Month: January 2022

HARVARD BUSINESS REVIEW – A large-scale two year study (with Inner Circle) suggests that carefully managing the threshold for the number of referrals needed in order for referring customers to access the premium features can increase customers and generate more profitable ones. There's 8k+ dating sites in the world. In 2019, 39% of U.S. couples said they met online. In 2020 270m adults worldwide subscribed to a dating site, ~double 5 years ago. Most sites don't have a clear idea of how profitable referred customers are compared to the (originating) friends who invited them to join the site. The number of successful referrals users are required to make before they can access premium features (called the referral threshold) can have important effects on users' behavior. Referral-driven growth typically comes at a cost: as the number of referred users in the population grows, their collective level of engagement tends to fall. Raising the number of successful referrals needed to win free access to premium features did not have an impact on the relative activity of their converts. New members were as engaged as those invited by users in referral programs that had a lower threshold. Total revenue increased when we raised the number of successful referrals required for free access to the premium features. Adding additional referral requirements in exchange for premium features did not disincentivize some users. Tweaks could be dynamic: the platform could start by assigning a freemium plan to all users, and after assessing behavior, decide whom to give the option of joining its referrals-for-features program. Individuals value having their friends on the platform. Social referral programs designed to enhance the shared experience of online dating (for example, by organizing offline activities) could be particularly effective in increasing platform engagement.

See full article at Harvard Business Review

Mark Brooks: This study was run by Professor Ting Li and Professor Rodrigo Belo, Rotterdam School of Management. Given that the only mutual contacts I have with them on Linkedin are with Inner Circle, I'm going to infer that this study was with Inner Circle. In short, it's worthwhile amping up your price and proposition testing. Time to hire a data scientist if you don't already have one, or perhaps open up to experiments by academics like this. See IDEA's Project 0d8 at 0d8.com, btw.