 .

[12]  S. Hunt,et al.  The Identity Salience Model of Relationship Marketing Success: The Case of Nonprofit Marketing , 2003 .

[13]  Dwayne D. Gremler,et al.  Electronic word-of-mouth via consumer-opinion platforms: What motivates consumers to articulate themselves on the Internet? , 2004 .

[14]  Ellen Garbarino,et al.  GENDER DIFFERENCES IN THE PERCEIVED RISK OF BUYING ONLINE AND THE EFFECTS OF RECEIVING A SITE RECOMMENDATION , 2004 .

[15]  Tomás Bayón,et al.  The effect of word of mouth on services switching , 2004 .

[16]  Peeter W. J. Verlegh,et al.  The Firm's Management of Social Interactions , 2005 .

[17]  R. Goldsmith,et al.  Market mavens: Psychological influences , 2005 .

[18]  Jen-Hung Huang,et al.  Herding in online product choice , 2006 .

[19]  Seounmi Youn,et al.  Online Word-of-Mouth (or Mouse): An Exploration of Its Antecedents and Consequences , 2006, J. Comput. Mediat. Commun..

[20]  Yong Liu.  Word-of-Mouth for Movies: Its Dynamics and Impact on Box Office Revenue , 2006 .

[21]  Dina Mayzlin,et al.  Promotional Chat on the Internet , 2006 .

[22]  Namir,et al.  Authors , 1947, Praxis der Kinderpsychologie und Kinderpsychiatrie.

[23]  D. Watts,et al.  Influentials, Networks, and Public Opinion Formation , 2007 .

[24]  James R. Coyle,et al.  Reconsidering Models of Influence: The Relationship between Consumer Social Networks and Word-of-Mouth Effectiveness , 2007, Journal of Advertising Research.

[25]  Hervé Mesure.  Freakonomics: A Rogue Economist Explores the Hidden Side of Everything20074Steven D. Levitt and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Harmondsworth: Penguin 2005. 357 pp. , 2007 .

[26]  Lawrence Feick,et al.  A Penny for Your Thoughts: Referral Reward Programs and Referral Likelihood: , 2007 .

[27]  Aviv Shoham,et al.  Opinion leaders and followers: A replication and extension , 2008 .

[28]  Elizabeth W. Dunn,et al.  Spending Money on Others Promotes Happiness , 2008, Science.

[29]  Jason Ho,et al.  Viral marketing: Motivations to forward online content , 2010 .

[30]  A. Hama.  Predictably Irrational: The Hidden Forces That Shape Our Decisions , 2010 .

[31]  William P. Neace,et al.  ‘Click here to share with a friend’: a uses and gratifications approach to word-of-mouth marketing effectiveness , 2011 .

[32]  George R. Milne,et al.  Spreading the word through likes on Facebook: Evaluating the message strategy effectiveness of Fortune 500 companies , 2013 .

[33]  Heikki Karjaluoto,et al.  Are Facebook brand community members truly loyal to the brand? , 2015, Comput. Hum. Behav..