Introduction
Referral marketing campaigns come in various shapes and sizes depending on the targets and goals set to achieve. In this book, we will be visiting prime examples of referral marketing campaigns that spread far and wide and help transform unknown companies into multimillion-dollar businesses.
Whilst referral marketing campaigns with different goals come in different forms they all have common properties that will only become evident after studying successful campaigns. In this book, we shall be studying referral campaigns for Software as a Service (SaaS) or membership websites that have a logged-in area, E-commerce businesses and also businesses who are looking to grow email lists. Depending on the scenario various techniques are applied, which shall be commented on in detail.
SaaS
This section will focus on different referral marketing campaigns that different SaaS (software as a service) companies had implemented. If you are looking to integrate a referral marketing campaign with your SaaS, membership website or any kind of website that has an authenticated section, then you have to give this section some special attention.
Dropbox
What do they do?
Host your personal files online in a secure and in an easily accessible way from various devices.
Referral program strategy
Dropbox is often quoted as the epitome of referral marketing. Reason being that Dropbox pushed the boundaries of what referral marketing can do for a company. So, in the beginning, Dropbox had a huge problem. They were paying an average of $300 in ads per customer for a $99/year service.
Once they implemented their referral program that changed and they saw a 60% permanent growth. This means that instead of paying a $300 per lead, they lowered their average customer acquisition cost (CAC) to an average of $123. How?
Let’s say Dropbox paid $300 per lead for 100 users. That would mean spending $30,000 for 100 users. But let’s understand how CAC dropped through Dropbox’s referral campaign.
So the first 100 users referred 60 new users.
The 60 referred users referred another 36 new users
The 36 referred users referred another 21 new users
….. 21 ……………………………. 12 ………….
….. 12 ……………………………. 7 ………….
….. 7 ……………………………. 4 ………….
….. 4 ……………………………. 2 ………….
….. 2 ……………………………. 1 ………….
Sum them all up and you get a whopping 243. So Dropbox paid $30,000 for 243, which gives us our $123 per customer.
Dropbox had huge success with their referral marketing campaign as the implemented double-sided reward system, where they give out a reward to both referrer and the referral. Dropbox also stacks rewards for referrers. This means that the more referrals a referrer gets, the more storage space get credited to the referrer’s account. Such kind of reward system helped them achieve great virality and lowering their churn rate.
SugarSync
What do they do?
Host your personal files online in a secure and in an easily accessible way from various devices. SugarSync competes with Dropbox.
Referral program strategy
SugarCRM tackled referral marketing from a different angle. Whilst they also have a double-sided reward system just like Dropbox, they are only rewarding for paying customers. Unlike Dropbox, they reward handsomely for a paid customer as they give out 10GBs of free storage, with a maximum of 40GB in rewards.
This kind of rewarding system is more focused when compared with Dropbox strategy. This might mean less activity when it comes to sharing and referring but it might be that overall it delivers a better return on investment (ROI).
TypeForm
What do they do?
The company that helps you building conversational forms, surveys, quizzes and landing pages.
Referral program strategy
Typeform’s refer-a-friend program offers a 10% double-sided reward targeted at their PRO customers only. Basically, it requires 10 paying customers to get you a FREE PRO account forever!
This reward strategy is very focused. First of all, it is exclusive to only PRO account users. So only committed customers are given the exclusive opportunity to spread the word about TypeForm and get something back. Whilst we really try as much as possible to make referral campaigns look exclusive, we don’t necessarily agree with this kind of exclusivity as it drastically lowered down the chance of FREE users having the chance to spread the word about TypeForm. On the other hand there must have been a really good reason why TypeForm closed down their access to PRO accounts only.
What we really like, is that rewards are stackable and directly proportional to the effort by the referrer. So if a referrer shares a referral link and gets 5 referrals, he will get a 50% discount month on month. Such reward stacking must have helped TypeForm to not only acquire new customers but also to drastically lower their churn rate for PRO accounts.
YesWare
What do they do?
Email tracking tool for salespeople.
