The effects of incentives, deal proneness, satisfaction and tie strength on word-of-mouth behaviour

Abstract

Although more than 30 years of research has established the power of word-of-mouth (WOM), little work has focused on how it could be managed more effectively. This study examines how incentives would work to actively encourage WOM, and how incentives would potentially interact with other variables that have been shown to drive WOM. In particular, a 3 × 3 × 2 experiment was conducted to examine the impact of incentives, tie-strength, and satisfaction on WOM behavior. Consumer deal proneness was investigated using a quasi-experimental design. Suggests from the findings that satisfaction does not necessarily increase the likelihood of WOM being generated. Shows incentives to be an effective catalyst to increase the likelihood of WOM being generated by satisfied consumers and tie strength to be an important variable in explaining WOM behavior. Suggests from the findings that deal prone consumers generate more WOM, independent of incentives. The findings have important implications, and suggest that satisfied customers are a necessary but not sufficient condition for getting positive WOM, and that incentives may be an effective way to get satisfied customers to recommend a firm. Furthermore, incentive programs targeted at strong ties are likely to be more effective than those targeted at weak ties, provided customers are genuinely happy with the service provided.