Saving Face While Earning Rewards: Reward-Both Referral Programs More Effectively Elicit Referrals for Experiential Purchases than Reward-Me Programs

Companies offer rewards when an existing customer invites a new customer to try their product, but the recipient of the reward varies depending on the type of referral program. In Reward-Me programs, only the recommending customer is rewarded, while in Reward-Both programs, both the recommender and the recipient who acts on the recommendation are rewarded. We examined whether purchase type (material vs. experiential) moderates the impact of a reward program on referral likelihood. The results reveal that purchase type does moderate referral likelihood across the two types of reward programs: for material purchases, referral likelihood does not differ between the two referral programs, whereas for experiential purchases, referral likelihood is greater under Reward-Both programs than under Reward-Me programs.