The underlying premise of referral marketing is to target existing ostensibly delighted customers to spread awareness and influence adoption of a focal product among their friends who are also likely to benefit from adopting the product. In other words, referral programs are designed to accelerate organic word-of-mouth (WOM) exposure using financial incentives. This poses a challenge, in that it mixes an intrinsically motivated process (stemming from the desire to share a customer’s delight with a product or a service) with an extrinsic trigger in the form of a financial incentive. In this paper, we demonstrate how firms can benefit from framing calls-to-action for referral programs in such a way as to move closer to the original intent of organic, intrinsically motivated WOM marketing, and yet at the same time reap the benefits of using a financial incentive to increase referral rates. In particular, via two large-scale randomized field experiment involving 100,000 customers each, we show the efficacy of a prosocial call-to-action over some of the more commonly used calls-to-action observed in practice. Additional mechanism-level analysis confirms the importance of an altruistic element in generating a higher quality of advocacy and reducing referral frictions.

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Online matching platforms require new approaches to market design because firms can now control many aspects of the search and interaction process through various IT-enabled features. Although choice capacity—the number of candidates a user can view and select—is a key design feature of online matching platforms, its effect on engagement and matching outcomes remains unclear. We examine the effect of different choice capacities on market performance by conducting a randomized field experiment in collaboration with an online dating platform. Specifically, we design four treatment groups with different choice capacities in which users can only interact with other users in the same group and randomly assign the users to the treatment groups. We find that providing more choice capacity to male and female users has different effects on choice behaviors and matching outcomes. Although increasing the choice capacity of male users yields the highest engagement, increasing the choice capacity of female users is the most effective method to increase matching outcomes. We empirically demonstrate four mechanisms underlying the effectiveness of different choice capacity designs and generalize our findings by discussing how choice capacity can be designed to increase engagement and matching outcomes.

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