📌 Case Study
Intrinsic vs Extrinsic Rewards in Referral Programs
One of the Most Interesting Problems I Tackled
📊 What the Data Showed
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Most referrals came from trial users, but those referrals had very low conversion to membership.
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Members made fewer referrals, but their referrals converted at a much higher rate.
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Member referrals typically happened after 6 months of being on the platform.
This pointed us to a core insight: the strongest referrals came later in the user lifecycle—when trust and satisfaction were higher.
💡 The Initial Hypothesis
Internally, we believed that users were referring friends out of intrinsic motivation—the joy of yoga—rather than for rewards. So, we thought increasing incentives wouldn't help.
This aligned with another finding:
👉 76% of converted referrals had taken at least one class together.
It wasn’t just about spreading the word. It was about practicing together.
🧪 Experiment #1: Practice Together Feature
We built and launched a feature allowing referrers and invitees to join classes together.
📉 But adoption was low.
The intention to practice together didn’t always translate into action.
To dig deeper, we turned to user interviews.
🗣️ User Interview Insight
User: “I tell all my friends and family about you.”
Me: “That’s awesome! How many joined you?”
User: “None.”
The gap was clear:
While intentions were noble, getting others to act on them was difficult—especially when the only reward was “more yoga.”
🔄 Reframing the Strategy
Intrinsic motivation gets people to talk.
Extrinsic rewards get people to act.
We needed two major changes:
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Add an extrinsic reward to motivate the referrer
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Tighten the follow-up loop after a referral is sent
🚀 Execution
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Introduced a $50 referral reward—for both parent and child on membership conversion
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Enabled email invite sharing
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Added nudges and reminders to push action
✅ The Results
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📈 15% increase in referral sign-ups
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💥 50%+ increase in conversion to membership
🎓 Lesson
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People love sharing positive experiences, especially ones that change their lives—like yoga. But good intentions don’t drive action on their own. For word-of-mouth to translate into growth, incentives must align with effort.
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Even in mission-driven products, material nudges are not a betrayal of intrinsic values—they’re a bridge to action. The real magic happens when you pair emotional connection with practical motivation.