The Impact of Referral Reward Programs on Customer Value: Evidence from the Restaurant Market
Authors: 
Yanan Zheng, Fei Wan, Linyuan HuAuthors Info & Claims
Pages 97 - 103
Abstract
Despite the extensive use of referral reward programs (RRPs), there is uncertainty about their effectiveness. We empirically examine the effect of RRPs on customer retention and which type of referrals is more valuable in the restaurant market under the “reward both” scheme. Based on social enrichment theory, the relationship between referrals and the firm is enriched because of the existence of referrers. Based on data from cafe referral records, we first test the effect of RRPs on referrals’ retention and find that referrals have shorter retention than non-referrals. Further, we examine which type of referrals is more valuable, and find that the referrals who are retained after the first month and have referred others have higher customer value in terms of purchase quantity and amount. Thus, restaurant marketing practitioners could arrange the RRPs according to product nature and develop tactics to encourage the referrals to refer continuously.
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Published In
July 2022
691 pages
ISBN:9781450396394
DOI:10.1145/3556089
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Published: 30 November 2022
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- Research-article
- Research
- Refereed limited
Funding Sources
- Shanghai Pujiang Program
- National Natural Science Foundation of China
- Fundamental Research Funds for the Central Universities
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ICEME 2022
ICEME 2022: 2022 13th International Conference on E-business, Management and Economics
July 16 - 18, 2022
Beijing, China
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