Why the worst users come from referral programs, free trials, coupons, and gamification

While referral programs can boost user numbers, they often attract users looking for quick gains rather than long-term engagement. This leads to lower engagement rates and higher instances of fraud, challenging the initial financial models that justified these programs and underscoring the importance of targeting the right kind of user growth.

Incentive programs can prematurely "pull forward" users who might have discovered the product organically, incurring unnecessary costs. This phenomenon highlights the delicate balance between incentivizing new users and allowing organic growth through word-of-mouth, which often brings in higher-intent users at no additional cost.

Uber's extensive experience with referral programs reveals a nuanced picture: while driver-side referrals attracted motivated users, rider-side referrals often brought in discount-seekers, leading to a misallocation of millions in marketing spend. This underscores the importance of understanding the different impacts of referral incentives on various segments of your user base.