How a millennial-focused investment App used Scratch Cards to 100x their referral program?

Venkatesh Rao
7 min readAug 18, 2020

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This is the story of Groww, an investment platform that wants to make investing simple and accessible for everyone using technology.

It was launched in April 2017, just 5 months after Demonetisation by ex-Flipkart employees with a sharp focus on the next generation of investors — read Millenials.

You can find a lot of articles on the Internet that talk about — how they started, the vision, funding, roadmap, etc — so I am going to cut the chase and straight get to the exciting stuff.

Product-Market Fit

The most important thing before starting any referral program is to “have a product” 😉 and of course Product-Market Fit (PMF). Without PMF, you will just be wasting time & money on the referral program.

Unlike most startups, the Groww team did not wait for their perfect native apps to test out the market. They created a progressive web app and launched it with just three mutual funds (their MVP).

It took them just 2 months to build the first version. They iterated over the next few months — adding necessary features and removing unhelpful ones — based on users' feedback to get PMF.

Amplifying Word-of-mouth using a Referral Program

The wealth management space in India is very competitive and crowded with heavy-weights.

Groww needed a low-cost growth engine to stay relevant in the space. And is there anything better than tapping on your existing user base for acquiring new customers? — I don’t think so!

If you can strongly conclude that your customer’s network overlaps with your target audience then a well-planned and executed Referral Program can become one of the best acquisition channels for you.

Initial Referral Program without Scratch Card explained

Groww started a referral program in August 2017, offering up to ₹1000 for every successful referral.

Yes, ₹1000! However, there is a catch here. The reward was divided into three stages of a referral, as you will read below.

Earn up to ₹1000 for every Referral

Screenshot Groww Referral Program — August 2017

You can see in the screenshot above (they are taken from a video on youtube and hence blurry. Hope you don’t mind), the referral program landing page was straight forward — provides required information, the option to copy the unique referral link, and multiple sharing options.

Referral Program Details

Groww Referral Program details
Referral Program Details

As you scroll down, they had explained how the program works —

  • Unique Referral Link & Dashboard — You have to share your link with friends and when they register with the link, they add them to your Referral Dashboard. (You can read about the importance of referral dashboards in my previous article on Dropbox Referral Program)
  • Referral Stages Notification — They will notify you of each step that your friend takes on Groww. (This assures you that your referrals are accounted for and also creates an opportunity for Groww to re-engage)
  • Reward Stages — You will be rewarded ₹50 when your friend completes the Sign-up stage (i.e. OTP verification). Then a reward of ₹100 will be given when your friend completes the Documents Verification stage and then finally you will get a reward of ₹850 when your friend completes the Investment stage.
Groww Referral Stages

Check out the screenshot above to understand the reward stages better.

Referral Tracking Dashboard

Referral Tracking in Groww Referral Program

Each of your referrals will be shown in a separate card on the list. (Remind you — it was in the very early stages, so please ignore the design.)

As you can see in the screenshot above that there is one referral card that shows the following details —

  • Name of the referral
  • Amount earned for the referral
  • Referral Stage Progress

No Two-way Rewards

Referral Program Information

When you refer your friends, your friends would just get a free account and support to invest their money using Groww.

There is no reward for your friend to join the platform.

A product manager at Groww wrote in an article that they couldn’t reward both parties due to restrictions on investment platforms by SEBI and other regulatory bodies. (I will dig more on this and update this article)

In my previous article, I have explained the social-risk for users recommending any product to their friends or family. So, without two-way rewards, the conversion percentage would have been much lower for this referral program.

To make the referral program better, Groww had to solve this challenge of not being able to reward the referee (the user who is being invited to join the platform).

The only option they had was to make the program more exciting for the referrers (existing users who are inviting their friends to join Groww).

Groww Referral Program with Scratch Cards

They decided to go ahead with variable cash rewards using scratch cards.

Why “Variable”?

In his best-selling book, Hooked, Nir Eyal explains how popular tech companies like Facebook, Instagram, Pinterest, etc use variable rewards as a powerful tool to hook their users.

To understand why variable rewards are so powerful, we have to look at these two experimental outcomes —

  1. Variability increases activity in our brain and spikes levels of the neurotransmitter dopamine which drives our hungry search for rewards.
  2. We are more excited when anticipating a reward than after getting the reward itself. Neuroscience tells us this happens because our dopamine system works not to provide us with rewards for our efforts, but to keep us searching by inducing a semi-stressful response called Desire.

Now, do you understand why Google Pay scratch cards are still popular even with every time “Better luck next time” reward?

The same is the case with slot machines and casinos. It’s the thrill and the desire that gets people hooked.

Now, let’s look at how Groww used variable rewards in their referral program —

Groww Referral Program with Scratch Card

Their current referral program gives a scratch card that can get users a reward of up to ₹10,000 on each successful invite.

A successful invite — Your friend Registers, Completes KYC, and Invests more than ₹2000 in mutual funds.

They have also mentioned the winning probability as you can see in the screenshot below —

Referral Screen
Referral WINNING Chance Screen

There is a 2% chance that you can get a reward of ₹10,000 for inviting a friend to Groww App. Also, there is a 100% chance that you will be rewarded ₹100.

This gives a sense of assurance to users that the referral program is transparent and everyone has equal chances of winning.

Referral Tracking Dashboard with an option to Remind their friends

They also gave a “Remind” option to their users. This solves two challenges that Groww faced in their earlier referral program —

  1. No two-way rewards — Do you remember that Groww as an investment platform can’t reward the Referee (the user who is being invited to join the platform) because of some regulations? — The remind option gives Referrer an opportunity to nudge her friends to invest.
  2. Conversion Time — It usually takes 3–7 days for a referral to convert and a slight push from friends helps in speeding up the process.

Scratch Card vs Without Scratch Card

Their latest referral program with Scratch Card rewards outperformed the one without a scratch card. Check out the results below —

  1. 100x more signups through referrals in a month after implementing scratch cards.
  2. CAC of referral channel = 50% of other channels CAC
  3. 50% increase in “signup to investment” conversion rate for users from the referral channel.

This shows how truly powerful variable rewards can be.

Next week, I will be writing on how we used Variable Rewards to take AppBrowzer from 300k to 1 million in just 21 days. (You can follow me to get an email notification when I post it here.)

The above results that I just mentioned were posted in an article by a Product Manager at Groww.

According to him, it took them five team members and approximately 2.5 months to build and take this idea of a referral program with scratch cards LIVE.

However, you don’t have to spend so much time and resources to implement this idea in your App. We have created FLYY to get you up and running with a Scratch Cards based Referral Program in your App within 2–3 days.

I hope you liked the article and would love to know your thoughts in the comments below :)

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