All things incentive design
Issue 8: extrinsic vs. intrinsic rewards, the ARROW method for incentive design, and gamification
Hi, I’m Emilie, and I’m writing this newsletter, Connection Engine, to discuss reflections and actionable lessons on community building in a digital world. If you’re a community builder or just curious about community work, you can join the fun by subscribing below!
Today’s issue is brought to you by Sweat Equity.
Sweat Equity is a weekly newsletter sharing health and fitness tips for busy entrepreneurs.
Join a community of folks looking to optimize their work performance without burning out. Sign up here.
It’s a tricky business figuring out why we do the things we do, and an even trickier business figuring out why groups of people do the things they do. What motivates us, discourages us, and fuels our fire is part of the mystery of what makes us human.
In life, we’re all driven by incentives to some extent: if I work hard, I’ll receive a promotion; if I spend more time practicing, I’ll be better at my craft; if I put more effort into my relationships, I’ll have a stronger network.
Translating these incentives to community work can be extremely difficult and is often a delicate balance between extrinsic and intrinsic motivations. But when done right, an incentive strategy can create even more magic in your community and foster a space where your members will want to keep coming back.
Extrinsic vs. intrinsic rewards
When we think about incentive design, it’s important to begin by identifying the difference between extrinsic and intrinsic rewards.
Extrinsic rewards come from an external source: an email from the company CEO, a swag pack in the mail, points, a gift card, or any other validation that comes from somewhere besides yourself.
Intrinsic rewards are the feel-good vibes you get when you do something you really enjoy, regardless of if you receive any recognition or external prize for it. They come from your internal sense of satisfaction and belonging.
A good community incentive strategy will use extrinsic rewards to build upon intrinsic motivations. It is key to have your early and most committed members contributing to and building your community with you because they want to and find joy in doing so — not because they’re getting something for it.
Starting out by building upon intrinsic motivations will also make sure you are attracting the right types of members to your community before using extrinsic rewards as further motivation to contribute.
Designing an incentive strategy
So how should you go about designing an incentive strategy for your community? An incentive strategy should work alongside your onboarding strategy — you’ll need to design an incentive as each member progresses up your community’s ramp from new member to solid contributor.
I’ve designed my own incentive strategy that I consider a good starting point when thinking about how you’re going to reward your members starting from their first contribution up until being a core contributor. You can decide which incentive works for the corresponding level of member activity, but the general sense is that as a community member becomes more involved, they’ll be rewarded accordingly.
My ARROW model:
A - Appreciation - a thank you email or message
R - Recognition - a milestone badge, a shoutout in the community, a feature in a newsletter or on social
R - Reward - a card in the mail, a gift card, a swag pack
O - Ownership - awarding members leadership or moderator roles, inviting them to own part of the community strategy
W - Worth - direct compensation in the form of equity or some other payout when the member serves as a core part of the team
As a member becomes more involved with contributions and community engagement, the reward increases:
Let’s dive into the details.
Appreciation
When a member first joins your community and contributes, it is extremely important to show some gratitude. Your reaction after their first contribution can set the tone for their relationship with your community and even determine if they’ll return.
“It’s absolutely critical that members feel validated and rewarded for their participation if we want them to come back and participate again.” - David Spinks
This early appreciation can be as simple as an email or direct message from the community manager or CEO of the company thanking the member for joining and contributing. Remember to keep it personalized and authentic — automated messages are easier to spot than you think.
Here’s an example you can modify:
Hey _________! I’ve noticed you are adding some great value to our community and just wanted to reach out and personally thank you for being an active member. I particularly enjoyed your ___(personalize)____. If you have any questions at all please don’t hesitate to reach out to me or anyone on the team.
Recognition
Once a member has joined your community, made a first contribution, and received some appreciation for joining and engaging, they will likely start adding more value to the community. This is where recognition, and reputation, come into play. A few ideas for recognition:
A shoutout in the community
A feature in a newsletter or on social
A personalized milestone badge or visual
Once the member has established a reputation within the community through recognition from leadership, they’ll start to also feel intrinsically motivated to keep contributing and building relationships with other members.
Reward
Perhaps the most fun part of incentive design: rewards! Nothing says “I appreciate you” like a swag pack in the mail or a gift card to your favorite coffee place. At this point, the member is a consistent part of your community and should be rewarded as such. If resources are limited, it’s the thought that counts and it’s always my belief that even a little bit (of monetary value) goes a long way.
Some ideas for tangible rewards:
Gift cards
Swag bags
Cards in the mail
Remember to keep it personal. Add a personalized note to anything you send and choose gift cards to places you know the member frequents.
