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Ask Irrational Labs: on referral prostitution and hiring for keeps

Dear Irrational Labs,

We are considering giving our users a small monetary incentive – either money or a discount – to share our app with their friends, and accelerate its adoption. It’s a cheap way to access a wide audience by leveraging people’s social circles. Should we do this?

– Need More Users


Hi Need More Users,

Let’s draw an analogy to real life. Imagine you have a first date this Thursday. To help with planning, you ask your trendiest friend what you should do with the lucky lady. He emphatically offers you a recommendation for a restaurant he professes to love.

Before the date, you discover he’s being paid by the restaurant for each referral he gets them.

How does that make you feel? Likely not good. Do you trust him more or less now that you know he stands to financially benefit from his recommendation? Probably less.

Why is this? When payment is involved as a key motivator in social transactions it undermines the relationship. Imagine paying a friend $10 to give you advice or for help with moving apartments.

While you may engage a consultant, pay for a taxi, or hire movers, the idea of mixing payments into a social context is inherently appalling and likely to either make you go broke or friendless.

So to respond to your question, asking your friends to ‘use’ their social circles for their own monetary benefit could resemble a cyberlike form of prostitution. You are introducing payment into a social environment where it not usually found.

A better idea? Give your users a discount code they can pass on to their friends. Let your user be the generous hero. For an added bonus, tag an expiration date on to the discount code. This deadline gives your users some extra motivation to promote you while also putting pressure on the friend to avoiding wasting the generous gift.

– Irrational Labs


Dear Irrational Labs,

How do I improve my hiring funnel? We make offers to candidates but have a problem getting them to accept.
– High and dry

Hi High and dry,

Perhaps it’s a problem of imagination. Your candidate can’t fully imagine the great opportunity they have to work for you. During the decision process, we would suggest putting a name on their potential desk, including them on funny office email threads and inviting them to company happy hours. If all else fails, just send them their first paycheck.

– Irrational Labs



Authored by Kristen Berman. Have a question? Submit to Kristen@Irrationallabs.org

See Dan Ariely’s WSJ column here. 

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