Referral program strategy
YesWare gives customers 100 free tracking events for every successful referral. They make use of the reward stacking technique to further add stickiness to their existing user base. Their referral campaign is deeply integrated within their webapp to further fuel sharing.
As you can see form the screenshot below, they even provide a prefilled email invite that users can send to their friends by typing in multiple email addresses and simply hit send. We really like the kind of reward that they give out and the way how this campaign is deeply integrated within what they are selling.
E-commerce
If you are looking to drive more sales, revenue to your E-commerce business; if you own a WooCommerce, Shopify store, PrestaShop or any other kind of platform (even custom ones) you might want to check how some E-commerce business got thousands of users/sales within months!
Dollar Shave Club
What do they do?
Everything you need in the bathroom – from razor blades to grooming products – automatically delivered to your door.
Referral program strategy
Only Dollar Shave Club members (that is those paying the monthly subscription fee) can refer their friends. On successfully referring a friend, you will get credit points that can be redeemed in future purchases from Dollar Shave Club.
The Dollar Shave Club referral campaign was set in place as from the get go. When launching back in 2012. Dollar Shave Club got a ton of publicity through their sarcastic and funny intro video featuring CEO Michael Dubin. The referral program helped in creating a viral loop, making sure converted customers tell their friends about their latest subscription. In fact, in a week Dollar Shave Club got over 25,000 paying users.
What we really liked, about Dollar Shave Club referral program is how easy it is to understand what you will get back. Basically when you refer a friend you will be getting credit which can spend at the store. That simple. The more you refer the more discounted stuff you we be getting any time you need them. This is a very important point to keep in mind when designing a referral campaign. KISS – keep it simple stupid.
Uber
What do they do?
Uber is a peer-to-peer ridesharing, taxi cab, food delivery, bicycle-sharing, and transportation network.
Referral program strategy
Uber had a huge challenge. They had to make sure they have enough demand and supply of both drivers and those wanting a ride. For those wanting a ride, they created a double-sided reward strategy where one can send a FREE ride to friends. I mean who will say no to a FREE ride?
This strategy is very clever because what Uber did was they actually solved one side of the problem. They were artificially creating demand for rides with the hope of getting repeat purchases from the referred customers. How? When you refer someone to Uber, both you and your friend will get free credit in the Uber world! This credit can be redeemed into free rides hence further fueling demand for rides.
At some point, Uber tried to implement a referral program for the other chain – the driver supply. They were enticing their existing user base to refer a Lyft driver (Lyft is a competitor of Uber) for a $250 credit + $500 reward for the driver who switches fro Lyft to Uber. This kind of referral campaign is very unusual from our experience but very interesting indeed. If Uber were doing it, most probably it was giving positive results.
Lyft
What do they do?
Rideshare with Lyft. Lyft is your friend with a car, whenever you need one.
Referral program strategy
It is interesting how an Uber competitor tackled the referral campaign from a different angle. Lyft combined the passenger and the driver referral marketing campaign into one. Both referral campaigns contributed to more demand on the Lyft platform.
We really like the messaging as it is very simple but on top of that, we really like the idea of pushing repeat purchases. So instead of giving $15 to each referred passenger, Lyft gives $5 per passenger off their first 3 rides. By booking 3 rides in order to claim your 3 coupons, Lyft will make sure they get your hooked to their platform.
Airbnb
What do they do?
A marketplace where you can arrange or offer lodging, primarily homestays, or tourism experiences.
Referral program strategy
Airbnb gave their referral program a lot of attention. In fact, they developed in an in-house system (that must have costed them a fortune) to be able to track referrals and referrers. Airbnb implemented variable reward just like Lyft did in order to be able to make referrals more attractive in cities where they want to drive more bookings.
What we really like about Airbnb is that they allow you to import all your contacts from Google Contacts, Yahoo and Outlook to send massive amounts of invites. This might look a bit spammy but it will help drive an insane amount of attention for a company who wants to get known.
Want to know how much Airbnb grew? Go on, check that hockey stick graph and drool!
