Social Interactions and Monetary Incentives in Driving Consumer Repeat Behavior

Abstract

Companies are eager to leverage social interactions among consumers by embedding social networking tools on their websites and actively integrating marketing actions with consumers' social activities. In this article, the authors investigate the impact of online social interactions on repeat usage behavior and the effectiveness of monetary incentives by formulating a model that parses out the effects of these individual factors. Using a unique data set from a wellness program, they find that online social interactions play a key role in driving repeat behavior, and after controlling for contemporaneous correlations from same-office friends, the social influence emanates even from distant friends working in different offices. The authors also find that monetary incentives have a significant impact on repeat usage and that ignoring this may overstate the impact of social influence. Furthermore, what-if scenario analyses show that social interactions are more effective than monetary incentives when both are present. The authors then explore social influence theories to understand the underlying process mechanisms that may operate in the repeat usage context. Using these findings, they offer strategic implications for marketing practice.