Designing Viral Promotional Campaigns: How Scarcity and Social Proof Affect Online Referrals

Online referrals have become an important mechanism in leveraging consumers’ social networks to spread firms’ promotional campaigns and thus attract new customers. However, despite a robust understanding of the benefits and drivers of consumer referrals, only minimal attention has been paid towards the potential of classical promotional tactics in influencing referral behavior. Therefore, this study examines scarcity and social proof, two promotional cues which are linked to extant referral literature and are of great practical relevance, in the context of a randomized online experiment with the German startup Blinkist. Our analysis reveals that scarcity cues affect consumers' referral propensity regardless of the presence of social proof cues, but that social proof cues amplify scarcity’s effect on consumer referral propensity. We demonstrate that consumers’ perceptions of offer value drive the impact of scarcity on referral likelihood and illuminate how social proof moderates this mediating effect.