RESEARCH PAPER ON 

“A study to understand the effectiveness of Referral

Marketing
in this pandemic Period”
For

Assignment of Subject: ‘Emerging Trends in Marketing’ Graduate

Diploma in Management (AICTE) 
Submitted By-
Group 4

Priyanka Atri 02

Harsh Kanojia 22

Vidhi Malhotra 31

Under the Guidance Of 

Dr. Kavita Kanabar 
2019 – 2021 

Vivekanand Education Society’s Institute of Management

Studies  and Research
Abstract:
The research aims to understand the effectiveness of referral marketing programs during the
period of pandemic and at a glance. Referral marketing stands as a big support to businesses
which are silent players. In this paper, you will come across the basic meaning of referral &
referral programs along with understanding its pros and cons which would give one better
understanding on the subject. The research states that referral marketing programs are
effective in nature and creates a win-win situation for customers as well as organisations. While
research a personal interview has been taken off an employee to understand the ongoing live
referral program of XL Dynamic India Pvt ltd to make one understand its functional aspects and
its positive outcomes. The authors also studied different secondary data from other research'
papers, textbooks, internet and more to understand different angles of referral marketing as
stated in the paper ahead. Researchers have even spoken about the effective rewards and
incentives which are more attractive and appealing

Keywords:
Referral, Referral Marketing, Referral programs, pandemic, Covid-19.

Introduction:
India is regarded in the present globalised scenario as a market with strong marketing potential for
international universities. Students currently seek reference marketing Courses to be given to
prospective students. This can be a creative service promotion method, such as training. The study
below analyses whether rewards will affect the behaviour of referrals. As more and more international
universities are recruiting Indian students to take courses they offer, reference marketing can be a
creative marketing instrument.

Humans always agree that marketing references work. It does better than any other tactic or platform
for marketing. There is a greater likelihood that people would purchase a product or service referred to
by an entity they know. It is a human trait that is common. Referral marketing is an instrument for
establishing and creating consumer bases by various organisations across a wide range of industries. In
the past, reference marketing has concentrated primarily on knowledge dissemination through verbal
contact with a close network. Brand advertising for referrals already relies heavily on social media and
the Internet, enabling a larger audience to expand the reach of referrals significantly.
Literature Review:-

1. Tikhonov (2019) in the study has stated that the referral programs are very effective in the other
foreign countries along with Russia and it plays a very important role at the time of recruitment when
referral programs for hiring are done in the companies which is beneficial. Also the brief difference
between the referral programs of Russia and other foreign countries are stated. Different sectors and
Industries are studied to identify the usage and effectiveness of referral programs over there

2. Garnefeld et.al (2013) in their research about the effectiveness of referral programs in
telecommunication industry states that it's very useful for a company in this industry. As customer
referral program not only bring in a new customer to the telecom brand but also are loyal to them for
certainly greater than other customers. It's stated that referral customers detection rate is very low in
this industry which increases the profits & revenues two times. Through a laboratory study, they have
analysed that referral programs which give out bigger and larger benefits & rewards strengthen
attitudinally & greater behavioural loyalty while the referral programs with smaller benefits & rewards
effects only the behavioural equation of an individual.

3. Berman et.al (2016) studied the difference between the traditional marketing programs against the
modern referral marketing programs and analysed that both share a little overlap in the context of
marketing objectives, target audience, etc. It states that motivating the delighted and satisfied
customers to promote the brand is more effective to seek new customers which will give a high lifetime
value to the organisation. In the paper, they have talked about the advantages of referral marketing
programs over traditional marketing programs where referral stands to be more efficient and cost-
effective along with studies few referral programs of a brand like Dropbox, Paypal, Roku and more.

4. Orisingher et.al (2018) in their research have studied about the psychological drivers that lead to an
effective and rewarding referral marketing program. In the study, they founded that the size of
incentives attached along with referral program enhances the attractiveness of audience and they tend
to avail it but on the other hand it reduces the meta perception favorability of the recommendation
through a referral program. The paper also informs about the proper managerial guidelines to design an
effective referral marketing program.

5. Dose et.al (2019) studies the customer behaviour for referral marketing programs for innovative
products and services. With the help of one on-field experiment and four internet experiments, the
researchers have analysed the effectiveness of referral programs for innovative products/services
against less innovative products/services. Concluding the paper researchers found that the referral
marketing programs for innovative products and offerings work much effectively and if the incentives
and rewards are not disclosed in public for the recommender and customer recipient ideally increases
the attitudinal behaviour of both.

