As VP of Growth, I’m constantly looking for new, interesting, and inexpensive ways to increase Betterment’s customer base. My team and I think in terms of growth loops: getting users to take actions that result in some sort of output, which, in turn, inspires more of those actions, ideally performed by a new set of users who hadn’t previously been exposed to Betterment.

One of Betterment’s most powerful growth loops is the referral. The loop is simple: customers invite friends or family to open and fund Betterment accounts. There’s an incentive for both the referrer and the recipient for doing so: you get a portion of your investments on Betterment managed free for a period of time. Because the incentive can stack (the more people you refer, the bigger the portion of your investments that we’ll manage for free, up to 5 referrals per year and $25,000), the idea is that the recipient will get inspired by the bigger incentive and will refer within their own network of family and friends.

We love this loop for two reasons. One, it involves a known cost: we know how much revenue our management fees generate, so we can easily calculate the cost of giving those fees away on certain dollar thresholds for a specific period of time. Two, we’ve seen that customers referred to us by other Betterment customers tend to be stronger customers. Additionally, they generally have higher balances and lower churn rates.

The problem with the loop

The trick with referral loops is to figure out how to make them ongoing. Incentivized referral loops tend to lead to small, isolated referral actions. Essentially, customers do just enough to get the incentive and stop there. I’m not one to turn away a referral, even if it’s just one customer referring one other person. However, I also know that a one-for-one referral equation is a slow path to growth. One person repeatedly referring two, five, or 10 other people, with those two, five, and 10 people then going on to refer even more, is far more ideal.

We sought to understand what might increase referral actions among our customers, so we started with an incentive focused hypothesis: a more attractive incentive would inspire more customers to refer, and to refer more people. However, we were wrong; the answer turned out to be much more philosophical.

What is ego?

Wikipedia defines egoism as “the philosophy concerned with the role of the self, or ego, as the motivation and goal of one’s own action.” In other words, sometimes people do things because they know those things will reflect back on them in a certain way. This isn’t inherently a bad thing. For product managers, understanding egoism can give us insight into what might motivate or provide fulfillment to our users. We can use that insight to build motivating and fulfilling products.

When we talked to our customers about referral, we were surprised to discover that for many of them, our incentive played a back-seat role in their decision to refer. Instead, they express the importance of being viewed as financially savvy among their family and friends. For these customers, referring Betterment gives them credibility, because Betterment is seen as a financially responsible product. By telling a friend or family member that they’re a customer, and then personally extending an invitation to try it themselves, these customers associate themselves with being financially responsible and with helping others become so themselves. That’s good for the ego.

How we brought ego into Betterment

Our referral experience up until that point was simple and straightforward: a card explaining the incentive alongside a call-to-action to refer. After our conversations with customers, we took a dramatically different approach. We tapped into the desire to help others with copy that’s more altruistic. We reflected the desire for credibility by designing a layout that prompts customers to think about the financial needs of their network. The copy encourages them to “hand pick” people for an invitation to join Betterment. Aside from that, the incentive structure stayed similar, and we didn’t make changes to the recipient experience.



The results spoke for themselves. The new design led to an increase in referrals sent. It also increased the number of referral recipients who created a Betterment account, despite the fact that we didn’t change the recipient experience. We attribute this happy and unexpected side effect to the new experience. It inspired customers to think differently about their family and friend networks, thus targeting better qualified people with their invitation.

Where can you bring ego into your product?

I’ll reiterate that egoism isn’t inherently bad. In fact, we as product managers can use the concept to help us discover ways to inspire users and build fulfilling products. Start with a list of the actions you’re looking to drive. Next, talk to people. If those actions directly associate with something specific to your product, talk to actual users. If the actions are about driving the adoption of your product, talk to people who aren’t using your product yet. Find out how they think about those actions outside of the UI of your product. As an example, we asked, “when you talk to your friends or family about Betterment, what usually triggers the conversation? Why do you mention Betterment?”.

Focus the conversation on the user and their feelings rather than descriptions of scenarios. This is where you’ll discover how your users view themselves and how they’d like to be viewedhe ego at play. It’s this that you’ll want to replicate or reiterate within the product experiences surrounding your target actions. The end result? A product that feels good to use. 

Any links provided to other websites are offered as a matter of convenience and are not intended to imply that Betterment or its authors endorse, sponsor, promote, and/or are affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.

About the speaker
Katherine Kornas Betterment, VP Product Contributor

Katherine Kornas is VP of Product at Betterment, where she leads growth, mobile, and money movement product teams. Prior to joining Betterment, she was SVP, Product at Havenly, and held product leadership positions at Pandora and Autodesk. Katherine has also worked on product teams at and GreatSchools. Katherine is a graduate of the University of Michigan and currently lives in New York City

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