👥 3 Ways To Turn Users Into Recruiters Using Double-Sided Incentives

Hey there,

Welcome back to another edition of Bootstrapped Growth. 👋

Today, we cover double-sided referrals. These programs not only reward the person sharing but also the person signing up as a a result. This creates a compounding growth loop where each user can be turned into a growth engine.

Table of Contents

• 🚀 Strategy

• ⭐️ Extra Tips

• 🛠️ Resources

Thanks for reading. Let’s jump in!

🚀 3 Best Practice Double-Sided Referral Programs

1) Reward both sides with credits that boost retention

Turo (peer-to-peer car rental) gives both the referrer and new renter travel credits when they list their car for ‘hosting’. Car owners who ‘host’ or list vehicles get $500 when the user that they referred to Turo, lists a car.

This creatively solves the classic marketplace chicken-and-egg problem by growing supply and demand. There is also a defined one year expiry for credits. Users are incentivized to actually use the platform, increasing lifetime value beyond the acquisition cost.

Takeaway ➡️ Structure rewards as credits with expiration dates to drive immediate usage and build habits.

2) Create asymmetric rewards where there may be a bottleneck

Rover (pet sitting marketplace) offers $20 to new pet owners and $20 to the referrer. However, Rover recognized that finding quality sitters was harder. As supply of new sitters is a growth constraint, they offer a higher amount of $50 for those who refer new sitters.

Takeaway ➡️ You may need to make rewards asymmetric based on which side of your marketplace requires more growth.

2) Build network effects into referrals

Venmo (payments app) makes transactions social by default. The social nature of the app means that a referred friend cannot get paid or be able to split expenses unless they also start using the Venmo app. This FOMO is reinforced with referral incentives where new users can get $5 for their first transaction, and referrers also get $5.

Takeaway ➡️ The best double-sided referrals occur because the product requires the participation of both parties as part of its core functionality.

⭐️ 4 actionable tips for building double-sided referral programs

1) Rewards should be visible and instant. Show both parties their rewards immediately after signup or first action. This sense of instant gratification encourages further sharing.

2) Test different reward structures on various user segments. Run A/B tests offering $x cash versus x number of credits versus x number of premium features. Determine what drives the highest quality referrals for each user cohort.

3) Cap referrals and prevent fraud. Limit rewards to 5-10 successful referrals per user per month. This can prevent gaming by referrers who recruit low-quality users just for bonuses.

4) Trigger referral prompts at high intent moments. Ask users to refer others right after they've experienced value and are satisfied (e.g. completing a transaction, hitting a milestone, or leaving positive feedback.)

🛠 Useful Resources

Need a quick conversion and/or calculator? Calculators.so is free to use and covers you from compound interest to volume calculations with unit conversions.

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