When Giving Money Does Not Work: The Differential Effects of Monetary Versus In-Kind Rewards in Referral Reward Programs

Jin, Liyin; Huang, Yunhui

doi:10.2139/ssrn.2315011

Cited by 36 publications

(109 citation statements)

References 39 publications

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“…Findings may also fail to generalize to hierarchical loyalty programs, where preferential treatment, thus mostly nonmonetary rewards, is of greater prominence (Eggert et al, 2015). Finally, it is possible that results are different, if customers encounter a loyalty program through the social setting of referrals (Jin & Huang, 2014). Future research is needed to identify whether the way in which rewards are presented affects preference for them.…”

Section: Open Questions and Directions For Future Researchmentioning

confidence: 99%

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Attracting new customers to loyalty programs: The effectiveness of monetary versus nonmonetary loyalty programs

Ruževičiūtė

Kamleitner

2017

J of Consumer Behaviour

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What type of reward attracts customers to loyalty programs? Given the increasing importance of loyalty programs, this question matters. Six sequential studies investigated whether monetary rewards universally attract people more than nonmonetary rewards. Results suggest that monetary rewards elicit a very robust attractiveness premium both on the level of individual rewards as well as on the level of entire reward programs. Across different industries, the more monetary loyalty program was consistently perceived as more attractive, and it was more likely to inspire intentions to join the program. Even in light of variations in consumption goals (hedonic vs. utilitarian), the effect persisted. The effect is not only consistent; it is also nonnegligible with medium effect sizes emerging in most settings. We discuss ensuing variations in effect sizes and conclude that monetarism holds a pervasive temptation for consumers that managers cannot ignore.

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Section: Open Questions and Directions For Future Researchmentioning

confidence: 99%

“…Moreover, monetary rewards are easy to understand, and by being instrumental, they offer the type of utility (Furinto et al, 2009;Jin & Huang, 2014) people are often seeking in service settings (Blattberg & Neslin, 1993). Evidence from neuroscience bolsters the presumed power of monetary rewards.…”

Section: Reward Monetarism and Attractivenessmentioning

confidence: 99%

Attracting new customers to loyalty programs: The effectiveness of monetary versus nonmonetary loyalty programs

Ruževičiūtė

Kamleitner

2017

J of Consumer Behaviour

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“…In this regard, both the reward and the brand will decisively shape the underlying process that drives customers to take part in CRPs. This assumption is mirrored by the attention past research has given to the relationship between recommendation behavior and brands (e.g., Lovett, Peres, & Shachar, 2013) and CRP effectiveness and rewards (e.g., Jin & Huang, 2014).…”

Section: Conceptual and Theoretical Background A Process Perspective mentioning

confidence: 99%

“…Brands that are valued by customers are characterized by a superior product quality (Bénabou & Tirole, 2006;Homburg, Müller, & Klarmann, 2011), engender trust (Keller & Lehmann, 2006), and imply the possibility of customer satisfaction (Jin & Huang, 2014). Further, such brands carry a lower perceived risk with regard to their performance (Smith & Park, 1992).…”

Section: A Schema Congruity Theory Perspectivementioning

confidence: 99%

“…Further, such brands carry a lower perceived risk with regard to their performance (Smith & Park, 1992). Jin and Huang (2014) therefore reason that also recommending such a strong brand bears a smaller risk for the recommender compared to referring a weak brand with regard to the social costs associated with unreliable advice. A rich body of customer recommendation behavior literature (e.g., Carroll & Ahuvia, 2006;Chung & Darke, 2006;De Matos & Rossi, 2008) lends support for the argument that brands being more favorably evaluated by customers are more likely to be recommended.…”

Section: A Schema Congruity Theory Perspectivementioning

confidence: 99%

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Customer Referral Reward–Brand–Fit: A Schema Congruity Perspective

Stumpf

Baum

2016

Psychology and Marketing

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Customer referral programs (CRPs) are widely applied as an effective means to stimulate word‐of‐mouth. While previous research mainly focuses on CRPs’ impact of acquiring new customers, this study introduces referral programs as a strategic brand management tool. In doing so, this article emphasizes what has been largely neglected by scholars: A “recommenders‐perspective.” Guided by two competing theoretical perspectives, this article proposes that the perceived congruity between a reward and the recommended brand is an essential driver of referral program performance outcomes. The results show that rewards that conform to the image of the recommended brand yield more favorable reward attractiveness perceptions. Furthermore, the authors show that reward attractiveness perceptions inevitably affect the brand customers are asked to recommend in exchange for receiving this reward. The research reported here extends the literature on judgmental evaluations resulting from schema‐based processing and provides novel insights into the design of CRPs.

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How scarcity and thinking styles boost referral effectiveness

Ang

Gerrath

Liu

2021

Psychology and Marketing

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Referral reward programs (RRPs) are a widely used tool to stimulate word-of-mouth (WOM). However, marketers still face a dilemma-while incentivization encourages senders to make referrals, recipients often react negatively towards such incentives.We propose a solution-referral scarcity-to improve referral effectiveness depending on thinking style. Three experiments show that limiting the number of referral rewards makes holistic-thinking recipients feel more special, boosting their referral acceptance and RRP evaluations. We replicate these effects across various contexts and in the relationship norm most common for referrals-exchange norm.Our findings theoretically contribute to the research on incentivized WOM, scarcity appeals, and thinking styles. We also demonstrate how marketers can adopt senderbenefiting referral rewards to maximize its dissemination and acceptance while identifying the consumer segment where it would be most effective.

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When Giving Money Does Not Work: The Differential Effects of Monetary Versus In-Kind Rewards in Referral Reward Programs

Cited by 36 publications

References 39 publications

Attracting new customers to loyalty programs: The effectiveness of monetary versus nonmonetary loyalty programs

Attracting new customers to loyalty programs: The effectiveness of monetary versus nonmonetary loyalty programs

Customer Referral Reward–Brand–Fit: A Schema Congruity Perspective

How scarcity and thinking styles boost referral effectiveness

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