Join Brad Batesole for an in-depth discussion in this video Creating an incentive strategy, part of Marketing Foundations: Growth Hacking.
- Most growth hacks are built around incentivizing users to invite others. It's an excellent way to drive exposure to your product. Plus, a personal recommendation from a friend is far more impactful than an advertisement. An incentive strategy can be a direct ask, say to unlock a particular feature, or built-in to the mechanics, say a game that requires you to invite friends to play. The entire idea of incentivizing is to leverage the social circle of a user. You're making a trade with them and the trade has to be valuable enough to the user so that they're willing to give up access to their preexisting network.
There's many approaches to incentives. You can incentivize a user by suggesting their personal network will improve their experience. This is similar to how sites like Twitter, LinkedIn and Facebook encourage you to import your contacts and invite them to your network. A user knows that without these friends, they won't have much to do on the platform. This is also common in mobile applications such as Snapchat or Draw Something. The application is meaningless without a network of friends to interact with, so inviting them to participate is the first step.
One problem with this method is it's widely used so it can come across as spammy unless there's a very clearly defined understanding of why a user needs to import their network. If the value isn't properly communicated, this approach will be ineffective. Another strategy is to use product mechanics to unlock a particular feature, or deal, based on the amount of users who have opted in. This was a strategy Groupon used. A deal would only become available if enough users committed to buying it. The incentive was to bring your friends into the experience so that you could receive what you originally sought after.
I've also seen this strategy used in online contests where the prizes get bigger and the chances to win greater with every new entry. The motivation is to invite more friends to unlock more prizes for everyone. This type of incentive goes well when paired with a sense of urgency. If the clock is ticking, it helps move someone along in the process. Otherwise, they might wait around to see if other people participate before they have to give up their friends list. One incentive strategy that is gaining a lot of traction is the idea of introducing a monetary component for a referral.
For example, PayPal created an offer where you would receive $10 for each person who signed up. Because a signup was free and fairly effortless, it was easy to participate and encourage your friends to do the same. A lot of brands these days will trade a coupon, a free month or cash credits for a successful referral, and these referrals are usually contingent on the recipient making a purchase. The best way to introduce this style of incentive is to identify the most important part of your product and determine the value of an interaction with that piece.
Now in some situations the incentive doesn't have to be monetary. Dropbox is a great example of a company that uses this method without the monetary component. Dropbox lets you store your files in the cloud and with a free account you're allowed a certain amount of storage, but for each friend that you get to sign up, that storage amount increases. Dropbox is motivated because they have a paid plan for larger amounts of data storage, and they figured out that the best way to get someone to pay is to give them a free account. Leveraging their friends with an offer of more free storage is a very successful strategy.
Be aware that you run the risk of losing revenue through this model. Any incentive strategy that involves monetary reward should be carefully evaluated. You might see users game the system, or if your conversion or attention rates are too low, the expense will not be profitable. As you look into your own product, decide if there's a clear way to include an incentive. Instead of creating something that benefits only the user, say a 10% off coupon for their e-mail address, look to build a reason for them to invite other friends to your platform. Build the right incentive into an incredible product and you'll hit new highs with your traffic.
The course concludes with growth-hacking case studies, highlighting the growth-hacking techniques that helped propel such companies as Airbnb, Uber, and Tinder to explosive growth.
- What is growth hacking?
- Understanding the funnel
- Setting up tracking and analytics
- Leveraging customers and existing users
- Testing ideas
- Generating an audience
- Creating an incentive strategy
- Real-world examples of successful growth hacking