The Power of Referral Programs and Effective Reading Strategies


Hatched by Glasp

Aug 25, 2023

4 min read


The Power of Referral Programs and Effective Reading Strategies


Referral programs are a valuable tool for acquiring new users and customers, allowing businesses to leverage the power of word-of-mouth marketing. In contrast to paid marketing channels, referral programs enable businesses to give their customer acquisition cost (CAC) to their existing users, who then spend it within the product. However, designing an effective referral program requires careful consideration of various factors such as incentives, timing, and target audience. Similarly, reading for understanding and extracting valuable information from books requires specific strategies and approaches. This article explores how to design a successful referral program and offers insights into effective reading techniques based on various sources.

Designing a Successful Referral Program:

1. Identify the right products:

Referral programs work best for products that are already spreading through word of mouth. For example, Dropbox's shared folders naturally complement the referral channel, making it an ideal candidate for a referral program. However, products with low customer lifetime value (LTV) may not benefit from referral programs as they lack the potential for arbitrage. It is crucial to assess the suitability of a referral program based on the product's natural use case and potential for organic growth.

2. Placement and timing of referral requests:

Instead of obsessing over the wording of the referral program, focus on the placement and timing of the referral requests. Asking users to refer multiple times, in various contexts and with different messages, increases the chances of success. Incorporating the referral ask into the main flows of the product ensures maximum visibility and engagement. Additionally, "holidizing" referral campaigns, as seen in Uber's approach, can provide a seasonal incentive for users to participate in referral programs.

3. Incentives and their effectiveness:

Choosing the right incentives is crucial for the success of a referral program. Intrinsic rewards, such as points or storage, can be cost-effective and easily controlled by the business. However, external users who are unfamiliar with the product may be less responsive to such rewards. Tiered offers with breakage can provide higher incentives, but the trade-off should be evaluated against the overall cost of customer acquisition. Moreover, it is essential to consider whether a symmetric or asymmetric offer (e.g., "give $20, get $5" or "give $5, get $20") would be more effective in catering to the inviter's self-interest or perceived altruism.

The ROI Question and Cannibalization:

Determining the return on investment (ROI) of a referral program can be challenging due to the potential cannibalization effect. To measure the incremental cost per customer, A/B testing can be conducted by offering different referral incentives to control and test groups. An "On/Off test" can also provide insights into the program's impact on new user acquisition. For products with a true network effect, referral programs may eventually be overshadowed by intrinsic use cases such as folder sharing. Balancing the benefits and potential cannibalization is essential when evaluating the effectiveness of a referral program.

Effective Reading Strategies:

1. Reading for understanding vs. reading for information:

Distinguishing between reading for understanding and reading for information is crucial. Reading for information involves easily digestible content that can lead to regurgitating opinions without deep comprehension. On the other hand, reading for understanding requires engaging with the text, marking key points, and critically analyzing the author's ideas. It is essential to prioritize reading for understanding to develop true knowledge.

2. Different levels of reading:

Mortimer Adler's framework outlines different levels of reading, including inspectional reading, analytical reading, and syntopical reading. Inspectional reading allows for a quick evaluation of a book's potential by skimming and assessing its merits. Analytical reading involves a thorough examination of the text, using marginalia to engage in a conversation with the author. Syntopical reading, on the other hand, involves reading multiple books on the same subject to compare and contrast ideas.

3. Asking the right questions:

To extract valuable insights from books, it is important to ask the right questions. Adler suggests four main questions to guide the reading process: understanding the subject matter, analyzing the author's arguments and techniques, evaluating the truthfulness of the book, and considering the significance and implications of the content. By asking these questions and seeking answers, readers can develop a deeper understanding of the material.


Designing a successful referral program and adopting effective reading strategies share common principles. Both require careful consideration of the target audience, timing, and incentives. Referral programs can be a powerful acquisition channel, but they should be balanced against other marketing efforts and evaluated for potential cannibalization. Similarly, reading for understanding involves active engagement, asking the right questions, and seeking deeper knowledge. By implementing actionable advice such as asking for referrals strategically and reading with intention, businesses can enhance their customer acquisition efforts, while individuals can unlock the full potential of reading for personal growth and learning.

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