Exploring the Impact of Word of Mouth on Active Members

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There is a reinforcing relationship among Active Members, Referrals, New Members from Word of Mouth, and Joining. Consequently, effective referrals can have a supercharger effect on membership over time. However, the effect of referrals might take months to kick-in. Furthermore, as community hosts, we can’t control word-of-mouth, though we may be able to influence it.

In this lesson, we’ll do the following:

  • Introduce scenarios to see how different sets of parameters affect membership.
  • Add the Referral Rate and Persuasion Fraction variables to the Active Members dashboard to allow us to play around with different assumptions regarding advertising and word-of-mouth.

Reflection Questions

  • How might you measure New Members from Word of Mouth over time in the real world? How might you measure the Referral Rate?
  • How long might it take before a member feels strongly enough about the value of their membership to start making persuasive referrals to prospective members?
  • What might you do to encourage referrals?
  • How might you help members make persuasive referrals?
  • If you encourage members to make referrals by offering extrinsic rewards, will those referrals be persuasive?
  • Under what conditions might members be intrinsically motivated to make referrals?
  • How many referrals can an average member make before they run out of connections with other prospective members?