Businesses in the modern world have to go to extreme lengths to acquire a user base for their products and services. In the 21st century, all industries are incredibly competitive, and consumers have many choices and alternatives. Here are 7 top referral program examples.
Startups and small businesses have to constantly improvise and innovate and execute strategies that can help them acquire new customers, and that is hard work.
Businesses are investing in customer support through chatbots and machine learning for automation and convenience. They’re also using BI tools and ERP systems to increase their efficiency while providing personalized customer journeys through AR/VR technologies.
While these technologies remain an active force in the market, one tried and tested strategy in the business world that is
Finding the right method to acquire new, valuable customers for your business is hard work.
Referral programs have been a resource for businesses before the rise of digital marketing, the internet, and social media. These programs helped businesses reach out to their target audience and incentivize them to participate in a mutually beneficial campaign.
This helped businesses increase their sales, engagement and fueled the growth in the digital world. Notable examples include PayPal, Uber, Slack, and Dropbox, each of whom has had its version of a web referral program.
According to Hubspot, 90% of people trust the suggestions made by their friends and family when choosing businesses. This showcases the power of referral marketing and word-of-mouth marketing strategies that many businesses have executed successfully.
Now, let’s look at some of the most noteworthy examples of successful referral marketing campaigns.
The 7 Top Referral Program Examples
These brands not only understood what their customers wanted, but they also understood the correct way to motivate them to become a part of their referral campaigns through targeted rewards, incredible service, and a user experience that the users felt deserved a shout-out.
Dropbox
Dropbox was found in 2007 by Drew Houston and Arash Ferdowsi. It is a cloud service that gives users the ability to host and store files on the cloud.
Dropbox’s story is similar to many startups and quite possibly very similar to the story of your business.
In its early days, Dropbox had to face a lot of problems in growing its user base. The business model was cost-heavy, and the lack of users was becoming the reason for failure.
Conventional strategies like Search Engine Optimization and Google Ads didn’t have a great impact. For a product that cost only $99, Dropbox’s per customer cost was $388.
That’s when Dropbox turned to Referral marketing. Dropbox’s referral program was heavily influenced by PayPal, who, in its early days, also did something very similar. However, at that time, the internet and social media weren’t as entrenched into our daily lives as they are now.
This Referral produced phenomenal results with incredible user growth in the first 15 months, giving new life to Dropbox as a business.
Referrer Rewards:
500MB free space
Referee Rewards:
500MB free space
Result:
In just 15 months, Dropbox’s user base grew from 100,000 users to 4,000,000 users! This campaign started the successful journey of a business that struggled to get users at the beginning and its transformation as a multi-billion dollar startup and is now being listed on the Nasdaq after recently filing an IPO.
What they did right:
First, they never stopped. They understood that there was value in their services, but they weren’t reaching the users in the right manner and evolved their strategy to meet their consumers personally. They realized that most people care about reviews from friends, and they came up with a program that ensured the spread of their product through word-of-mouth.
Airbnb
Airbnb’s strategy was a mixture of referral and email marketing. The referral marketing team at Airbnb decided to create an email campaign introducing its target audience to the new referral program they had launched.
The team worked extensively on the email design, adding different features such as the referrer’s picture to the referral gift is sent to new users.
They also had two different kinds of messaging, emphasizing the idea that referrals mean you get $25 off on your next vacation and one that emphasized that you’re sharing this with your friend out of pure love. This kind of A/B testing proved successful and resulted in a huge increase in bookings and signup for Airbnb.
Referrer Rewards:
$25 credit
Referee Rewards:
$25 credit
Result:
300% increase in bookings and signups than before.
What they did right:
From A/B testing through an email campaign, AirBnb’s referral campaign 2.0 was an incredible success because they could generate a lot more awareness. They were able to tap into the minds of their users and incentivize them into referrals with an altruistic message.
W Concept
A Korean online retailer for luxury fashion, W concept has, for a long time, relied on referral, affiliate, and influencer marketing programs to tap into the hip Korean crowd that loves fashion trends.
W Concept went all out with their referral program making it the highlight of their brand, with promotions using newsletters, emails, and even their website’s homepage.
