Building Network Effects Into Your Referral Strategy

There’s a level of magic we credit successful companies with. We even call the best ones unicorns. No doubt a $1B valuation seems like the impossible dream. But when we credit “magic” for their success, we stop ourselves from learning how they did it and applying growth lessons to our own business strategies.

So, let’s cut through the magic and get real about how network effects can drive your recruiting referral program into viral territory.

A unicorn and its network effects

When we look at modern-day unicorns, like Instagram and Pinterest, network effects are a driving force behind their growth and value.

network effect is when new users of a product or service add value and utility, by being users, for the entire user base — and that value and utility will continue to increase as the user base grows.

Consider Instagram. It started as a fine place to find free photo filters. Edit your photos and then share with friends and family on another platform, like Facebook or email. But once early adopters started sticking around, it grew into a network to see these photos — and eventually the key way to keep up with anything going on in your family and friends’ lives.

Each time a person joined, users had more reasons to share, engage and tell more people to find their content on Instagram.

The chicken and the egg

Still sounds a little magical, right? But the lesson for corporate recruiters and staffing firms who want to take their recruiting viral starts a few steps back.

Instagram didn’t snap its fingers and suddenly have a powerful user base sharing pictures. It started by demonstrating two essential qualities:

1. Inherent value
Those filters! Instagram offered trendy filters that made photos take on the moods and hues of high-end photography and vintage Polaroids. It made cell phone photographers look and feel legit. What’s more: they were FREE. At a time when competitive apps charged 99 cents to $4.99 for similar functionalities, Instagram exchanged the monetary value of those filters for growth.

2. So darn easy
Built with users in mind, the Instagram app made editing and sharing photos to a (growing) network easy as a few swipes and taps. It knocked down adoption barriers by delivering an experience that was enjoyable, easy. Plus, it was simple enough that you could invite your mom to join without needing to be on-call tech support for her to see pictures from your trip to London.

Before there could be network effects, the Instagram experience had to deliver value by itself and make it easy — inevitable, even — for users to share the experience with others, too.

This is where you put your candidates, first

Gut-check time. Does your candidate experience demonstrate those two essential qualities — inherent value and so darn easy? Spoiler alert: you can’t actually answer that question yourself.

Inherent value here means your candidate experience stands up by itself. That no matter the outcome, the candidate walks away feeling seen, heard, understood, updated and engaged.

How to gauge inherent value

The best way to measure inherent value? Ask. Here are a few questions to get you started:

  • If a candidate didn’t get the job, would they consider a future job opening with the company or apply for another job with you?
  • Would that candidate who didn’t get the job refer a friend to your company?
  • How likely is a hired candidate to refer friends to you?
  • For referral sources, did they feel informed and appreciated during their referral’s hiring process?

Recent research reports that 80% of candidates wouldn’t consider future jobs with a company or recruiter that didn’t communicate during the hiring process. Similarly, ERE suggests that not updating referral sources for more than 24-36 hours can make them question their referral — and even deter them from referring friends in the future.


  1. Ask past/present candidates, new hires and employees the above questions directly via email, text or phone.
  2. You can also ask en masse with a survey or a quick poll. Start with easy yes/no and 1-5 ratings.
  3. Follow up with open-ended questions to get a deeper understanding of their responses.

Ready to dig a little deeper into the experience you’re delivering? Download our (FREE) 10-point candidate engagement checklist.

Make it so darn easy

More than 60% of candidates abandon job applications because of poor experience design or length of application, according to SHRM. What is your job application’s abandon rate?

Now, consider how many of your contacts opt-out of referring their colleagues to your jobs because it’s not easy or clear for them to do so.

Audit how much information you’re asking for when it comes to referrals, and ask your network how much they’re willing to mine for you. Check that you’re specific and clear about how to submit referrals (and what they’ll get in return). Tailor your requests to the minimum viable actions your contacts want to take.

Investing in the right tech, you can also make it simple as a swipe or tap to share jobs on social media and refer friends via text or email. You’ll make it easy — inevitable, even — to provide referrals, lower that opt-out rate and maximize your referral talent pipeline.

This is your referral program on network effects

When sources spread the word about your candidate experience and easily share job opportunities with their networks, you’ll build connections, increase reach and perpetuate a positive feedback loop. By incentivizing successful referrals, your program will encourage sources to refer more quality candidates, who can then become your referral sources, too.

Referral management tech can help automate referral requests, process updates, thank you notes and incentive tracking so you can keep delivering the experience you’ve built your name on. You’ll reduce recruiting costs, boost speed-to-hire and just hire better people, period.

Popping an Instagram-sized one billion referrals into your talent pipeline won’t help you hit next year’s recruiting goals. But developing a smart referral program that leverages existing networks and a candidate-first mindset can.

And the companies that do? We like to call them LLamas.

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