Design a referral system for a grocery app.
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in Product Design by (33 points) | 1.3k views

3 Answers

+3 votes

Clarification questions

1. How many cities is the app located in? 5

2. Do we want to design the referral for all cities? We want to start by experimenting in 1 city

3. How many users does the app have? 30,000

Okay, I am assuming the goal of the referral program is to increase the user base of the app. Is there any other goal that you have in mind? No, go ahead.

Okay, I will start off by breaking down the components of a referral program, then look at the persona of our referrer and their needs. I am then going to list out some solutions that might fulfill our goals and address user needs. At the end we can evaluate these solutions.

So, a referral program has 4 primary components –

1.    Referral channels

2.     Referral incentives

3.     Budget

4.    Users

Let’s talk about our target Users first:

1.    For a grocery app, I am assuming that the age range of our users is between 25-40 and that they are working professionals who don’t want to spend time grocery shopping physically.

2.     They are tech savvy and are active on multiple online platforms and share things with their peers on these platforms.

3.     For the referral program, we should aim to target users who are cost-sensitive as well.

Some of the needs of our users are –

1.   They want to easily discover people they want to refer to

2.    The cost-sensitive user might want to avoid delivery fee

3.   Get free samples of things they have never tried

4.  Are fond of convenience and want faster delivery

5.    Want items to be delivered in fixed time slots

Now let’s explore some solutions that address these needs –

Referral channel

1.    Sync app with Facebook that shows friends living nearby and who are not using the app

2.  Apart from above, provide multiple referral channels like Whatsapp, Instagram, messaging etc. for e.g. provide option to share promotional image as a story.

3.   Include 1-click signup link in the referral message.

4.    To ensure that new users are actually ordering, make the referral applicable after the new user’s first order.

Referral Incentive


5.    The most straightforward incentive is to provide a referral bonus. This might be a huge money sink though. Instead, we could promise 1-hour delivery for the next order for every referral. Or we can send a sample gift bag for each referral.

Referral Budget

6.     We can run the program for a fixed number of days during which we expect to meet our target # of users or reach our budget limit.

7.    We can extend the program for 20% more time if our targets are not met or evaluate what went wrong.


We can create an A/B test to analyse what referral incentive and channel works best for our users.

Thank you for such a great answer!
0 votes

what does the grocery app do?

  • users can order groceries and have it delivered to home

what is a referral system and why do we need it?

  • need a way to grow new users in a inexpensive way
who are our users?
  • busy professionals, kids at home, don't have too much time to shop grocery store after work and cook
  • College students, buy groceries occisionally
  • care about saving some money, save on delivery and service fees
user pain points
  1. Want to save money on fees
  2. Want to sample new items on display at the store
  3. Want to get latest sale flyer
prioritize #1 based on user need
Design: Referral Program that will help busy professionals save money on grocery delivery fees
Goal: increase new users activation (account creation), new user orders
Use cases
  1. My referral and I will get my delivery fees taken off, if my referral buys something
  2. I can share my contacts on phone and see who are not already using the app
  3. I can see how much delivery fees are being credited back to me
  4. I can see referral entry point at the end of my purchase so i don't get distracted
Prioritize 4, 1, 3, 2  based on impact to goal

by (23 points)
0 votes

Clarifying questions

  • User group: Are we referring consumers or other grocers?
  • Limitations: Are monetary rewards allowed? Or will I need to decide that?
  • External factors: Where is the product in its lifecycle? Will most users have heard of it already?
Based on my knowledge of grocery apps I'm going to assume we are dealing with consumers referring consumers, where monetary rewards are allowed and adoption is low.

Solution and metrics

  • Measuring success: I assume we're going to try to increase the number of users on the platform who make a purchase
  • Types of solution: We need to consider the whole funnel: (1) which users we target (2) what we target them with (3) how the referral is sent and redeemed
  • Other factors: We want to consider what's been tried before, ensure we don't annoy users reducing overall usage and that the system can't be exploited

Implementation and success tracking

  • The lowest hanging fruit would be to (1) target power users (2) with a simple message (3) that asks them to tell their friends about the grocery system with a social media URL. Traffic, downloads and subsequent purchases are measured as well as possible. This is attractive because the team would be able to work out what the dynamics of this system are and tweak the different stages in the funnel. A downside is that it potentially displaces existing, more authentic referrals by word of mouth.
  • A more advanced solution (1) target activated users (2) with functionality to invite friends with a specific message (3) monetary incentives based on existing CPA. This is attractive because it has a much bigger potential impact. A downside is that it's open to fraud and costly to implement.


  • Assuming the need is for the first consumer referral system in a grocery app, the initial proposed solution would be a simple social sharing link shown in-app or emailed manually to a proportion of power users. This would maximise learning early.
  • Data from the initial test could then be applied to building more advanced solutions.
by (24 points)
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