{"id":1162,"slug":"rule-network-membership-precedes-referral-program-design","title":"R1 — Network membership precedes referral-program design; \"we have a referral program\" is not a strategy until \"we are in the network\" is true","kind":"rule","scope":"business","status":"current","audiences":["kevin","candid-team"],"topics":["psychology-aversion","social-network-theory","referral-mechanics"],"reference_body":"**Rule:** Stop treating \"we have a referral program\" as a strategy. Start treating **\"we are members of the network whose information we want to participate in\"** as the strategy.\n\n**Why:** Referral programs (in the Schmitt-Skiera-Van den Bulte sense — [[schmitt-skiera-van-den-bulte-2011-16pct-ltv-premium]]) are an **incentive layer on top of an existing network**. The Ontario trades network exists with or without Candid; the question is whether Candid is *in* it. Network membership precedes referral-mechanism design. [[expectation-setting-retention-by-tie-strength]] shows that **referral depth > referral volume** for lifetime value, which means cultivating fewer, deeper referrer relationships beats incentivizing broad weak-tie referrals.\n\n**How to apply:**\n- Audit current \"referral program\" infrastructure (incentive emails, \"refer a friend\" pages, partner programs). If the underlying referrer base is thin, the program is **applying force to nothing**. Pause or deprioritize.\n- Identify the 20-50 highest-quality potential referrer relationships Candid should cultivate over the next 12 months (peer-coach implementers, well-connected supplier reps, BILD/OHBA committee members, alumni clients in BTA/EOS cohorts). Invest in those relationships explicitly.\n- Once a network base exists, *then* layer a referral-incentive program on top to amplify what is already flowing.","rationale_body":null,"metadata":null,"links":{"outgoing":[{"slug":"research-brief-trust-networks-in-group-reputation-may-2026","title":"Research brief: trust, referral networks, and in-group reputation in Ontario's trades economy (May 2026 — Foundation Brief #3)","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"schmitt-skiera-van-den-bulte-2011-16pct-ltv-premium","title":"Schmitt, Skiera, Van den Bulte 2011 (JoM) — referred customers ≥16% higher LTV than matched non-referred; retention persists, margin decays","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"expectation-setting-retention-by-tie-strength","title":"Expectation transfer + retention by tie strength — strong-tie referrals carry expectation specificity + active social-enrichment retention; weak-tie referrals churn at near-baseline rates","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"ontario-trades-info-ecosystem-five-layer","title":"Ontario residential-construction information ecosystem — five descriptive layers (regulators / trade assocs / suppliers / events / digital)","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"apb-sorci-2024-48-7pct-referrals-half-of-sales","title":"APB SORCI 2024 — 48.7% of builders rely on referrals for >50% of sales; 41.1% need 1–50 paid leads to close one contract","kind":"reference","scope":"business","link_type":"depends-on"}],"incoming":[]},"created_at":"2026-05-25T13:34:11.242Z","updated_at":"2026-05-25T13:34:11.242Z"}