Referral Contagion: Downstream Benefits of Customer Referrals

For your marketing

Possible founder application

Track whether acquired customers later refer others and test simple lifecycle reminders. Evaluate incremental referred-customer value net of reward cost; avoid treating the reported lift as a forecast for a different product.

Reported result

What the study found

Conditional on purchase activity, referred customers made 31%–57% more referrals than nonreferred customers in the field data. In a field experiment, reminding customers they joined through a referral further raised their likelihood of referring by 21% according to the publisher abstract.

Research question

What the authors investigated

Do customers acquired through referrals themselves generate more downstream referrals, and can that behavior be increased?

Design

A large-scale customer field dataset was combined with preregistered laboratory experiments and a field experiment that reminded customers how they had joined.

Sample and setting

The publisher abstract reports a large-scale field dataset but no total sample size; the author-hosted manuscript describes data from 41.2 million customers, two preregistered lab experiments, and one field experiment.

Scope and transfer

Limitations to keep in view

The field relationships may depend on the partner firms and customer contexts; the reminder intervention is a specific treatment. Referral propensity is not evidence that a referral program is profitable after incentives and servicing costs.

Research sources

Journal of Marketing Research abstract plus author-hosted manuscript; sample detail comes from the manuscript, and the 21% result follows the publisher abstract.