How we used variable rewards to get 100x more referral

Referral sign-ups


To give you some background, we’re Groww — a mutual fund platform based out of Bengaluru. We’re the fastest growing fin-tech startup and we’re backed by Y-combinator and Sequoia Capital.

A few months ago, we decided to launch a referral program to accelerate our user acquisition. After studying all the successful referral programs that existed, we noticed in all of them there was a two-way reward associated with the user where both the parties get a reward.


But we got a problem : we can’t incentivize both parties for investments on our platform because investments in India are highly regulated.

As we couldn’t give a reward to the user who got referred and made an investment, we gave a reward to the referrer — the user who introduced Groww to his/her friend.

We realized that for this referral to work it had to be addictive. To make it addictive we followed the rule of ‘Variable Rewards’. This is the single reason for the success of the world’s most addictive platforms like Instagram, Tinder, and Facebook.


There was a very famous experiment by B.F Skinner, a professor at Harvard University. In his experiment, a rat was placed in a box with a lever. As the rat moved, it would accidentally knock the lever and a food pellet would drop into the box. After the rat had been put in the box a few times, it learned to go straight to the lever and knock it: the reward reinforced the behavior. After a few days, the rat knocked the lever only when he was hungry.

The way to maximize the number of times the rat pulled the lever was to vary the rewards it received. If it didn’t know whether it was going to get one pellet, or none, or several when it pulled the lever, it pulled the lever over and over again. It became psychologically hooked. This became known as the principle of variable rewards.

We encashed one of the Seven Sins — Greed and mixed with a variable reward system to make a deadly combo for a referral. Now we made sure that reward money should be way higher than the existing referrals in the market.

We also ensured complete transparency. The users are shown the odds of winning the rewards clearly.

The money goes directly into the user’s bank account. The instant gratification because of this gives the user a dopamine hit.

We gave the exact tracking of referrals to our users so that they are constantly updated about their referrals.

We even gave a ‘Remind’ option to the user since we know it takes 3–7 days to convert a user and a nudge from a friend can expedite the process.

You can see how our referral program works here.


  1. We initially got 10x more referrals than usual and after a month it exploded — we got 100x more signups.

  2. Referral customer acquisition cost halved when compared to the CAC of the normal user.

  3. Conversion from signup to investment became 1.5x when compared to a normal user.


The referral went viral on social media & youtube. After that, we needed to scale up our servers as they were down due to the very heavy traffic.




India's Largest Online Mutual Fund Investment Platform


Rishu Garg


Never miss a Growth opportunity !


How we’ve increased our store rating to 4.9🌟

How we’ve increased our store rating to 4.9🌟

From 800 to 40 000 Users in One Day Thanks to Referral

From 800 to 40 000 Users in One Day Thanks to Referral