Network-based Referral Mechanism in a Crowdfunding-based Marketing Pattern

TL;DR

This paper develops a network-based referral mechanism for crowdfunding marketing by modeling the value of leading customers through sequential-move game models and proposing an award allocation strategy to enhance referral success.

Contribution

It introduces a novel game-theoretic approach to measure leading customers' value and designs an effective referral award mechanism in crowdfunding networks.

Findings

Model transforms complex multi-sequence games into simple simultaneous games.

Proposes rules for allocating awards to incentivize leading customers.

Deepens understanding of leading position effects in referral strategies.

Abstract

Crowdfunding is gradually becoming a modern marketing pattern. By noting that the success of crowdfunding depends on network externalities, our research aims to utilize them to provide an applicable referral mechanism in a crowdfunding-based marketing pattern. In the context of network externalities, measuring the value of leading customers is chosen as the key to coping with the research problem by considering that leading customers take a critical stance in forming a referral network. Accordingly, two sequential-move game models (i.e., basic model and extended model) were established to measure the value of leading customers, and a skill of matrix transformation was adopted to solve the model by transforming a complicated multi-sequence game into a simple simultaneous-move game. Based on the defined value of leading customers, a network-based referral mechanism was proposed by exploring exactly how many awards are allocated along the customer sequence to encourage the leading customers' actions of successful recommendation and by demonstrating two general rules of awarding the referrals in our model setting. Moreover, the proposed solution approach helps deepen an understanding of the effect of the leading position, which is meaningful for designing more numerous referral approaches.