Effects of customer referral programs on mobile app stickiness: Evidence from China fresh E-commerce

Abstract

Customer referral programs are an effective means of increasing customer acquisition and customer retention. Using a large-scale customer data set with 17, 116 observations from a Chinese fresh e-commerce app, we identify that participation in a referral program also increases customer stickiness. We apply propensity score matching to match each customer participating in the referral program with a similar customer (statistical twin) who did not participate. Then a regression model is constructed to compare their stickiness. Our empirical analysis shows that participation in a referral program increases stickiness of both the referrers and the referred customers by 54.13% and 10.88% respectively after matching. The results contribute to a growing literature on customer referral programs as a means for retaining and growing relationships with current customers. We also offer empirical evidence from China fresh E-commerce to contribute to the understanding of mobile app stickiness. The study is also important for marketers, who can differentiate customers with stickiness to realize more precise marketing.