Incentives are also in the eye of the beholder!

Not all incentives are created equal! Incentives are a slippery slope – some of them could lead you to paths that you didn’t originally intend to go on to begin with.

This blog is motivated “after” my discussions with Matt Corbett, Founder/CEO of InCXO.com and Amit Gupta, Founder/CEO of TenLegs.com. Both of them are solving the early customer/user development with interesting incentive structures. Very interesting startups …..please check them out!

In the past, I talked about incentives as “features” or “actions” your users perform while using your products -When to enforce “Actions” out of your users & customers? .

In this blog, I will talk about incentives with broad strokes – what they mean to startups, impact of them and impact on the type of users.

Incentives can be tangible or intangible. Incentives could be vanity (leaderboard) or centered around benevolence.

Users and/or consumers respond differently to incentives and type of incentives. Startups needs to be clearly aware of following aspects when they create incentives –

  • Objective of the Incentives – Startups need to be very clear about the objectives of the incentive. Are the incentives
    • To grow new users,
    • Bring current users back to the site/app regularly,
    • Increase the time on site/app for the current user base
    • For current users to bring new users,
    • For current user behavior/actions to brings new users, and so on and so forth.
  • Life of Incentives – Some incentives are short lived and some are part of a startup’s existence. Knowing that well ahead of time allows startups to tailor the incentives accordingly.
    • Temporary incentives – These are short lived. Typically offered in the initial days of a startup to grow users, user engagement and loyalty. These could also be offered during special events, campaigns and promotions as well.
    • Long term incentives
    • Incentives as features
  • Target User – Who is the target user for the incentive? What kind of users are you trying to convert or engage with this incentive? Early adopter? Influencer? Networker? Passionate advocate? Biggest catch for any startup is what happens when their target users change? What happens – when the company moves from early adopters to mass users/consumers? How will the incentive structures change and influence the next leg of users? What motivates Quora to attract high profile entrepreneurs to take an active role in discussions where as not in other communities with lot more tangible incentives?
  • Behavior  – What kind of behavior would incentives encourage/evoke from your “current target” users? Is that behavior consistent with your overall business growth and objectives? During early days of Hashable, all interactions were rewarded equally – which led to active interactions but when they changed the incentive structure to “new introductions” versus “interactions”, user behavior has changed – which in turn led to increased user base for Hashable.
  • Which type of user – Understanding which segment/type of your users are being incentivized is also very important. For example, typically for most consumer Internet startups, you have some or all of these types of users – “end users/demand”, “customers”, “producers”, “paid users”, “partners/suppliers”, and so forth. Typically they fall under two broad categories – demand and supply. Its a good idea to white board incentive structures for both those categories – demand as well as supply. There are times when companies focus only on one side of the user base that will not generate optimal results for the startup as they grow.

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