Email List Building
If you are looking at driving traffic to landing page and capturing email addresses then you should check out this section of this book. Most companies start off by building a list prior to launching a product or service. Other companies depend on building lists to promote their product or service.
RobinHood
What do they do?
An app that helps you to invest in stocks, ETFs, options, and cryptocurrencies, all commission-free,
Referral program strategy
In just one year prior to launching the RobinHood app, they managed to build a waiting list that had almost 1,000,000 emails! One of the main drivers behind the RobinHood referral marketing huge success was FOMO (fear of missing out). RobinHood had their waiting list in INVITE only mode so most visitors simply signed up in order to make sure they reserve a spot to this exclusive/upcoming trading app.
What we really like about the Robinhood style is that they kept their messaging and even their sign-up process as simple as it can be. No first name, last name, just an email address. Straight after sign-up you will get your position in the queue and different options how you can improve it. Such strategy fueled sharing so much that position Robinhood in front of such a huge audience that made them a success prior to launching.
Hotjar
What do they do?
Hotjar is a tool that helps you to understand how your website visitors are interacting with your website.
Referral program strategy
David Darmnanin, CEO of HotJar spelt out the way how Hotjar acquired so many users. So prior to launching an MVP (minimum viable product) Hotjar created a landing page through which they explained what Hotjar will be all about. They asked visitors to sign-up for early exclusive access to the tool. Once again they used FOMO (fear of missing out) as a strategy. Once a visitor signed up, they were sent to a waiting list. Whilst waiting subscribers were asked to refer their friends and it so how Hotjar built a list of 60,000 emails prior to launching.
Once Hotjar launched, as from day one, they had their own referral system developed and integrated into their SaaS. This made it easy for Hotjar users to invite their friends in exchange for a reward. It was so successful that Hotjar kept doing and still are till this very day.
How many referrals does Hotjar get every month? Go check out for yourself as Hotjar are transparent about how many referrals are getting for any month. For the month of September 2018, up till the 24th, Hotjar’s referral system has generated over 694 sign-ups.
Harry’s
What do they do?
Harry’s is a New York-based grooming brand that manufactures and sells shaving equipment via mail order.
Referral program strategy
Harry’s managed to get 100,000 in 7 days! Yes, that is right in just one week one hundred thousand emails! They did this campaign prior to launching the new razor blades. The referral campaign was very simple. Both the messaging and the user signup flow was as simple as 1 2 3. Visitors were asked to sign up at a coming soon page.
Once someone signed up, they were asked to refer their friends by telling them about this upcoming brand that is going to chance the male groom space!
But they gave it a twist. They added gamification to the process. They set up milestones for each referrer to aim for. Associated with each milestone, there is a reward. What we really like about the milestones is they were well spaced from each other making referrers work hard in order to reach the next milestone.
Thehustle.co
What do they do?
Get the most important stories of the day delivered directly to your inbox. Tech And Business News.
Referral program strategy
Everything theHusle does has one aim – that of capturing your email address. In fact, all their content is gated and you cannot even read one single article without giving your email address. So when theHusle came up with their referral program, their sole aim was to amplify their email capturing process.
What we really like about theHusle is the bold move to simply lock everyone out in exchange for an email. Once a visitor signs up, they will go to a dedicated page, where they are asked to refer their friends in exchange for rewards. Their choice of rewards will not work for anyone, as they give out merchandise in exchange for referrals. But since theHusle managed to get a huge loyal following this seemed to work out for them.
theHusle referral campaign worked so well for them that they managed to grow their email list by 70,000 emails in less than 4 months.
Conclusion
Irrespective of the industry, type of business and targets referral campaigns have some properties in common which by now, after visiting several successful referrals should be very evident. By studying successful referral campaigns, you are now in a much better position to understand the core concepts of what made companies heavily rely on referral marketing to grow their business.
When it comes to implementing a referral campaign, always consult with referral marketing experts that can help you by providing the necessary tools to make the job easier but also will guide you as to how you should navigate your referral campaign. This will ensure the best results in the shortest time span.