3 builders who never spoke to each other

Size the reward and expect it to plateau

Ten dollars will not move anybody, but past a point more money buys no additional referrals while still costing margin, and doubling the bonus sometimes changed nothing at all. Switching from store credit to cash produced a step change where credit had stalled, paying more for referrers who bring higher value users beats one flat rate, and rotating in new rewards keeps a years old programme interesting. Assume fraud scales with whatever you offer.

The method

1. 01

   Make the reward large enough to actually move someone. Ten dollars will not, and the reward need not be cash at all: ask users what they would want, then check your unit economics can carry it.

2. 02

   Switch the reward from store credit to actual cash when you want a step change in participation.

3. 03

   Expect the incentive to plateau. Past a point more money buys no more referrals while still costing you margin.

4. 04

   Vary the payout by how valuable the referred user is likely to be, rather than paying one flat rate to everybody.

5. 05

   Assume fraud scales with the reward, and set things up so committing the fraud costs more than the payout is worth.

What it returned

• $100

  Airbnb replaced travel credit with a flat $100 cash payment to the referrer and $50 to the person referred on the host side.

• 30

  Commission rates cited: 30 percent at NoCodeAPI, 30 percent at Jet Admin, 40 percent at No Code MBA.

• Airbnb doubled the bonus in some markets and sometimes saw barely any change in behaviour.

• Airbnb generated a personalised referral amount based on the expected lifetime value of the supply that referrer would bring in.

Sources

• The Secrets Behind Morning Brew's Growth to 2.5 Million Newsletter SubscribersJenny Rothenberg · sparkloop.app · 5. Referred Readers Refer Readers · undated
• No-Code: Custom GPTs, Getting Early Users, Million-Dollar Businesses - Trends.vcDru Riley · trends.vc · 🌱 How to Grow No-Code Businesses · 2023-12-27
• Building a referrals program - by Lenny RachitskyLenny Rachitsky · lennysnewsletter.com · 2020-03-03