Research On Incentive-based User Acquisition And Retention Strategies In Social Network Environmen

The widespread popularity of the online social network provides a favorable context for the information diffusion process among individuals.Compared to mass media marketing,referrals among acquaintances usually lead to better adoption intention.The viral marketing method based on customer-to-customer referrals has received significant attention in recent years.The referral intention determines the viral marketing performance directly,and providing incentives is an intuitive method to enhance the referral intention,which is one of the research emphases of previous research.The performance of viral marketing under the context of online social networks is also related to individuals’ purchase intention.Therefore,viral marketing methods with incentives for both referrers and adopters are widely applied by companies in recent years.However,most previous studies about viral marketing focus on the identification problem and the incentive problem of “opinion leaders” with high centrality,the majority of influenced individuals are neglected.And most previous studies about incentive marketing do not discuss the performance of incentives under the context of an online social network,which leads to the negligence of the effect of adoption incentives on the diffusion of marketing messages.Therefore,studies about dual incentives in the field of viral marketing and referral marketing are both deficient.To solve these problems,three studies are carried out in this paper,the first and second studies are theoretical studies about dual incentive strategies on the customer acquisition process and the customer retention process respectively,and the third study is an empirical study about the effect of incentives on customer behaviors,the main context and conclusions of this paper are as follows.1.A study about customer acquisition strategy with dual incentives.Based on the SIR epidemic model,we construct the SAN diffusion model to describe state transitions in the customer acquisition process under the context of both homogenous and heterogeneous networks with the mean-field theory.We obtain the minimum incentives which are needed to reach a viral spread of marketing messages by deducing thresholds of the SAN model on homogenous and heterogeneous networks.We also prove that the optimal strategy is only providing promotion incentives when there is no penetration target.On the other hand,we discuss the incentive strategy with penetration targets and the difference in diffusion features of the context of the homogenous and heterogeneous network with numerical simulation.Results show that the optimal incentive strategy is providing merely promotion incentives with a relatively low penetration target,which is consistent with the theoretical result.But when the penetration target is high,both incentives are needed to obtain the optimal strategy.Comparative results between the two network structures show that compare to viral marketing campaigns on homogenous networks,on the heterogeneous network,it’s easily to launch a viral marketing campaign and diffusion speed is also higher,but more excess marketing costs are needed to reach a higher penetration.2.A research about customer retention strategy with dual incentive.We add the product life and the potential buyer state after running out of products to the SAN model to construct the SANB model which contains the customer retention process based on referral marketing.For exploring the allocation problem of heterogeneous incentives,we apply the N-intertwined model to describe the individual-level state transitions in this part.Then,the threshold of the BANB process is deduced with Lyapunov’s second method,which implies the condition of incentives needed to keep the subsequent repeated purchase process.Transition functions of three states after the BANB system reaches a steady state are also structured to be the constraint of the profit maximization problem.The profit maximization problem with an approximate long-term profit objective is constructed.We use the global and multiple starting point searches with Sequential Quadratic Programming(SQP)approaches to solve the problem.Results of the problem show that the incentive strategy with merely the promotion incentive is optimal for the low profit of each product,but dual incentive strategies should be adopted for the higher profit of each product.Comparison of numerical results with various durations and the theoretical optimum show that companies need to provide incentives higher than the theoretical optimum at the initial state of viral marketing campaigns,but the numerical optimum decreases gradually till it reaches the theoretical optimum with the increase of durations.Besides,the profit maximization problem of heterogeneous incentives is also constructed and solved in this part to get the incentive allocation strategy.Results of the heterogeneous incentives problem show some interesting conclusions.When the constrain of total incentives is tight,more adoption and promotion incentives should be assigned to individuals with high centrality.But when the constraint of the marketing budget is loose,a counterintuitive conclusion is that more adoption incentives should be assigned to individuals with low centrality,but the allocation strategy of promotion incentives is consistent with the tight constrain case.Finally,in the sensitivity analysis part,we analyze the adjustment of incentive strategy that companies need to make for the change of the cycle of repeat purchase and the customer churn rate,and we also discuss the incentive allocation strategy with heterogeneous churn rates.3.In the empirical research part,based on a dataset of exposure and customer conversion rates from a mainstream online food delivery service platform,we investigate the effect of platform coupons and merchant discounts on customer behaviors including opening the application,clicking the page of the merchant,and making a purchase.The parameter estimation results of the econometric model with mixed date show that platform coupons have a significant effect on merchants’ exposure(i.e.,the possibility of customers opening the application and seeing merchants),and merchant discounts have a significant effect on the clicking rate after customers observe the merchant,while both incentives have a significant effect on the purchase rate after customers browsing the page of merchants.To distinguish the effect of incentives on different types of merchants,we then add two dummy variables(major merchants KA and fresh cut merchants FC)which represent the category of merchants as moderator variables.The parameter estimation results of the econometric model with interaction terms show that platform coupons have a larger effect on click and purchase rates of KA merchants,but have a smaller effect on exposure compared with non-KA merchants;similarly,compare with whole fruit merchants,merchant discounts have a smaller effect on click and purchase rate of FC merchants,but the larger effect on exposure.Besides,we also construct the PVAR model to investigate the long-term effect of variations in the coupon value or the discount depth.The parameter estimation results of the PVAR model and the orthogonalized impulse response functions show that the increase in the value of the platform coupon and the depth of the merchant discount have a significant negative effect on exposure and the click rate respectively.We innovatively introduce the mode of providing incentives after successful recommendation and adoption incentives into the diffusion process of viral marketing and the profit optimization problem in this paper.Our research fills the deficiency of the previous studies of the diffusion process of marketing information in the field of viral marketing and the lack of attention to adoption incentives in the field of referral marketing.We also innovatively investigate the referral reward program in the context of a social network,which enriches studies on referral marketing and the management of viral marketing.Besides,we innovatively discuss customers in a different stage of exposure to the purchase funnel with customer conversion data and discuss the longterm effect of variation of incentives with the PVAR model,which enrich studies about coupons or discounts marketing.In practice,this paper provides theoretical suggestions for incentive and allocation strategies in the process if customer acquisition and retention for companies.Besides,we also point out the possible negative effect of incentives in the empirical study,which provides suggestions for adjustment of incentive strategies.