Tools- of Changes

Boosting Program Referrals Using Reciprocity and Convenience

This field experiment with 7,680 low-income homeowners boosted referral rates, new participant numbers, and progam cost-effectiveness. It achieved this with two changes to a program that was already running. (1) It offered, in addition to the program's standard financial incentive, a non-contingent token gift upfront with a reminder about the programme, to evoke a sense of reciprocity. (2) It simplified the referral process by providing a mailable referral slip with a stamped return envelope.

Like other social benefits programmes, many subsidized energy programmes go undersubscribed, owing to distrust of programme providers, high hassle costs for programme enrolment, and lack of information. Low participation rates translate to inefficient use of programme funds, as programme administrators must allocate additional resources for outreach, especially to capture vulnerable, hard-to-reach populations.

This study looked at peer referral for a fully-subsidized low-income solar program in California, with three groups of 2,558 program participants each (7,680 homeowners in all).

1. The baseline (control) group was offered US $200 for every referral resulting in a solar installation.
2. The second group also received a non-contingent token gift upfront with a reminder about the programme, to evoke a sense of reciprocity ("We have enclosed a small $1 gift to thank you for being part of the GRID community.") This led to 1.7 times the response rate, 2 times the number of referrals and 2.6 times as many solar contracts compared with the control group.
3. In addition to the incentive and gift, the third group received  a mailable referral slip with a stamped return envelope. This approach led to nearly 5 times the response rate, 7.5 times as many referrals, and 5.2 times as many solar contracts, and increased cost-effectiveness compared with the baseline program. It was also better ar getting referrals from participants who had not yet made a referral.