Designing Promotional Incentives to Embrace Social Sharing:
Evidence from Field and Lab Experiments
by
Siva Viswanathan
Dean’s Professor of Information Systems and Digital Innovation & Co-Director of DIGITS
University of Maryland
Robert H. Smith School of Business
Friday, September 13
10:30 – 12:00 pm | Speakman 200
Abstact:
Despite the increasing connectivity between customers and the large volume of social shares supported by digital technologies, there is an absence of research systematically investigating how firms can design the promotional incentives that jointly consider their customers as both purchaser and sharer. In this study, we examine whether and how firms can take advantage of customers’ social connections and sharing motives to design novel incentives to engage customers in this social sharing era. In collaboration with a leading online deal platform, we conduct a large-scale randomized field experiment and two lab experiments to test the effectiveness of different incentive designs (varied by shareability and scarcity of promotion codes) in driving social sharing senders’ purchase and referrals. We find that different incentive designs have distinct impacts on senders’ purchases and further successful referrals. Specifically, providing senders with one non-shareable promo code significantly increases their purchase likelihood, but does not influence their referrals. In contrast, the senders who receive one shareable code are less likely to purchase themselves yet are more likely to make successful referrals. Surprisingly, the incentive design with two codes that has one non-shareable code and one shareable code increases neither the senders’ purchase nor their successful referrals. Very interestingly, we estimate that the one non-shareable promo code group derives the highest net revenue for the current experiment period, whereas the one shareable promo code group will derive the highest lifetime value from the new customers the incentive lures in. We further conduct two lab experiments on Amazon Mechanical Turk that replicate the field experiment’s findings and explore the underlying mechanisms of the observed relationships. We find that the exclusivity perception and social motives triggered by one promo code incentive designs mediate and explain their effect on sender’s purchase and successful referrals, respectively. Our study extends prior IS literature on social sharing that has focused on sharing information to the domain of sharing incentives, providing implications to firms on how to design promotional incentive that accommodates the dual role of customers as purchasers and sharers and sheds light on the motives underlying social sharing.
Link to the paper: Click here