Why Prosocial Referral Incentives Work: The Interplay of Reputational Benefits and Action Costs

For your marketing

Possible founder application

Test whether reducing the recipient's cost or increasing their benefit works better than paying the referrer alone. Measure completed, retained customers and net contribution.

Reported result

What the study found

Across the experiments, recipient-benefiting prosocial referral incentives recruited more new customers than comparison incentives in the studied contexts.

Research question

What the authors investigated

When do referral incentives that benefit the recipient generate more referrals than incentives paid to the referrer?

Design

Two field experiments and a fully incentivized laboratory experiment compare prosocial, recipient-benefiting incentives with alternative reward structures and test reputational benefits and action costs.

Sample and setting

Participants in two referral-program field settings and an incentivized lab experiment; the publisher abstract reviewed does not give sample sizes.

Scope and transfer

Limitations to keep in view

Reward effectiveness depends on the product, action cost and social meaning of the referral. Abstract-level results do not establish profitability after reward expense or generalize every program to a prosocial reward.

Research sources

Journal of Marketing Research abstract and bibliographic record; experiment count and headline comparison are reported in the abstract.