IDEAS home Printed from https://ideas.repec.org/a/spr/joamsc/v46y2018i6d10.1007_s11747-018-0603-8.html
   My bibliography  Save this article

Understanding the quality–quantity conundrum of customer referral programs: effects of contribution margin, extraversion, and opinion leadership

Author

Listed:
  • Vijay Viswanathan

    (Northwestern University)

  • Sebastian Tillmanns

    (Department of Management, Technology, and Economics, ETH Zürich)

  • Manfred Krafft

    (University of Münster)

  • Daniel Asselmann

    (University of Münster)

Abstract

Firms can substantially profit from customer referrals, but they must understand the different stages of the referral process to determine what drives the number of referrals (first stage), conversion (second stage), and average contribution margin per referral (third stage). Applying a framework that integrates perceptual and behavioral drivers, this study uses a financial services company’s customer survey and transaction data to investigate how the effect of contribution margins of referring customers at all three stages depends on their perceived extraversion and opinion leadership. Extreme extraversion and opinion leadership diminish the positive effect of the contribution margins of referring customers on the number of referrals; their effect on the number of successful referrals is insignificant. In terms of the contribution margin of successful referrals, extraversion has a negative and opinion leadership a positive moderating effect.

Suggested Citation

  • Vijay Viswanathan & Sebastian Tillmanns & Manfred Krafft & Daniel Asselmann, 2018. "Understanding the quality–quantity conundrum of customer referral programs: effects of contribution margin, extraversion, and opinion leadership," Journal of the Academy of Marketing Science, Springer, vol. 46(6), pages 1108-1132, November.
    • Handle: RePEc:spr:joamsc:v:46:y:2018:i:6:d:10.1007_s11747-018-0603-8
    DOI: 10.1007/s11747-018-0603-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11747-018-0603-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11747-018-0603-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. J. W. B. Bos & M. Koetter, 2011. "Handling losses in translog profit models," Applied Economics, Taylor & Francis Journals, vol. 43(3), pages 307-312.
    2. Michael Haenlein, 2011. "A social network analysis of customer-level revenue distribution," Marketing Letters, Springer, vol. 22(1), pages 15-29, March.
    3. De Bruyn, Arnaud & Lilien, Gary L., 2008. "A multi-stage model of word-of-mouth influence through viral marketing," International Journal of Research in Marketing, Elsevier, vol. 25(3), pages 151-163.
    4. Gilles Laurent & Pierre Chandon & Brian Wansink, 2000. "A Benefit Congruency Framework of Sales Promotion Effectiveness," Post-Print hal-00458440, HAL.
    5. David Godes & Dina Mayzlin, 2009. "Firm-Created Word-of-Mouth Communication: Evidence from a Field Test," Marketing Science, INFORMS, vol. 28(4), pages 721-739, 07-08.
    6. Karlis, Dimitris & Ntzoufras, Ioannis, 2005. "Bivariate Poisson and Diagonal Inflated Bivariate Poisson Regression Models in R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 14(i10).
    7. Lichtenstein, Donald R & Netemeyer, Richard G & Burton, Scot, 1995. "Assessing the Domain Specificity of Deal Proneness: A Field Study," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 22(3), pages 314-326, December.
    8. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    9. Viswanathan, Vijay & Sese, F. Javier & Krafft, Manfred, 2017. "Social influence in the adoption of a B2B loyalty program: The role of elite status members," International Journal of Research in Marketing, Elsevier, vol. 34(4), pages 901-918.
    10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    11. Eyal Biyalogorsky & Eitan Gerstner & Barak Libai, 2001. "Customer Referral Management: Optimal Reward Programs," Marketing Science, INFORMS, vol. 20(1), pages 82-95, August.
