How scarcity and thinking styles boost referral effectiveness

Abstract

AbstractReferral reward programs (RRPs) are a widely used tool to stimulate word‐of‐mouth (WOM). However, marketers still face a dilemma—while incentivization encourages senders to make referrals, recipients often react negatively towards such incentives. We propose a solution—referral scarcity—to improve referral effectiveness depending on thinking style. Three experiments show that limiting the number of referral rewards makes holistic‐thinking recipients feel more special, boosting their referral acceptance and RRP evaluations. We replicate these effects across various contexts and in the relationship norm most common for referrals—exchange norm. Our findings theoretically contribute to the research on incentivized WOM, scarcity appeals, and thinking styles. We also demonstrate how marketers can adopt sender‐benefiting referral rewards to maximize its dissemination and acceptance while identifying the consumer segment where it would be most effective.