business-plan, customer-developmentMany startups use an invitation system to manage the flow of users to their service. It seems like there are two different ways of implementing this. Some companies start off with a few invitations and give those first users a limited number of invitations to share. Ello and Gmail used a system like this. Robinhood used an alternative strategy where you add yourself to the waiting list and can move up by inviting more people to join the waiting list.
It seems to me that Robinhood’s strategy encourages users to spam invites and use fake emails, while people are more likely to be careful with their Gmail invites. What are other pros and cons to these systems. When does it make sense to use one or the other?
I think the main difference is just in the culture you’re looking to build. I hesitate with the usage of “just” because it’s probably a pretty important detail, but I’m not sure anyone could accurately walk up and say “this one is better, and here’s why.”
#Invitations
I think in general, invitations are a much nicer way of doing things. I’m not saying they’re better, but if you can get away with invitations, I think they’re a more pleasant and enjoyable experience for all. That’s not to say waitlists don’t have their moments, but I like the cleanliness of invitations.
Invitations have a few pros that I can think of off hand:
#Waitlists
Waitlists have a distinct advantage over invitations. Everything I said there was contingent on the premise that you have a good product, and that the network of people you launch it to will mostly know other interested parties. If your product targets largely disjoint sets of customers, a network invitation approach probably won’t be very effective.
But that’s where waitlists are great.
As you say, waitlists are very spammable. You can invite people in mass numbers to join your waitlist. That can obviously be very annoying to users, but that’s really up to you. In an ideal world, this would lead to you to tons and tons of users who stick around. Sometimes that works out, and sometimes it doesn’t.
The biggest benefit of this mass marketed approach is variety. By the same token as how invitations are only as good as the community they target, waitlists give you a variation of users. Sure, the network will eventually grow in either case, but waitlists will be a lot faster to get you that wider audience.
An invite list is prone to fail in the event you don’t have enough press attention, or if early adopters are underwhelmed by what you’re showing them. It works based on the incentive that an eager user will crave to become one of the “privileged few” who get to use an awesome product, and then chat around hoping to locate someone who will be able to honor her with that privilege. If early reviews suggest that your product is underwhelming, there isn’t much of a privilege in using it, and little chatter will result.
The benefits of a wait list over an it include that a) it tends to spread further, faster, and more virally; and b) it quickly pins down which of your market segments are most eager to use your product – or at the very least those which are most eager to promote it.
A downside is indeed that these may end up promoting it to users who aren’t really interested. You can work around this though: if you count invites closed rather than invites sent, or the invite closure rate, or the invites sent by invites, the incentive to randomly email spam is lower.
It can also be perceived as spammy. (“Just notify me when it’s ready, thank you very much.”)
Still, methinks a waiting list is the better approach if there’s any potential for your product to be promoted virally (neither approach will work if it doesn’t): it allows to build a larger list during a pre-launch, without needing too much press attention. Because upon signing up, there’s little incentive to pass on (a fixed number of) invites in e.g. forum or a blog post, whereas there can be an incentive to mention it in the same location with a special signup link.
I should add (and this is something I’ve yet to see done atm) that there might be value in suggesting which types of users ought to be invited in terms of “Users who [describe a problem you address here]”. When a user signs up, ask in which segment(s) she fits in, and leave her the possibility to add a custom answer (“I need it for something else”) to get additional market insights.
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