The campaign showed its results in the first month, helping W concept increase their revenue, using simple 10% discounts.
The web referral program turned out to be a huge success and has incredible learning value for other brands.
Referrer Rewards:
10% discount on their next purchase
Referee Rewards:
10% discount on the first purchase
Results:
The first month showed W Concept generating $20,000 in new sales from their referral program and has since continued to grow, helping them generate thousands of dollars in sales revenue.
What they did right:
W Concept had one motto, “exposure, exposure, exposure!” They ensured that every person who consumes their products knows about this program through multiple channels and marketing strategies, and that’s how they got thousands of people to participate in the campaign.
Harry’s
Harry’s is a modern shaving brand that has made a name for themselves in the digital world through their incredible service.
From shaving services to shaving accessories, Harry’s e-commerce store is a billion-dollar subscription service, as well as a business-run barbershop located in Manhattan.
They boast a success that has taken them to 7-figures, and a part of that success was their incredible referral marketing campaign.
What you need to make it big as a business is an outreach and the ability to convince people to give your brand a shot. The rest is dependent on how good you are at what you do, and it turns out that Harry’s is incredible at providing their services.
Harry’s launched a week-long referral as part of a pre-launch strategy to collect emails and generate leads of potential customers. Part of this was their digital marketing strategy that gave incremental rewards to those who took part in the referral campaign.
The idea was simple; let’s create noise in the market through digital marketing. Be it Facebook, Twitter, or email – if you can refer an “x” amount of friends, you can get incremental benefits depending on the number of people you refer.
Referrer Rewards:
- 05 Friends Referred: Earn free shave cream.
- 10 Friends Referred: Earn a free razor.
- 25 Friends Referred: Earn a free premium razor.
- 50 Friends Referred: Earn free shaving for a year.
Referee Rewards:
10% discount on their first purchase.
Results:
The weeklong campaign turned out to be one of the most successful referral marketing campaigns of all time. In the first week, Harry’s was able to generate 100,000 potential leads using their campaign by creating a connection with their audience based on mutual benefit.
What they did right:
Harry’s understood its clientele and figured that basic discounts might not work their charm on them. Rather, they went forward with the idea of providing physical products for free to create a connection between the brand’s e-commerce setup and the customers.
Think of that as disseminating sample products for people to check them out pre-launch. This is the kind of upscale, innovative decision-making that helped Harry launch a successful referral marketing campaign.
Evernote
Evernote was launched in 2008 as a simple note-taking app and has grown ever since into a platform with over 100 Billion worldwide users and a valuation of $1 billion.
It takes pride in its $0 user acquisition budget. Early in their setup, Evernote realized that they have to rely on word-of-mouth and that their users will be the best marketing assets to them.
Evernote’s referral program deserves credit for its success, which played a central role in helping the company grow and scale, leading to incredible market success.
Referrer Rewards:
The customer gets 10 points for their first three referrals – enough for three months of Evernote’s premium subscription or 3 GB of additional monthly upload. For every referred user buying a premium subscription, the referrer also got 5 points.
Referee Rewards:
One month of free premium.
Results:
13 million users came on Evernote through their referral marketing campaign.
What they did right:
The model was absolutely amazing. It focused on incentivizing current users to keep on referring to use Evernote’s premium trial for an extended period of time. The more people you got in, the more you can enjoy the free trial of the premium service, and that’s what got their users referring intensely.
PayPal
Although PayPal’s referral marketing campaign isn’t as famous as those of Harry’s and Dropbox’s, that’s because it outdates them and was set in a time when the internet wasn’t as mainstream as it is now.
It is inspired by Dropbox’s campaign. PayPal used email marketing, content marketing, and IM marketing – yes, IMs were still a thing back then.
PayPal realized that they were one of the few brands that could actually give direct cash benefits to their users because that’s the primary business function for PayPal.
They understood the motivations of their target audience and provided what would feel like the most value to their users, direct cash benefits.
Referrer Rewards:
$10 for referrals.
Referee Rewards:
$10 for signing up
Results:
PayPal achieved 7 to 10% daily growth, resulting in a user base of over 100 million members.