6. Palmatier et.al (2006) in the research have studied about the effectiveness of relationship marketing
which could lead to a greater recommendation at the time of referral marketing program for the
companies or while recruitment new customers. They state that by this it directly affects positively to
the seller's objectives, market position and image. They identified that relation made with customers
and referrals are more effective than making relations with the selling firm.

7. Arora et.al (2018) in the research paper explained about the referral marketing programs for the
online product and service providers where word of mouth and referring to a friend makes a huge
difference. The paper tells more about the factors influencing the customer perception and behaviour
towards a brand and the referral program. Through a detailed study conducted on people of Delhi-NCR,
they have found that six out of seven factors positively influence the customer behaviour of clusters
identified. The research revolves around the customers and their behaviour patterns for a referral
program of a particular brand and gives Insights on them.

8. Song et.al (2020) have examined the perceived social risk for the referral programs of bank's credit
cards focusing on its effects. They founded that people with higher perceived social risks strike a balance
between financial returns and social risks, while consumers with lower social risks largely ignore these
social risk elements in referral decisions. The paper also talks about referral marketing programs by
different financial institutions for their credit cards and other services.

Objective:
• To analysis the reach of referral programs during the current pandemic.

• To identify which reward is more effective for a referral program.

• To understand whether people use the referral programs of brands they use.
Data Analysis:
Primary Data:

Personal Interview:-

Name of Interviewee - Nikhil Mehta

Position - Finance Analyst

Company - XL Dynamic India Pvt Ltd.

• Mr Mehta informed us about the Referral Program of XL Dynamic India Pvt ltd and how it
functions in their organizations to recruit new employee just the way it functions in Retail,
FMCG or Service sectors to recruit new customers.

• He said that any existing employee of XL Dynamic can referral people about the opening in
their organisation promoting the company and its culture also by education eligible candidates
about the job role.

• If any of the candidate referred by an XL Dynamic internal employees is finally selected after
the whole interview than that particular employee who referred would get an incentive of
15,000/-

• This incentive money would be credited to their accounts along with the salary of that
particular month in which the referred candidate got selected.

• This way, XL Dynamic India Pvt ltd creates a win-win situation for 3 entities i.e Internal
Employees, Job Seekers and company themselves as Internal Employees get incentives against
a positive reference conversion, candidate get a good job in a reputed firm like XL Dynamic and
the company get a good and potential employee to work in their organisation along with
boosting the morale of current employees.

• This referral programs have not only to help the needy candidates to get a decent job during
this difficult pandemic period but also the company to perform better in their day to day
business.
As per the Primary Data collected bellow is the analysis:

Q2. Age Q3. Gender

Maximum responded is under the age range of 19 years to 25 years i.e 74.5% followed by 26
years to 30 years with 13.7% and other being above 30 years. It clearly says that these
responded are from the Generation-X and Millennials were 58.8% being females and 41.2%
being males.

Q4.Occupation Q5. Income

70.6% of the responded are students, 21.6% working as employees and rest being under house
makers, professional and others. As we know that the maximum of our audience is students so
they have an income of 10,000 or even lesser i.e 62.7% whereas 17.6% responded earn 40,000
and above.
Q6. Location

Almost half of the responded are from Mumbai City that stands at 51% but rest half are from
different parts of India namely Nagpur, Gurgaon, Himachal Pradesh, Jabalpur, Pune, Bhopal,l
etc. Views of people are from different places of India being a diverse sample set geography-
wise.

Q7. Are you aware of the referral marketing program of any brands?

When asked about the familiarity of individual regarding any referral marketing programs by
any specific brand, majority of them i.e 86.3% responded as Yes - that they are aware of the
some of the other referral programs of any brand while only 13.7% responded with a No.

That means a large part of our sample is aware of the referral marketing programs.
Q8. Did you come across any referral program in recent time on any platform or via someone?

66.7% responded with a Yes when asked whether they have come across any referral program
in recent time i.e pandemic going on for 10 months. While 33.3% said No, they haven't come
across any referral marketing program of any company.

