Online Marketing

HypeSprout Review- The Smartest Way To Leverage On The Power Referral Marketing

In many businesses, referrals are viewed as an organic byproduct of the company successfully doing its job. If you exceed customer expectations, it’s natural to assume they’ll return the favor by singing your praises to their networks. If you blow them away with world-class customer service, you can expect a flood of social-media goodwill.

But here’s the problem with those assumptions: While referrals do happen organically, they’re never a given -- even if a customer loves your products and services. In fact, a Texas Tech University study found that while 83 percent of customers say they’re willing to provide referrals after a positive brand experience, only 29 percent actually do. That chasm exists for many reasons, but it’s often exacerbated by a failure to properly prioritize and manage a referral program.

Related: HypeSprout Review

So, how can your company close that gap? Here’s a list of referral marketing “dos” and “don’ts” that will help you proactively convert happy customers into reliable revenue-drivers:

1. Do give customers the tools they need to promote your company.

For referral marketing to work, you can’t expect customers to invest time and energy into developing tools and assets to support your brand. Instead, you need to make the referral process as simple as possible. This might mean creating a hashtag that customers can share on Twitter, or developing email templates that ensure ambassadors use the right language and share the right landing page URL.

Regardless, decreasing the effort required to deliver a referral is a critical piece of the referral-marketing equation.

2. Don't expect customers to always be thinking about you.

One of the biggest mistakes companies make with referral marketing is assuming customers always have their brands on the top of their minds. If you’re not constantly looking for opportunities to engage your most loyal customers, then you’re missing a huge opportunity to encourage and incentivize conversations about your products or services.

3. Do think about who (and how) you ask for referrals.

To operate a successful referral marketing program, you must consider who you’re targeting, where those people are most active, and which incentives are most likely to influence specific actions. Early adopters love being the first to discover or experience a new product. Others are driven by monetary gain, such as a $200 credit on their bill or a percentage of the sale.

Related: Bing Bang Profits Review

Regardless of where your customers fall on that spectrum, it’s critical to truly understand their motivations and preferences before you reach out. If you offer the wrong incentive to the wrong customer in the wrong environment, your referral marketing program will fail to generate results. 

4. Don't “set it and forget it.”

Once you get a referral marketing program up and running, it’s easy to fall into the trap of assuming the engine will run itself. Like all strategic marketing initiatives, referral-marketing programs thrive in an environment of perpetual optimization.

This is where referral marketing software can be enormously helpful. With the right tools, you can create a structured process around monitoring, tracking, testing and incentivizing referrals. Why is this valuable? Over time, the analytics created by that process will provide clear trends into the activities, channels and customer personas that are driving the best results. Arming yourself with that insight will make it much easier to successfully scale your referral marketing program.

5. Do incorporate referrals into your overall marketing strategy.

The best referral-marketing programs (see Airbnb and Dropbox) share a common thread: referrals are embedded into every aspect of the user experience. Referral calls to action are included in newsletters and blogs. Employee email signatures feature referral messaging. And the referral program is fully integrated with other critical systems (customer-relationship management, marketing automation, ecommerce technology, point-of-sale systems, optimization tools, etc.).

For referrals to consistently deliver bottom-line results, they must be part of how your business operates. Without structure and commitment, you’re largely at the mercy of chance. But with the right approach, process and technology, you can turn referrals into a predictable, scalable channel of high-quality revenue.

What is a referral program?

A referral program is a deliberate, systematic way of getting people to make referrals to your business.

People do informally make referrals all the time. But Content Siphon Review studies have shown that people make far fewer referrals than they’d like to.

A referral program, then, is a way of purposefully encouraging referrals. This helps you get some of the best new customers you can get. It also increases the customer loyalty of your existing customers, by having them invest more in your brand. Modern referral programs use software to detect referrals, keep track of them, and to pay out referral rewards.

(NOTE: If you’d like to set up your own referral program, you can check out ReferralCandy. ReferralCandy makes it easy for any ecommerce store to have their own referral programs.)

What are the best referral programs?

  1. PayPal. They literally gave away free money, and it worked out great for them. And this was before social media!
  2. Dropbox. Modelled after PayPal, Dropbox’s referral program got 4 million users in 15 months
  3. Airbnb. A single user in China led to thousands of signups and hundreds of bookings in a single month.
  4. Uber. They’ve been in a unique position to run multiple referral programs at once – for users and for drivers.
  5. Tesla – $1,000 for both advocate and friend, with quite a start-studded list of advocates!
  6. Amazon Prime –Likely one of the most heavily-used referral programs in recent times.
  7. Google – When the front page of the Internet decides to run a referral program, it’s worth looking into.
  8. Evernote. Their referral program relies on a point system.

Thinking of putting together a customer referral program, and need some ideas or inspiration? Here’s a list of 74 referral program examples for businesses of all types.

Click on the following links to jump to your relevant topic:

A. “Best practice” referral program examples

1. Dropbox’s famous referral program gives you and your friends 500MB additional free storage space, up to 16GB

This is a legendary referral program: Dropbox’s refer-a-friend feature permanently increased signups by 60%, with users sending 2.8 million direct referral invites by April 2010.

