Referrers vs. Referees: How Do Reactivation Referral Programs Work on Social Media?

Abstract

Reactivation referral programs aim to engage inactive users by leveraging active users' social network. To examine its effectiveness, we leveraged a large-scale field experiment on a major social media platform, where randomly selected users could earn monetary rewards for encouraging their inactive friends to become more active on the platform. This treatment not only increased the engagement of referees, as intended, but also enhanced the engagement of referrers consistently during the experiment, resulting in a 35-fold return on investment. Notably, although individual engagement increased more among referees than among referrers, the program’s overall benefit from referrers was 15 times greater because they represent a larger share of the user base. One potential mechanism for referrers' engagement increase appears to be their effort to expand their social networks to gain new referral opportunities. Specifically, referrers not only increased their overall engagement but also shifted toward activities facilitating new friend formation, deviating from the typical changes in engagement patterns seen with general increases in platform activity. In addition, referrers made new connections, which might have driven further referrals. Our findings highlight the importance of considering referrers' contributions when evaluating the effectiveness of reactivation referral programs on social media platforms.

Keywords: reactivation referral programs, social media platforms, social network, customer retention, customer engagement