    12. Armelini, Guillermo & Barrot, Christian & Becker, Jan U., 2015. "Referral programs, customer value, and the relevance of dyadic characteristics," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 449-452.
    13. Brown, Jacqueline Johnson & Reingen, Peter H, 1987. "Social Ties and Word-of-Mouth Referral Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 14(3), pages 350-362, December.
    14. Hogan, John E. & Lemon, Katherine N. & Libai, Barak, 2004. "Quantifying the Ripple: Word-of-Mouth and Advertising Effectiveness," Journal of Advertising Research, Cambridge University Press, vol. 44(3), pages 271-280, September.
    15. Mano, Haim & Oliver, Richard L, 1993. "Assessing the Dimensionality and Structure of the Consumption Experience: Evaluation, Feeling, and Satisfaction," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 20(3), pages 451-466, December.
    16. LAURENT, Gilles & CHANDON, Pierre & WANSINK, Brian, 2000. "A benefit congruency framework of sales promotion effectiveness," HEC Research Papers Series 698, HEC Paris.
    17. Mooradian, Todd A. & Swan, K. Scott, 2006. "Personality-and-culture: The case of national extraversion and word-of-mouth," Journal of Business Research, Elsevier, vol. 59(6), pages 778-785, June.
    18. Jin, Liyin & Huang, Yunhui, 2014. "When giving money does not work: The differential effects of monetary versus in-kind rewards in referral reward programs," International Journal of Research in Marketing, Elsevier, vol. 31(1), pages 107-116.
    19. Sun, Baohong & Morwitz, Vicki G., 2010. "Stated intentions and purchase behavior: A unified model," International Journal of Research in Marketing, Elsevier, vol. 27(4), pages 356-366.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krafft, Manfred & Kumar, V. & Harmeling, Colleen & Singh, Siddharth & Zhu, Ting & Chen, Jialie & Duncan, Tom & Fortin, Whitney & Rosa, Erin, 2021. "Insight is power: Understanding the terms of the consumer-firm data exchange," Journal of Retailing, Elsevier, vol. 97(1), pages 133-149.
    2. Mohamad Saifudin Mohamad Saleh & Ali Mehellou & Bahiyah Omar, 2023. "The Influence of Islamic Values on Sustainable Lifestyle: The Moderating Role of Opinion Leaders," Sustainability, MDPI, vol. 15(11), pages 1-20, May.
    3. Heike M. Wolters & Christian Schulze & Karen Gedenk, 2020. "Referral Reward Size and New Customer Profitability," Marketing Science, INFORMS, vol. 39(6), pages 1166-1180, November.
    4. Hemant C. Sashittal & Avan R. Jassawalla, 0. "The personal influence of Instagram bloggers on consumer–brand interactions: brands as tribal artifacts," Journal of Brand Management, Palgrave Macmillan, vol. 0, pages 1-12.
    5. Di Kuang & Xiao-Fei Li & Wen-Wen Bi, 2021. "How to Effectively Design Referral Rewards to Increase the Referral Likelihood for Green Products," Sustainability, MDPI, vol. 13(13), pages 1-16, June.
    6. Itani, Omar S. & El Haddad, Rania & Kalra, Ashish, 2020. "Exploring the role of extrovert-introvert customers’ personality prototype as a driver of customer engagement: Does relationship duration matter?," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    7. Hemant C. Sashittal & Avan R. Jassawalla, 2020. "The personal influence of Instagram bloggers on consumer–brand interactions: brands as tribal artifacts," Journal of Brand Management, Palgrave Macmillan, vol. 27(6), pages 679-690, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pescher, Christian & Reichhart, Philipp & Spann, Martin, 2014. "Consumer Decision-making Processes in Mobile Viral Marketing Campaigns," Journal of Interactive Marketing, Elsevier, vol. 28(1), pages 43-54.
    2. Meyners, Jannik & Barrot, Christian & Becker, Jan U. & Bodapati, Anand V., 2017. "Reward-scrounging in customer referral programs," International Journal of Research in Marketing, Elsevier, vol. 34(2), pages 382-398.
    3. Lili Wang & Zoey Chen, 2022. "The effect of incentive structure on referral: the determining role of self-construal," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 1091-1110, September.
