Acquisition and retention · Field experiment and archival generalization study
Referral Reward Size and New Customer Profitability
Wolters, H. M., Schulze, C., & Gedenk, K. (2020). Marketing Science, 39(6), 1166–1180.
Plain-English take
Larger referral rewards acquired more new customers but considerably decreased the profitability of referred customers in both studies. For your marketing: Evaluate referrals on net customer profitability, not just the number of signups.
How much weight to give this
3.5/5 Useful evidence with meaningful caveats
The 1–5 evidence-check score is a practical reading aid, not a formal peer review or a probability that a conclusion is true. It combines design strength (2 points), sample reporting (1), comparison/control clarity (1), and how much of the paper could be checked (1). Access affects how confidently this directory can assess a study, not the study's underlying quality. Blinding is reported separately because it is not relevant to every design.
An experiment is useful for causal evidence, but the accessible profile does not establish random assignment.
A usable sample size is not stated in the profile's accessible source.
Experimental comparison is described; randomization or control details need checking in the paper.
This profile could be checked against an abstract or metadata, not the full paper.
Double-blind? Blinding is not reported in the source reviewed; that does not establish whether blinding was or was not used.
Research question
What the authors investigated
How does referral reward size affect the number and profitability of newly referred customers?
Design
A field experiment involving bank customers is complemented by archival data from a telecommunications provider to assess generalizability.
Sample and setting
More than 160,000 bank customers in the experiment and approximately 270,000 telecommunications customers in the archival analysis.
Reported result
What the study found
Larger referral rewards acquired more new customers but considerably decreased the profitability of referred customers in both studies.
This is a paraphrase of the source. Check the original paper for definitions, estimates, statistical uncertainty and analysis details.
Scope and transfer
Limitations to keep in view
The evidence comes from banking and telecommunications programs; reward economics and customer behavior may differ for software. The abstract does not provide the exact optimal reward size for other programs.
Possible founder application
Evaluate referrals on net customer profitability, not just the number of signups. Test reward levels with margin, retention and reward cost included in the outcome.
Evidence access
Publisher abstract and JSTOR preview
INFORMS publisher metadata and abstract, corroborated by the journal preview; both sample contexts and central tradeoff are reported in the source.
If only an abstract or metadata was available, the profile is limited to claims supported there. A paper's paywall does not change its evidentiary status, but it limits what we can substantiate from accessible text.