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.
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.
Absolutely, people who don't have a lot of money - students for example will value a monetary reward. The more you earn the higher that reward has to be. This would have been good for Uber, since it is an 'everyone' product. So even if someone who wasn't going to spend much in the next year or so signs up, they in turn may refer someone who will.
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.
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.
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.