Design a referral system for a grocery app.

Certainly, I'll provide a detailed, strategic answer to the question "Design a referral system for a grocery app" from the perspective of a seasoned VP of Product. I'll structure my response according to the guidelines you've provided.

Introduction

The challenge at hand is to design an effective referral system for a grocery app. This task involves creating a mechanism that encourages existing users to invite new customers, thereby driving organic growth and expanding our user base. I'll outline a comprehensive strategy that addresses user acquisition, engagement, and retention through a well-designed referral program.

Here's how I'll approach this:

1. Ask clarifying questions
2. Analyze the current state and growth challenges
3. Examine competitor strategies and market trends
4. Define user segments and personas
5. Develop growth levers and hypotheses
6. Create retention and engagement strategies
7. Establish metrics for success

Let's begin by clarifying some key points about the grocery app and its current state.

Step 1

Clarifying Questions (3 minutes)

• Based on the growth challenge described, I'm assuming we're working with an established grocery app looking to accelerate user acquisition. Is that correct?

Why it matters: This helps frame our referral strategy within existing app capabilities and user base. Expected answer: Yes, it's an established app with a solid user base but seeking growth. Impact on approach: We'd leverage existing users for referrals and focus on expanding reach.

• Are there any specific growth targets or timelines we're aiming for with this referral system?

Why it matters: Helps set concrete goals for the referral program and measure its success. Expected answer: Aiming for 20% user growth in 6 months. Impact on approach: Would influence the aggressiveness of referral incentives and campaign intensity.

• What's the current user acquisition cost (CAC) for the app, and how does it compare to the lifetime value (LTV) of a typical user?

Why it matters: Helps determine the budget for referral incentives and ensures program profitability. Expected answer: CAC is $10, LTV is $50. Impact on approach: Would inform the maximum referral reward we could offer while maintaining profitability.

• Are there any geographic or demographic constraints we should consider for this referral program?

Why it matters: Ensures the referral system is tailored to the target market and complies with local regulations. Expected answer: Focusing on urban areas in the United States, targeting millennials and Gen Z. Impact on approach: Would influence messaging, incentives, and potentially the referral mechanics.

• What data do we have on current user behavior patterns, particularly around sharing or discussing the app with others?

Why it matters: Helps identify natural sharing behaviors we can amplify through the referral system. Expected answer: Users often share shopping lists or deals with friends and family. Impact on approach: Would guide the design of sharing features and referral touchpoints within the app.