— Ep3: Expensive Lessons Learned on User Growth
User incentive programs can go a long way. In our case, it pushed us to the top of the Appstores and racked up almost one million users in a month. It seems like a tremendously successful user growth story except that the success comes with costs.
Let’s start with the benefits it brought. It helped us verify several things: 1) direct monetary incentive to users for referral or usage can bring exponential growth in a short span of time; 2) when well managed, the CAC can be lower than traditional paid acquisition. Therefore, to a nobody app launched just a few weeks ago, it was a great buff that suddenly increased our exposure and user engagement.
Everything comes with a price, and there’s no exception in our case. The payment came a while after the success and came gradually:
- Internally, it made it hard for us to verify product-market-fit and guide our following product iteration. Both user acquisition and retention were bloated by our incentive program, so it was hard for us to tell how much our users actually liked our product and where the room for improvement was.
- Externally, the incentive program was so successful that it was hard to redirect the narratives on social media and press to focus on the product itself. Ultimately, our goal was to build a short video product that people like.
- It was also hard to stop, or even change the incentives. Once the users form a certain perception and develop a certain behavior, it would hard to change them 180 degree in a short time. It would be hard to make any change to the incentives without pissing some users, if not all of them.
That said, the user incentive program is still helpful in many cases. Here’s my tentatively list of things that make a user incentive program especially helpful:
- The incentives are more aligned with the product value proposition. I don’t need to elaborate on the stories of how Dropbox and Uber leveraged incentivized referral to drive their early growth.
- The company or product is new to the market and need to stir things up within a short span of time.
- The user demographic that are more naturally interested in such programs is actually your target users.