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Show the referral at the limit
Referrals that worked
Superhuman ran give one month, get one month. Some users collected hundreds of referrals and hundreds of free months, and would never pay for the rest of their lives. It worked because the program was easy to find and the reward was concrete.
Wispr Flow timed the offer to the free word limit of 2,000 words. As a user approaches it, the app points out that sharing the product with a friend earns the next month free. That takes five seconds, one friend signs up, and a new person is now spreading the word. The K factor is what makes or breaks it.
Victor's credit tree
Victor's product runs on token credits, so when a user nears the limit, a decision tree shows ways to earn more. Posting about Victor on LinkedIn pays out by CPM in credits. Inviting a company earns a revenue share of its plan in credits every month. Some eight-person teams spend $15,000 to $20,000 a month on Victor, so a 20% share of a friend's agency spending $5,000 meaningfully lowers the bill, and it costs Victor less than the $1,000 to $2,000 it is willing to pay to acquire a customer.
Why programs fail
Programs fail when the reward is vague, when it is swag, or when it grows into twenty tiers of gamified actions that nobody bothers with.
How does a K factor work?
K factor is the average number of new users each existing user brings in. It is calculated by multiplying the invitations each user sends by the share of invitations that convert. A K above 1 means every wave of users is bigger than the last, which is the math behind viral growth. Most products land well below 1.
Why does a limit make a reward land?
Daniel Kahneman and Amos Tversky's 1979 paper on prospect theory found that people weigh a loss more heavily than an equal gain. Estimates from later work put the weight at roughly twice as much. Hitting a usage cap puts a loss in front of the person, so an offer to lift it is judged against that loss.
How did Dropbox's referral program grow?
Dropbox launched its referral program in 2008, giving extra storage to both the person who invited and the person invited. The company has said its registered users grew from 100,000 to 4 million in about 15 months. Storage was the product itself, so every reward made the service more useful to the person receiving it. Rewarding both sides is known as a double-sided incentive.
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