Most referral programs are useless, here’s why

6 months ago, I added an incentivized referral program to my startup. “Invite someone to sign-up and receive extra [your main product value goes here], for both of you”. Last week, I learned why it didn’t work. The problem nobody mentions when advocating for PLG, viral loops, and incentivized referral programs, is that offering a free cookie for sharing your product is not what motivates users to spread the word. It’s the product itself that does the job. The referral program just amplifies what already exists. And if there’s no existing momentum, no value that blows users’ minds and looks and feels like magic, it’s just not going to work: Even Infinity multiplied by zero equals zero. If the product is crap, or, most often, is confusing, doesn’t look good, or does its job without delighting the user — the incentivized referrals won’t work. The user would simply not reach the point when the usage habit is developed, and the ♥️ chemistry with the solution happened. The solution — is to optimize for retention and engagement, before anything else. We’re doing that by simplifying the onboarding flow — to show new users our value faster. We do that by defining the right Aha moment: the first time the user receives the value and feels the full power of the product offering. We do that by playing what Habit moment means for our startup: how often our user does the key action that creates value for them. We aren’t quite there yet, we’re just getting started. We still have work to do. But once we’re ready, the incentivized referral program will be a nice add-on to our flywheel of user growth. We’ll be back.