Growth Marketing: Growth experiment in Nigeria

Growth Experiment: The Effect of failed Ponzi and Pyramid Schemes on Using Referral Schemes to Grow Products/Services in Nigeria

I recently conducted an experiment to test the effectiveness of a referral scheme on Social Butterfly (SB). Background information shows that referrals are the primary source of clients for SB, with most referrals coming from individuals who are aware of SB’s services but have not used them. To encourage even more referrals, SB launched a referral scheme offering 10% of the package subscribed for as a reward for referring a client to SB or getting a FREE service.

Surprisingly, the scheme did not get any response, even though people were still referring SB’s services without signing up for the service. To understand why, I conducted an experiment where I created two posters. Poster A asked people to refer SB with no reward, while poster B asked people to refer and earn a reward of either 10% of the subscribed service or a free service. 80% of respondents chose poster A.


Growth Experiment: Referral scheme in Nigeria

The responses I received from the experiment showed that most participants valued their reputation and are more concerned about proving their worth to whoever they referred SB to more than rewards. They trusted the reviews and results of SB’s services, rather than monetary compensation. These participants came from diverse backgrounds, including students, entrepreneurs, and employees aged 29-35.

One reply stood out, where a participant mentioned their dislike for anything loosely related to reward schemes, especially those resembling pyramid schemes, due to the scams and ponzi schemes that arose during the Covid period. Since the primary audience SB targets are Nigerians, factors like this could be one reason why the refer and earn scheme did not work.

Given these findings, it is essential to experiment more to understand what can encourage referrals for SB.

However, the results of this experiment left me with even more questions;

How much have these failed schemes impacted marketing strategies and funnels, and to what extent?

What is influencing people to choose to bring more value to organizations over making more money for themselves?

Some potential ideas I’ll consider for future experiments could include:

  1. Exploring different types of rewards: I will consider testing different types of rewards that might appeal to SB’s target audience. For example, perhaps instead of offering a monetary reward, SB could offer a discount on services or a free add-on to the package purchased. This is targeted at providing more value to the brands getting these services than the person referring SB, since those who want to refer SB care more about the value they’re bringing to the businesses they’re referring SB to.
  2. Using social proof to encourage referrals: I will consider showcasing positive reviews or testimonials from happy customers who were referred to SB. This could provide social proof and encourage others to refer SB’s services. This is what has been shown to work so far for SB.
  3. Creating a referral program that is easy to use: I will consider simplifying the referral process to make it easier for people to refer SB’s services. This could include creating an online portal where people can easily submit referrals, or offering pre-made referral templates that people can send to their contacts. Again, something with no financial motivation behind it.
  4. Targeting specific niches or demographics: I will consider targeting specific niches or demographics with referral programs specific to that group. For example, if SB offers services that are particularly valuable to entrepreneurs, consider creating a referral program specifically for this group.

By experimenting with different approaches and analyzing the results, I can identify what works best for your target audience and create a referral program that drives more referrals for SB.

What is your takeaway from this experiment? Share your thoughts!

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