The course of true love never did run smooth, as Shakespeare once said. That there are more than 8, dating sites in the world dedicated to bringing people together is a testament to the fact that β even in , with the most advanced matching algorithms β finding a partner is not easy. But while users of dating apps are often looking for one special someone, the chief marketing officers of these apps need to attract millions of people. And like many network businesses, dating sites must cope with a dilemma: grow the network or grow revenue?
A network business needs to succeed, of course, but to attract new users, dating sites often trade revenue to grow their membership by exchanging access to premium features as a kind of commission for a successful referral. Unfortunately, the value of these referrals is not always clear. Ironically, given the data-driven nature of the business, dating app marketers generally have to guess whether new members recruited by friends who already belong to the site will be less active on the site and less interested in paying for premium features.
But that may be changing. Like many network businesses, the site ran on a freemium model β free use of the basic features, subsidized by users who pay for premium packages. This creates a dilemma for most dating sites. A social referral offer generates some referrals from users who would not have paid for the premium features, effectively increasing the number of users in the platform at low cost.
It also attracts referrals from users who would have paid but given the option, prefer to work for their subscription, generating more referrals but fewer paying users. For example, if referrers end up inviting people who are less likely to subscribe to premium features, their addition to the platform could harm the value of the community in the long run.
We wanted to find out whether it would be possible to design referral programs so that they can balance growth without reducing the profitability of their user base. Working closely with the platform executives, we conducted a large-scale randomized field experiment for two years on the platform to assess whether raising the number of referrals required for the member to gain access to premium features changed the level of engagement of those new referred members.
