The role of tie strength in bank credit card referral reward programs with scarcity messages

Abstract

PurposeThe purpose of this paper is to investigate how referral reward programs (RRPs) utilizing scarcity messages influence bank credit holders’ referrals to and adoptions by close or distant friends.Design/methodology/approachA 2×2 experiment is implemented with 760 consumers solicited through Amazon’s Mechanical Turk worker panel. Logit transformation and general linear models are used to test the proposed hypotheses.FindingsResults showed that offering RRPs with limited available referrals (quantity scarcity) increases the overall number of referrals to and adoptions by close and distant friends. The percent of strong ties also increases with RRPs. As quantity scarcity is relaxed, the percentages of referrals to and adoptions by close friends decrease.Originality/valueThe inclusion of tie strength with scarcity framing greatly enhances our understanding of the effectiveness of RRPs for bank credit cards. To the authors’ knowledge, this is the first research attempt on this topic.