That says that different companies are working during this pandemic time to recruit new
customers via referral programs as 66.7% of people from the sample came across some of the
other referral marketing programs during these difficult times.

Q9. Does any of your close one has referred you for a referral program of any specific brand?

Q10. If Yes, then which brand or product/service it was?

Part 1 -

• Almost 53% responded with a No and 47% responded with a Yes when asked upon whether
any of their close one's recommended them about any of the referral programs going during
the current pandemic.
• Only 47% of people acutely referred they close once for a referral program of some product
or services.

Part 2 -

• The responded who answered with a Yes i.e 47% in the above questions said
brands/products/services like e-commerce players - Myntra, Tata Cliq, Amazon along with
other brands like Google Pay, Uber, MyGlamm, Sugar Cosmetics, Maybelline, Oyo, etc came
through their close one's as referrals to avail them and get rewarded.

• Here, E-commerce players along with Google Pay and Uber where most once to come in
limelight.

Q11. Have you purchased on the bases of the referral program suggested by your close ones in
recent times?

When asked whether they avail the referral and made any purchase out of the programs they
came across by their close one's, almost 53% responded with a Yes and 47% with a No.

It says that people are coming across these referral marketing programs of good brands by their
family & friends they tend to make a purchase availing the referral benefits which

would offer both i.e recommender as well as the referred customers with rewards
Q12. Which form of reward will attract you the most in referral programs?

People would love to be rewarded with good discounts and offers against a referral program as
72.5% votes were given to Discounts/Offers followed by Cash Prize with 60.8% votes than the
Service Benefits with 29.4% votes and least votes for Loyalty Points/Membership benefits with
only 21.6% votes.

This clearly says that driving factor for any referral program that motivates positively to an
Indian individual is the reward of Discounts and offers followed by Cash Prize.

So whenever while formulating a referral marketing programs, the rewards could be kept as
above.

Q13. Do you think, referral programs are effective during these tough times like pandemic?

Almost everyone from the sample set except 1 or 2 agreed that a referral program is beneficial
during tough times like a pandemic for any brands or business.

As a whopping 96.1%, people agreed to it saying, Yes a referral program is beneficial and
effective during difficult times as a referral program referred by a close one builds trust factors
against the business offerings and one could rely on it.
People have a positive mindset and attitude towards these referral marketing programs during
these tough times of Covid-19 pandemic.

Q14. Have you ever used any of the brands or their products/services that are mentioned below?

Q15. Are you aware of any of the referral programs mentioned below? If Yes, then please select
them?

Part 1 -

• Myntra and Goole pay were the most used services or brand by the audience followed by
Uber as Google Pay received 72.5% votes a little less than that of Myntra i.e 74.5% votes and
uber managed to collect 47.1% votes and least was with Citibank i.e 3.9% votes only.

• This says that people use Myntra and Google Pay the most followed by Uber and Citibank is
not in the picture much because it has a different target audience not a much-used bank by
Millennials and Generation-X. This may differ as on different characteristics of the sample set.

Part 2 -
• As by the above question it was clear that Myntra and Google Pay are quite famous and used
by audience followed by Uber, people are also aware of the referral marketing programs which
these brands are offerings.

• Google Pay got the highest votes i.e 74.5% followed by Myntra with 66.7% and then Uber
with 23.5% votes when asked about their knowledge and familiarity with referral programs of
these particular brands.

• People are quite aware of the referral marketing programs offered by these brands during the
pandemic period.

Q16. Have you ever availed any of the above referral programs?

68.6% of people responded with a Yes when asked about whether they have availed the
referral marketing programs of Myntra, Google Pay or Uber while only 31.4% people responded
No.

This says that even during the pandemic times people have availed these referral programs and
gave their contribution to the businesses like Myntra, Google Pay, Uber and others.

This is what makes their referral marketing programs a success one.

Secondary Data:
The key thing about reference marketing is the word-of-mouth (or the referral)
recommendation from a current customer into a potential one. The nuts in marketing apply to
whether a company is interested in it or not. It is good and bad every day. Indeed, reference
marketing or word-of-mouth marketing is the driver behind something viral that happens
several times in the general population. All the best reference marketing programmes and come
from brands who have embraced the concept of reference marketing as a perfect way to meet
new clients and retain them. A newbie is more likely to buy on your brand based on a friend or
family member's recommendation.

