Recommend Friends for Miles: Effective Referral Marketing Strategies in Frequent Flyer Programs

Previous research demonstrated the effectiveness of referral programs in boosting firm performance. However, referrers’ evaluations of such programs are under-examined. This study fills this gap by conducting two studies. Study 1 finds that psychological closeness between a referrer and a referee enhance the referrer’s evaluation of the program. Study 2 reveals that the relationship between such psychological closeness and the referrer’s evaluation is contingent on referral reward type (material vs. experiential). This study advances previous research in referral marketing by drawing on the experience recommendation theory and construal level theory. Referral marketing managers shall note that encouraging existing customers to refer their close others is particularly effective when referral messages highlight material rewards, instead of experiential rewards.