Referral Reward Program via Simple Posting on Social Media: Conflicting Impact on Communicators and Viewers

Abstract

Independent restaurants practice a referral reward program whereby they offer a reward to customers for making a positive referral. A prevalent form of this program is providing consumers with material or psychological reward for simple posting on social media (e.g., taking a picture and adding a simple hashtag). However, little research has yet addressed the effectiveness of this referral reward program in driving existing consumers (i.e., communicators) to attract new consumers (i.e., viewers). Results reveal that consumers are more willing to engage in posting in the following order: material reward, psychological reward, and absent. Posting intention is higher (vs. lower) when communicators are aware (vs. unaware) of similar referral reward programs in advance. However, rewarded posts are inferior to voluntary posts regarding quality of pictures, reviews, and hashtags. Viewers, therefore, perceive lower (vs. higher) level of message credibility from rewarded (vs. voluntary) post, and are less (vs. more) likely to visit a referred restaurant. Such conflicting impact on communicators and viewers provides conceptual contributions to the literature on referral reward program, informational influence, and message credibility. This research also raises the alarm for managers considering to implement a similar referral reward program.