ONLINE REFERRAL REWARD PROGRAMMES: MOTIVATIONAL FACTORS BEHIND A REFERRAL

Abstract

Many businesses are adopting referral reward programmes to build their customer base. These programmes provide current customers with incentives or rewards to motivate them to spread referrals about the company to their family or friends. Despite the prevalence of referral reward programmes in several industries, there has been a lack of academic research specific to such programmes. This study focuses on three factors, namely incentives, tie strength and environmental context and analyses their collective impact on referral likelihood and metaperception; both of which being key components in the referral programme. Referral likelihood, describes the referral behaviour of the inductor while metaperception focuses on the inductor’s impression management concerns when making an incentivised referral. The most significant findings were that referral likelihood towards weak ties increases when referrals are conducted online due to the increased accessibility afforded by online communication platforms. In addition, impression management concerns were found to reduce in an online setting and coupled with the less intrusive nature of online referrals, lead to metaperception being perceived more favourably online than offline under incentivised conditions. This study also found that metaperception partially mediated the relationship between incentives - tie strength - environment and referral likelihood.