Why Dropbox’s referral program was so effective:

  • Prior to the referral program, Dropbox was using SEM and affiliate marketing, with a CPA of $288-$388
  • But the math didn’t work; their product was $99/year.
  • Inspired by PayPal, they added a double-sided referral program, where both referrer their friend get rewarded
  • The referral rewards were extra storage space, something that was key to usage and enjoyment of their product

Dropbox’s referral program results:

  • Permanently increased sign-ups by 60%
  • In Sept 2008 the service had 100,000 registered users
  • In Jan 2010 (15 mos.) the service had 4,000,000
  • 35% of daily sign-ups are via the referral program

We wrote an even deeper analysis about Dropbox’s referral program here:
How Referrals Built The $10 Billion Dropbox Empire.

2. PayPal’s referral program literally gave users (and their friends) cash – something payment platforms can get away with

Referrals helped PayPal achieve 7 to 10% 
daily growth, catapulting their user base to over 100 million members.

According to David Sacks, original COO of Paypal, Paypal used to literally pay people to invite their friends.

It turned out to yield better marketing ROI than traditional marketing channels.

Once they achieved a critical mass of early adopters they dropped the Refer-A-Friend bonus, but they kept it for Merchants. Then they dropped the Merchant bonus, once they reached their target numbers.

Further analysis on PayPal’s referral program here:
The Original #GrowthHackers: How PayPal Achieved 7-10% Daily Growth.

3. Airbnb’s referral program – the 2nd iteration was even more successful than the 1st!

“Airbnb created a referral program […] launched in a private beta to 2,161 existing members and brought in 2,107 new members, nearly achieving a viral growth factor of 1.” [Source]

There’s a lot to love about this referral campaign! Successful referral programs bias the reward to the friend, since people tend to share more out of altruism than out of personal financial gain.

The image above is from what Airbnb’s Growthm team calls “Referrals 1.0”.

They released Referrals 2.0 since– here are our notes and takeaways from their video:
Referrals at Airbnb: Our Notes and Takeaways

4. Uber’s referral program lets you give your friends the gift of discounted first rides

Simple! And with a clear call-to-action to refer friends. The bar at the bottom is a cunning little piece of gamification — everybody wants to fill up progress bars.

(Also, check out the suits that they put you and your friend in. Great way to align their brand on this touchpoint.)

We’ve written more about Uber’s many referral programs here:
How Uber Covered More Than 50 Countries In 3 Years

5. Evernote’s referral program gives your friends Premium– and you get points that you can use towards Premium or increased monthly uploads

Evernote has a dual-sided referral incentive program that gives people additional space and/or Premium membership.

What we love about this is the clarity of what constitutes a referral — your friend has to sign in, not just sign up.

We’ve written more extensively about Evernote’s referral program here:
How Evernote Gained Millions Of Users Through Word-of-Mouth

6. Amazon Prime’s referral program is pretty well put together – no surprise, coming from a market leader like Amazon!

Prime members are a lucrative demographic, spending 2x more than others, and ordering more times per year.

  1. Evocative header image
  2. Effective use of social proof to make referred friends more comfortable
  3. Clear calls-to-action encourage visitors to move quickly to the next step
  4. Wide reach– the referral program is accessible even to non-Prime users

We did a thorough breakdown of Amazon Prime’s referral program here: 
Lessons from Amazon Prime’s Referral Program

B. Ecommerce Referral Program Examples

B1. Fashion & Apparel Referral Program Examples

7. Flash sales: Amuze’s referral program gives you and your friends $25 off your next flash sale purchase


Amuze is a members-only fashion portal that gives discounts on authentic designer labels. $25 may not seem like a hoot, considering that Amuze is selling luxury items. However, Amuze’s flash sales and daily discounts allow the $25 to have a much better impact. Their insane discounts are part of their selling point, and their referral program helps to drive the prices down further, gaining more customers in the process.

We’ve written more extensively about Amuze’s referral program here:
Designer Fashion Referral Program Examples: Amuze

8. Adventure Gear: The Clymb’s referral program is very stylish!

The Clymb sells sporting and adventure gear. Interestingly, they’ve changed their referral reward structure– initially it was $15 credit for a minimum purchase of $50. At the time of writing, it’s now $10 credit, but for a minimum purchase of $50.

They now even allow you to mass invite your friends and send them a personalized message.

We’ve written more extensively about The Clymb’s referral program here:
Apparel Referral Program Examples – The Clymb

9. Accessories & Stationery: Erin Condren’s referral program gives away $10 credit to Friends and Advocates

Erin Condren sells clutches, t-shirts, notebooks, papers, stickers and all sorts of fashionable accessories. Her referral program works because it’s heavily focused on giving her customers a great experience.

We’ve explored Erin Condren’s referral program in greater detail here:
Fashion Referral Programs – Erin Condren

10. Lingerie: True&Co’s referral program has strong visual images

True&Co is an online lingerie store that uses a special algorithm to figure out a lady’s bra size, and then recommend lingerie that cater to their personal sizes. They even provide a home-fitting service, so that totally eliminates the trip to the dressing room.

Look at this:

Our resident referrer, Alice, only has to give her email address before she can refer her friend, Brenda (She’s not referring Bob this time, for obvious reasons). She can then share by entering her friends’ email addresses, sending a personalised link, or through Facebook.

Easy to share = referral program success.

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