[HN Gopher] How to design a referral program
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How to design a referral program
Author : gmays
Score : 63 points
Date : 2022-08-15 16:18 UTC (6 hours ago)
(HTM) web link (andrewchen.com)
(TXT) w3m dump (andrewchen.com)
| fegu wrote:
| Has anyone designed referral programs for online B2B products?
| What payback works, and is legal?
| badtension wrote:
| What are some drawbacks of giving subscription product discounts
| for each confirmed (paid) referral, that accumulate up to 100%?
| Assuming margins that make sense in case everyone other than the
| leafs have 100% discount.
| franze wrote:
| Due to organisational restrictions (aka a dysfunction product
| team) I "invented" the double "sweapsteak" referral giveaway.
| Which worked mostly outside of the product (we just needed a "who
| referred this user"-flag), mostly just newsletters.
|
| Basically you could win 2 IphoneX. One for you and one for the
| person you referred. If you referred one person, this person was
| a ticket for you.
|
| If this ticket/person won. The referrer and the referred/ticket
| won an Iphone each.
|
| The more persons you referred the more "tickets" you had.
|
| If the referred person referred new people, then they gained more
| tickets (additional to the ticket they were themselves.)
|
| worked massively. 2 IphoneX after all. And a benefit for the
| person you referred and yourself.
|
| And an incentive for the referred person to refer more.
|
| repeated runs were shot down by the legal department (Fintechs
| which want to become a bank care about law a lot) due to gambling
| laws of the EU.
|
| CPAU (cost per active user) was way better than the later
| implemented real referral program which worked with moneytary
| incentives.
| gruez wrote:
| >repeated runs were shot down by the legal department (Fintechs
| which want to become a bank care about law a lot) due to
| gambling laws of the EU.
|
| >CPAU (cost per active user) was way better than the later
| implemented real referral program which worked with moneytary
| incentives.
|
| the secret ingredient was crime
| logifail wrote:
| Not wishing to rain on anyone's parade, but there is no mention
| of broken incentives here. Tip for the marketeers, think about
| the users who will _ab_ use your referral program.
|
| * I've signed up for Amazon's free one-month Prime trial at least
| 20(!) times.
|
| * I've referred myself for many different kinds of products over
| the years.
|
| * My friends and I have referred each other for all kinds of
| things too. Sometimes with offline compensation, sometimes using
| the honour system for a future payback.
|
| "Just sayin'..."
| bombcar wrote:
| The reason this isn't mentioned is that often referral programs
| are _designed_ to be abused, so that metrics can be gamed just
| before an important funding round, a IPO, etc.
|
| Seen it happen many times.
| logifail wrote:
| > often [referral] programs are designed to be abused
|
| Heh.
|
| As it happens my OH and I were sitting at the local
| playground this afternoon chewing the workplace cud - while
| vaguely watching our daughter play - and were discussing how
| often higher management types _actually_ know what 's going
| on at the coal face.
|
| "Not often enough" was our unanimous conclusion.
| scottydelta wrote:
| For companies like Uber and Doordash and other such companies,
| the system is intentionally designed to be abused.
|
| They can use these abuse signups to show growth to the
| investors and rake in more money.
|
| It's not a bug but feature.
| kevmo314 wrote:
| I ran an abusable referral program once. Those who abused the
| referral program were the best because they kept sharing our
| product onto new forums telling others about how easy it is to
| abuse. Many of those new customers we would never have reached
| and most second-degree referrals didn't abuse the system, all
| we had to do was make that first customer feel superior to us.
| So it was well worth it :)
| arthurofbabylon wrote:
| Having designed and implemented referral programs myself, I find
| that this essay misses the mark.
|
| The single-most important quality of a referral program - by far
| - is aligning with novelty and the social currency implicit in an
| invitation.
|
| Almost nothing else matters.
|
| Without the referrer feeling "in-the-know" and valued by the
| referred, without the product warranting being talked about,
| referrals will not be a growth engine.
|
| As such, iterations upon a referral mechanism should first take
| place at the level of language and context. Dollar amount, offer,
| terms, etc are not the most effective levers.
|
| I advise neglecting referral programs until a product has natural
| "word-of-mouth" growth, then consider a referral program as
| lubricant upon that existing growth.
|
| Prior to good growth, one might try a light/crude alternative
| sans transactional incentive -> gift 1-month free, give coupons,
| require invite-only access. While it lacks the reward-loop, this
| approach offers the same trigger as a referral program without
| the heavy backing logic, saving 95% setup costs. The trigger is
| the first part of a referral program to get right anyways, and
| the rest of the referral mechanisms can be built on top of what
| is working within this lightweight system.
|
| Once successful, note that referral systems follow the Pareto
| principle (10% of referrers accounting for 90% of referrals), and
| the designer might accordingly shift their attention to
| encouraging serial referrers.
| hot_gril wrote:
| Yeah, the most successful (and annoying) referral program I can
| think of is the One Plus phones, and it hit the marks you're
| describing. Maybe the 2022 version is retailing something below
| market value, creating artificial scarcity, and prioritizing
| orders to referred people.
| atwood22 wrote:
| I've seen people bend over backwards and jump through flaming
| hoops to score Uber Eats credits via referrals. There are
| definitely people out there who value a monetary reward.
| pedalpete wrote:
| I agree with this, but I think the feeling of "in-the-know"
| though valuable, only applies to certain products. I've been
| thinking about our referral program, and am looking at it from
| the perspective of "what is it in the referrer's nature that
| will make them want to refer".
|
| "In-the-know" is definitely valuable here, as well as a way of
| showing off their knowledge.
|
| However, if you think about a referral campaign for a charity,
| it isn't about being "in-the-know", you'd want to tap into
| people's level of caring, or measure of impact.
| berkeleyjunk wrote:
| Surprised that this post does not talk about one of the most
| successful referral programs I have seen (way before Dropbox):
| Paypal. I certainly made a bunch of money and got a few friends
| signed up back in the day.
| TomGullen wrote:
| I think Chrome when it first came out was giving $5 per install
| as well.
|
| You see similar rewards here in UK for referring people to new
| bank accounts, Chase made a big move over here and was giving
| PS20 to the referrer, and PS20 to the referred for minimum
| commitment. If you got the money it's a fast way to gobble up
| market share.
| robk wrote:
| Yep I ran the early Google referral programs where we paid a
| bounty to adsense pubs that originally were referring Firefox
| installs!
| mandeepj wrote:
| Does it necessarily have to be money? I know everybody
| likes cash. Dropbox ran a very successful referral program
| where they give double (I guess) the storage to both
| parties.
| TomGullen wrote:
| Doesn't have to be cash, but I think it's important to
| remember when Dropbox was doing it disc space was a lot
| more valuable - I don't think it would work as well
| nowadays.
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