Research Recap

Using Social Coupons to Enhance Customers’ Social Empowerment

Key Takeway

The simple act of sharing a social coupon generates greater purchase amounts and purchase intentions.
Businesses often seek to leverage their customers’ social networks to acquire new customers by, for example, stimulating word-of-mouth or offering incentives for referrals. Customers make brand recommendations for reasons such as financial benefits and reputation enhancement; they may also be motivated by a desire for social empowerment—to feel an impact on others.

In several multi-method studies, Sara Hanson and Hong Yuan show that social coupons (i.e., coupon sets that include one for self-use and one to be shared with others) are a novel and unique marketing strategy that allows businesses to facilitate social empowerment. When a customer shares a social coupon, he or she personally benefits from a greater sense of social empowerment than if the coupon is not shared. These feelings of social empowerment transfer to the firm, who consequently benefits from greater purchase amounts and purchase intentions from the customer who shares the social coupon.

Thus, as firms engage in social coupon strategies, they can gain not only new customers via social sharing, but also more dedicated customers who are more likely to spend. These results are illustrated in both field and experimental settings, across contexts including a restaurant and a coffee shop, and with both known and hypothetical brands.

Furthermore, the authors demonstrate that social coupons are most effective when the firm’s relationship to the customer who shares is new rather than firmly established. When a prospective customer is relatively new to the firm, a social coupon can activate a desire for empowerment. As the social coupon is shared, this behavior then drives positive associations between the sharing act and the firm that provides the social coupon, resulting in greater purchase intentions. Therefore, offering new customers the chance to share a social coupon is a way to connect with these less engaged consumers and satisfy the need for empowerment.

Put into Practice

These results suggest that it would be advantageous for firms to encourage social coupon sharing by devoting messaging to this call-to-action on the coupon itself or establishing promotional campaigns that encourage sharing. Because feelings of social empowerment are critical to generating positive firm outcomes, firms could also employ post-distribution communications to highlight the important role that the consumer played in impacting the shopping experience of others. Together, these studies connect social empowerment to relationship marketing and provide guidance to managers targeting social coupons.

Related links

The Impact of Referral Coupons on Customer Behavior and Firm Revenues: Evidence from Field Experiments
Raghuram Iyengar and Young-Hoon Park (2016) [Report]
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