The impacts of RRPs on the online consumers´ referring likelihood: The moderating role of audience closeness

Many service firms are now using referral reward programs (RRPs) to harness the power of electronic word of mouth and to increase referrals to acquire new customers. However, a persistent problem is that rewards are not always effective. This study examines how incentives would work to actively encourage eWOM, and how incentives would potentially interact with audience strength. In particular, a 2×4 scenario experiment was conducted to examine the impact of incentives and audience closeness on consumers´ referring likelihood. The study findings suggest that reward does not necessarily increase the likelihood of eWOM being generated, and audience closeness to be an important variable in explaining eWOM behavior. The findings have important implications, and suggest that referral reward programs targeted at strangers are likely to be more effective than those targeted at family, friends, and acquaintances.