Pros of referral marketing

1. Referal marketing is highly efficient and generally very cost-effective and other pros include

-> credibility hearing about the experience of real, satisfied customers leaves a credible and
authentic impression.

Referring to a brand that you’ve has a good experience with for most people.

We want our friends and family to be able to experience this too and additional we feel in
sharing a brand we know they will like

2) faster-purchasing decisions- personal recommendations convince customers more rapidly

from the usefulness of the product and leave fewer doubts or questions.

People are more likely to buy a product or anything they are referred to buy a friend when a
friend and family member recommends something it means they have tried it and had a
positive experience.

People don't hate the thing they recommend in fact if a company had a bad reputation people
make sure no one they know from that company

3) Brand development and trust- referral marketing strengthens customer trust in a brand. As
explained earlier in the above points when a friend or family member recommends something
it means they have tried it and had a positive experience. So you trust them and this
strengthens customers trust in a brand.

4) increase sales from existing customers- giving recommendations increasing customers loyalty
to a brand or company. This increases the customers base and leads to more regular sales

Cons of Referral marketing

1.Existing customers are a prerequisite- the idea of referral marketing requires that existing
customers share their experience with others. So for new companies with relatively few
customers, it may be harder to implement it the right way.

2.Unsatisfied customers and bad reviews- unsatisfied customers are hard to avoid so try to
understand your customers. This requires you to put yourself in their shoes. Things like
unfulfilled promises, keeping the customer waiting, not attending their calls. If a company is
slow in returning calls or fulfilling orders then they are in danger of losing customers with good
service. For example, if they offer them a personal service, if they can remember a customer’s
name and recall their last conversation with them, it will brighten up their day. They will also
tell their friends or relatives what a great service the company provides because an unsatisfied
customer will give bad reviews about the company.

3.Public Reviews- Public platforms like google reviews or trust pilot come with the risk of
misuse whether by competing companies or dissatisfied customers. On such platforms,
everyone has the freedom to say whatever they like. This could lead to bitter or damaging info
being posted. One negative review of a product or business can skew a potential customer’s
view of them
Conclusion:
By the study done through the primary data analysis, its clear that referral marketing programs
are quite effective during these tough times of pandemic and that business make a profit out of
these programs. Here people are in favour of referral programs as these recommendations
mainly come straight from their friends and family members on whom one can trust before
making a purchase decision. General public from around India is aware of the different referral
marketing programs running in the market on an individual level where discounts and offers
followed by in cash rewards attract more customers. These rewards & incentives are more in
demand and are appealing for the people giving references. Referral marketing programs of
famous brands have managed to spread a lot of knowledge about their offerings to their
customers which is creating a positive situation for both.

Hence concluding, Referral marketing programs are effective and efficient not only for
customers but for different industries and sectors like Human Resources, Retail, FMCG,
Banking, Pharma and more.
Reference :

1. Tikhonov, A. I. (2019). The use of networking in staff recruitment: recommendations and referral
programs. Amazonia Investiga, 8(19), 521-528.

2. Garnefeld, I., Eggert, A., Helm, S. V., & Tax, S. S. (2013). Growing existing customers’ revenue streams
through customer referral programs. Journal of Marketing, 77(4), 17-32.

3. Berman, B. (2016). Referral marketing: Harnessing the power of your customers. Business Horizons,
59(1), 19-28.

4. Orsingher, C., & Wirtz, J. (2018). Psychological drivers of referral reward program effectiveness.
Journal of Services Marketing.

5. Dose, D. B., Walsh, G., Beatty, S. E., & Elsner, R. (2019). Unintended reward costs: The effectiveness of
customer referral reward programs for innovative products and services. Journal of the Academy of
Marketing Science, 47(3), 438-459.

6. Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. (2006). Factors influencing the effectiveness of
relationship marketing: A meta-analysis. Journal of Marketing, 70(4), 136-153.

7. Arora, M., Nagdev, K., Singh, R. P., & Rajesh, A. (2018). Educing the referral power to tap potential
customer segments–a study in Indian perspective. International Journal of Public Sector Performance
Management, 4(2), 133-145.

8. Song, C., Wang, T., Lee, H., & Hu, M. Y. (2020). The moderating role of perceived social risk in bank
credit card referral programs. International Journal of Bank Marketing.