Invite-only strategy stirs demand, but could backfire

Making it such that users need an invitation to be able to register and access a site or app's services helps build up demand and scale more efficiently, but this "invite-only" strategy might also stifle user traction and rivals could meanwhile dangle alternatives with more open entry requirements.

Simply put, an invite-only strategy is a "double-edged sword", said Serene Chan, industry analyst for ICT practice in Asia-Pacific at Frost & Sullivan.

Exclusivity of membership to use a service of a Web or mobile site generates buzz, but there is no guarantee the publicity is in favor of the company and users will catch on positively. Success, whether in terms of monies and traction, depends on several factors, Chan explained. This includes the competitive landscape at the time, value of content and services being offered, quality of user experience, and size and characteristics of the target audience.

For instance, a company offering strong content and opens up membership to the mass public could fare better than another provider that just got good publicity with invite-only membership but gains fewer users, she said.

The Frost & Sullivan analyst said the objectives of the service and the company are more important when considering invite-only strategies--and whether to open up membership later on.

Air of exclusivity
Niche players may prefer to target only a specific segment of like-minded users. But if a platform has to thrive on a large user base for interactivity and content, going invite-only would limit its full potential, Chan pointed out.

On the other hand, the provider may want to first gather feedback from a small group of genuinely interested users, and take the time to fine-tune certain features on the front or back end before opening up registration to the public, she added.

Guy Hearn, director of communications insights for Asia-Pacific at Omnicom Media Group, noted that the inherent nature of the service is a major factor deciding whether an invite-only strategy is appropriate. "It could be argued that the appeal of a platform might be compromised by general admission. Platforms targeting a niche audience, such as luxury shopping sites, can only really keep that air of exclusivity through an invitation-based approach."

Both observers agreed that the concept of "by invitation only" is not new to society or business. Chan said doing so creates the perception of exclusivity, creating pent-up desire and anticipation. It also betters the odds of invitees staying on as active, rather than dormant, users.

If registration is eventually opened to the mass market, the combined number of existing and new users could be "impressive" relative to competitors, she added.

The downside is the possibility that competitors could have used the time in between to offer a similar service with more compelling features and liberal registration requirements, she pointed out.

Invite to initiate
Pinterest, a photo-sharing social network, opened its registration this month, slightly more than two years since it began with users needing an invitation to join. The company did not respond to queries by press time.

Whether to open up membership and the time to do so is a matter of the individual company's business strategy and a fine balancing act, according to Chan. Not only could competitors have made similar alternatives, but pent-up excitement from the audience might have dwindled.

Hearn predicted that in the future, many services would take a "walled garden" approach at least during the initial stages. In the long term, however, only a few will be capable of adequately monetizing exclusivity, and most will need to be generally available in order to maximize revenue potential, he added.

When Reebonz, a members-only Singapore-based online fashion store, started in 2009, user membership was based solely on invites for the first 12 months. Registration has since been opened to the public to become members. Sharanjit Kaur, its assistant manager of public relations and special projects, said keeping access to invites at the start maintained exclusivity of the site.

Awareness of the platform grew quickly, so to meet the growing interest, Reebonz streamlined the registration process and ended the invite-only strategy. "The site is still members-only because registration is required, but we have made the process easier for those who could not get invited to enjoy what we have to offer."