We recently launched our word of mouth advertising startup, www.boostria.com. We want to rapidly grow our user base to mature our system. But it takes lots of time/effort to sign new users. So, my question is:
Is it a good idea to pay users to sign up to my service? What are the pros/cons?
11/13, I add my responses to Clint' answer here because it is too long for the comment Clint,
Thank you for the input. I would like to response with 3 points
Does this make better sense?
11/13, James added our demo site http://boostria.blogspot.com
Are you referring to paying users to write stories? Or paying advertisers to post opportunities?
In terms of the former, giving some form of incentive, whether cash or some piece of merchandise might be a good way to get people on the site. Since people are paid for the actual writing they do (though you might want to show how much that could be per click), you probably don't want to pay for the writing itself. So a better approach might be to say that the first 100 people to write an article/boost will get a gift card, or a t-shirt, or whatever.
In terms of the advertisers, you don't really want to pay directly, though you may want to consider giving reduced rates on the first 100 advertisements , which you seem to be doing already.
Paying for word of mouth is a bad business model!
Read Word of Mouth Marketing by Andy Sernovitz and you will know why.
Joel Spolsky, the founder of this very site's software, has stated publicly that paying people as a motivator doesn't work. Do a Google search for specifics.
Word of mouth is organic. You spread the word to your friends and family (F&F) because you honestly feel some product or service gave you value and can benefit them as well.
Ask yourself, would you recommend something to your close F&F just because you were paid to do so? I wouldn't. First, if I recommended a bad service (because I didn't use and vet it first), it could impact my reputation. Second, if my F&F found out I was getting paid, they would label me as a sell out (i.e. trying to capitalize on them).
Word of mouth occurs natually when you provide value to your customers (i.e. they get more than they feel they paid for).