Ownership
At this phase, the member probably knows the ins and outs of your community and has graduated to a core contributor. Transparently this will only happen with a small percentage of your community — and that’s ok! But it is very important to pay special attention to these members.
A great way to reward such contributors is to actively make them part of your community strategy. Invite them to important meetings, strategize with them, and even let them make key decisions. With ownership comes responsibility, and with responsibility, value. Your core members will start to feel like your teammates — and they should.
Worth
At the highest level of your incentive strategy is worth — or equity. Whatever this looks like for the community you’re building, your most loyal and committed members should benefit from the growth. They’ve become core members of your community, helped other members become core members, gained ownership over some aspect of the community management, and are now rewarded for all these efforts.
Equity is meaningful in the longer run and reaffirms a member’s role as part of the community team. This level should be reserved for only the very top members of your community — in time you’ll know who they are.
Tada! You have the first draft of an incentive strategy. A few things to keep in mind when building this out:
Each community is different, so it’s up to the community designer to figure out what motivates and discourages members of that community.
Decide whether to make the reward thresholds explicit (defined somewhere in your community and what it takes to reach each level) or more behind the scenes for you and your team to track.
Personalize your incentive strategy at each level. Automate to track, personalize to distribute. Getting an automated thank you message from an Airtable integration is much more underwhelming than getting a thoughtful note from a community manager or CEO.
“Incentives are a powerful way to keep your members interested, engaged, and rewarded. Importantly though, always keep the personal touch front and center as you do this work. Communities thrive on personal relationships. People don’t want to feel they are on a hamster wheel. They don’t want to feel played. Incentives run the risk of coming across as systemic and contrived if you fail to properly use them as a means to foster, recognize, and build these relationships.” - Jono Bacon
Caring is cool. Showing your community members you care and appreciate their efforts is key to developing and sustaining any lasting community relationships.
Gamification
I’ve been asked my thoughts on gamifying communities and how that affects engagement. My general rule is that organic engagement should always precede gamification and once you have members solidly contributing and adding value to the community, you can test some version of gamification to see how it clicks with your membership.
David Spinks makes a good point about gamification as a primary engagement tactic (don’t do it):
“The thing everyone gets wrong with gamification is that they think it can be used to spark engagement where there isn’t already organic engagement.” - David Spinks
If you do introduce some sort of point system or progress bar to your community engagement, make sure it’s very easy to participate. If you don’t, new members will have a hard time catching up and could be actually put off, instead of motivated.
“Make it simple for your community members to see what gamification opportunities are available, step-by-step instructions for how to accomplish them, where they can get help in doing so, and any other information.” - Jono Bacon
Another thing to watch out for in gamification is bad actors who will take advantage of your system. If, for example, you reward points based on the number of contributions, members could artificially inflate this number by posting short, meaningless messages. You have to consider how to equally weigh quantity and quality to make sure your community keeps a high bar.
It’s my rule of thumb in community work that anything is worth trying. If you have a solid foundation of members, engagement, and growth, you really never know what will help energize your community until you try. Gamification could lead to healthy competition between your community members or help you discover pain points in your onboarding and member journey experience.
Incentive design in web3
Incentive design for web3 communities is its own beast. DAOs (decentralized autonomous organizations) are built upon collaboration and shared rewards, so everything from tokens to shared treasuries to NFTs need to be considered from the get-go.
Ben Perez has a great piece on incentive design in web3 and questions you should be asking to achieve your DAO’s goals:
What are the most pertinent values or circumstances of your DAO?
What is your relationship to the contributor to be incentivized?
What is the nature of the work or activity to be rewarded?
Which incentive mechanisms address your DAO’s specific needs?
As these communities are constantly evolving and finding new ways to share ownership, it’s important to consider how extrinsic rewards like tokens and NFTs play into your overall community strategy before launching:
Incentive design is a delicate and often overlooked aspect of community design. Many community builders send a short thank you message or branded T-shirt when a member contributes and then forget about any sort of recognition afterwards. This is a mistake.
Incentive design should mirror the progress of your onboarding design — and just like onboarding happens at every stage of a member’s journey, so does incentive strategy, from a thank you message all the way to equity in the community.
Thanks for being part of Connection Engine. Together we can, and together we will.
Until next time!
Shameless plug: I recently launched my own community consulting service. If you need help on strategy, execution, or launch for your community or just want some advice, check it out!
About me
I’m Emilie. Why am I doing this? To share my learnings on community work, to learn more myself, and to make new internet friends!
Want to read more? Follow me on Twitter and subscribe to my newsletter here.
Have a community question for a future issue or interested in working together? Check out my website or email me at ekormienko@gmail.com.