Growing Existing Customers’ Revenue Streams Through Customer Referral Programs

For your marketing

Possible founder application

Evaluate both sides of referral programs: the acquired customer and the referrer. If participation is self-selected, use a randomized encouragement or carefully designed comparison before attributing retention changes to the program.

Reported result

What the study found

Within a year, recommenders’ defection rate fell from 19% to 7%, and their average monthly revenue rose by 11.4% versus the matched control group. The loyalty effect was stronger among customers with shorter prior tenure.

Research question

What the authors investigated

Does participating in a referral program change the behavior and value of the existing customer who makes the recommendation?

Design

Using customer data from a global cellular telecommunications provider, the authors compare participating recommenders with a matched control group and report a field experiment on subsequent customer behavior.

Sample and setting

Existing customers of one global cellular telecommunications provider; the abstract reports a one-year defection and revenue comparison.

Scope and transfer

Limitations to keep in view

One telecommunications provider and one program context. The abstract does not report sample size or enough assignment detail to assess all sources of selection; the reported changes should not be assumed for other products or referral mechanics.

Research sources

Journal publisher abstract; profile reports only the summarized provider setting and headline outcomes. Sample size and detailed assignment methods were not available in the abstract reviewed.