    4. Muller, Eitan & Peres, Renana, 2019. "The effect of social networks structure on innovation performance: A review and directions for research," International Journal of Research in Marketing, Elsevier, vol. 36(1), pages 3-19.
    5. Khim-Yong Goh & Cheng-Suang Heng & Zhijie Lin, 2013. "Social Media Brand Community and Consumer Behavior: Quantifying the Relative Impact of User- and Marketer-Generated Content," Information Systems Research, INFORMS, vol. 24(1), pages 88-107, March.
    6. Claus, Bart & Geyskens, Kelly & Millet, Kobe & Dewitte, Siegfried, 2012. "The referral backfire effect: The identity-threatening nature of referral failure," International Journal of Research in Marketing, Elsevier, vol. 29(4), pages 370-379.
    7. Goic, Marcel & Rojas, Andrea & Saavedra, Ignacio, 2021. "The Effectiveness of Triggered Email Marketing in Addressing Browse Abandonments," Journal of Interactive Marketing, Elsevier, vol. 55(C), pages 118-145.
    8. Williams, Martin & Buttle, Francis, 2011. "The Eight Pillars of WOM management: Lessons from a multiple case study," Australasian marketing journal, Elsevier, vol. 19(2), pages 85-92.
    9. Mead, James A. & Richerson, Rob & Li, Wenjing, 2020. "Dynamic Right-Slanted Fonts Increase the Effectiveness of Promotional Retail Advertising," Journal of Retailing, Elsevier, vol. 96(2), pages 282-296.
    10. Palazon, Mariola & Delgado-Ballester, Elena, 2011. "The expected benefit as determinant of deal-prone consumers' response to sales promotions," Journal of Retailing and Consumer Services, Elsevier, vol. 18(6), pages 542-547.
    11. Chai, Joe Choon Yean & Malhotra, Naresh K. & Alpert, Frank, 2015. "A two-dimensional model of trust–value–loyalty in service relationships," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 23-31.
    12. Heike M. Wolters & Christian Schulze & Karen Gedenk, 2020. "Referral Reward Size and New Customer Profitability," Marketing Science, INFORMS, vol. 39(6), pages 1166-1180, November.
    13. Fang Di & Richards Timothy J. & Grebitus Carola, 2019. "Modeling Product Choices in a Peer Network," Forum for Health Economics & Policy, De Gruyter, vol. 22(1), pages 1-13, June.
    14. Sinan Aral & Dylan Walker, 2011. "Creating Social Contagion Through Viral Product Design: A Randomized Trial of Peer Influence in Networks," Management Science, INFORMS, vol. 57(9), pages 1623-1639, February.
    15. Menon, Kalyani & Ranaweera, Chatura, 2018. "Beyond close vs. distant ties: Understanding post-service sharing of information with close, exchange, and hybrid ties," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 154-169.
    16. Jamal, Ahmad & Peattie, Sue & Peattie, Ken, 2012. "Ethnic minority consumers' responses to sales promotions in the packaged food market," Journal of Retailing and Consumer Services, Elsevier, vol. 19(1), pages 98-108.
    17. Dickinger, Astrid & Kleijnen, Mirella, 2008. "Coupons going wireless: Determinants of consumer intentions to redeem mobile coupons," Journal of Interactive Marketing, Elsevier, vol. 22(3), pages 23-39.
    18. Tiwari, Ashutosh & Richards, Timothy J., 2013. "Anonymous Social Networks versus Peer Networks in Restaurant Choice," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150467, Agricultural and Applied Economics Association.
    19. Jin, Huijie & Lu, Shouwang & Wang, Kanliang, 2024. "Who is more likely to initiate referrals? Effect of consumer's regulatory focus on referral intention," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    20. Ashworth, Laurence & Darke, Peter R. & McShane, Lindsay & Vu, Tiffany, 2019. "The rules of exchange: The role of an exchange surplus in producing the endowment effect," Organizational Behavior and Human Decision Processes, Elsevier, vol. 152(C), pages 11-24.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joamsc:v:46:y:2018:i:6:d:10.1007_s11747-018-0603-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.