The primary incentive to focus on is how do you motivate the referrer. That is 90% of the problem to solve. The referee incentive should be derived from (1) will it give the referrer more motivation to send the invites, and (2) will it help the referee convert at a higher rate. This (probably) always translates to the referrer being higher than the referee.
Thanks Lenny, much appreciated. The aspect we're considering is whether having a materially higher payout for the referrer vs the referee creates a "self-serving" aspect and might deter from sharing widely. If the referee payout is higher, it can feel more like a gift. We'll test out both approaches and share the results with you if any interesting insights come out. Thanks for the great newsletter!
Hey Yorick, not sure if you'll receive a notification for this but did you get any insights on what you were exploring? Would love to know the same as we were building out on our own referral program
Hey Lenny, loved the article. Can you please elaborate on why having a data scientist was so valuable? What types of questions were they answering? How did you get them involved, and what types of insights did they discover?
Hey Lenny, Frank here - great short read for a starting a referral program. Can you elaborate a little bit in phase 1 - the limited discovery and limited platforms point?
For teams that are small, my takeaways are to figure out a monetary incentive or non-monetary incentive that provides enough value for them to ping the main retention action on the platform. Then, make sure to have some guerrilla analytics to figure out if it's working or not and tweak from there.
Again though, building it into the actual product, even a basic version, is going to be much more fruitful than any one-off. Make sure your users can't miss it, that the incentive is actually meaningful to them, and that you can track users who sign-up through it.
If you're thinking about referrals for a B2B business, check out this follow-up thread: https://twitter.com/lennysan/status/1235017941441105921
Very easy read. Thanks for sharing this (and thanks for whoever asked about this. Can't wait to check out the B2B thread.
Any successful affiliated programs for B2B with affiliate partners (so not our users but affosfe partners.
Thanks Lenny, great article! How do you think about balancing the rewards to the referrer and the referee - should the referrer always receive more?
The primary incentive to focus on is how do you motivate the referrer. That is 90% of the problem to solve. The referee incentive should be derived from (1) will it give the referrer more motivation to send the invites, and (2) will it help the referee convert at a higher rate. This (probably) always translates to the referrer being higher than the referee.
Thanks Lenny, much appreciated. The aspect we're considering is whether having a materially higher payout for the referrer vs the referee creates a "self-serving" aspect and might deter from sharing widely. If the referee payout is higher, it can feel more like a gift. We'll test out both approaches and share the results with you if any interesting insights come out. Thanks for the great newsletter!
Hey Yorick, not sure if you'll receive a notification for this but did you get any insights on what you were exploring? Would love to know the same as we were building out on our own referral program
Hey Lenny, loved the article. Can you please elaborate on why having a data scientist was so valuable? What types of questions were they answering? How did you get them involved, and what types of insights did they discover?
This may shed some light on that: https://www.lennyrachitsky.com/p/fostering-a-culture-of-experimentation
Thanks Lenny. If anyone else has this same question, I also just found this article to be helpful https://medium.com/airbnb-engineering/hacking-word-of-mouth-making-referrals-work-for-airbnb-46468e7790a6
Hey Lenny, Frank here - great short read for a starting a referral program. Can you elaborate a little bit in phase 1 - the limited discovery and limited platforms point?
For teams that are small, my takeaways are to figure out a monetary incentive or non-monetary incentive that provides enough value for them to ping the main retention action on the platform. Then, make sure to have some guerrilla analytics to figure out if it's working or not and tweak from there.
That's exactly right. See this thread someone just shared for an example of the scrappy mode: https://twitter.com/marinadedes/status/1235001813192986629
Again though, building it into the actual product, even a basic version, is going to be much more fruitful than any one-off. Make sure your users can't miss it, that the incentive is actually meaningful to them, and that you can track users who sign-up through it.
Awesome. Thanks for the share! Putting this to use immediately.