How Scarcity And Thinking Styles Boost Referral Effectiveness

Referral 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.