What they did right:
Understood that the best kind of value for PayPal’s consumers is direct cash incentive and kept their rewards simple.
Koodoo Mobile
The telecommunications company is known for its knockout double-sided referral program that they needed to reduce their Cost per Acquisition (CPA), increasing significantly.
They were excellent at satisfying clients, but it cost them too much to get clients in the first place.
Despite having a great client satisfaction rate, the team at Koodoo was looking for something new and fresh, and that’s when they started to execute a referral marketing campaign.
Initially, they had a 25$ reward within the program and noted a 5x increase in referrals when they changed that to $50.
This was a huge success that helped Koodoo achieve its financial targets and solve its CPA problems.
Referrer Rewards:
$25 discount on your tab
Referee Rewards:
$25 discount on your first bill
Result:
Koodo reduced its customer acquisition cost (CPA) by 167% and acquired 75,000 new customers through the program in just two years.
What they did right:
They experimented based on the knowledge that their customers were willing to be their spokespeople based on their services and figured out the best way to mobilize them through a referral program that was personalized and tailored to them.
How To Run A Successful Referral Marketing Campaign.
Referrals programs have shown incredible results for businesses, but just having a referral program isn’t enough. Not every business with a referral program gets a 300% sales increase.
This is because there are a few key things that you need to keep in mind when executing a referral program.
These ensure that your program is good enough for your audience actually to refer their friends and families. Identifying the correct value and reward system differentiates between a successful campaign and a failure.
Let’s look at 5 important tips to keep in mind to launch a successful web referral program.
1. Analyze The Market And Consumers
Customers referred through referral programs have a 37% higher retention rate and are 4x more likely to refer customers to a brand.
So how do you ensure that you make the best out of your referral marketing program? You have to analyze your target audience and customers.
The first people you have to convince to become a referral partner are your profitable and satisfied clients. They are the most likely to refer other customers to you because of a positive experience and a sense of brand loyalty.
Analyze what they like, design the program according to their preferences, and make sure you also identify the new customers and their profile. With these two things in mind, you’re more likely to attract customers that are profitable and have a higher likelihood of converting and being retained as a long-lasting customer.
2. UI/UX design
Just like any website, forum, or app, referral programs need to be easy to navigate and enter. This is where design and user experience come into play.
During the design phase, try to map out the shortest and simplest way for users to sign up for a referral program. It should be clean and simple to ensure a high signup percentage and success.
Your process should be easy to understand. Your signup method should be simple, the rewards for both the referrer and referee should be clearly established, and your payout procedure should also be clearly highlighted.
If there are eligibility criteria, then that should also be easily available and understandable.
In this phase, you can run A/B testing to determine which design and approach give you the best results to maximize referral results and revenue.
3. Personalized and Affordable Rewards
When choosing your rewards, you have to ask yourself, “what would your customers most want from my brand?”. Because the truth is, not all brands can give cash to the referrers and the referees. Some brands give small discounts, while some provide free services for a limited time.
PayPal gave a cash reward, but Dropbox decided to give away 500 MB of extra space for storage. Both these rewards are different but were successful. It’s because that’s what meant value to their customers, and they understood that.
Similarly, perhaps you can provide discounts, or incremental rewards, or even free physical products or, like Tesla, provide a branded experience.
At the end of the day, there are two things you have to ensure with rewards.
- The reward is incentive enough for your consumers to take part in the referral program.
- Your business can afford and sustain the rewards system.
Find the right reward that matches these two factors for both the referrer and the referee, and you’re good to go!
4. Marketing Your Referral Marketing Program is Essential
If there is one thing we learn from Harry’s, awareness is one of the most important reasons why referral programs are effective.
The lack of awareness was also a problem in Airbnb’s referral program 1.0, where they felt like not enough people knew about their program.
Brands should provide information regarding their referral programs to customers in an accessible manner. This information should be concise and to the point while highlighting the best features.
All of your customer-facing employees and departments should integrate referral program marketing within their SOPs.
Whether it’s the sales executive taking a client call, or a social media manager creating a content plan, the referral program should be everywhere.
Even your employees should know about it because they can be the biggest mouth-pieces for your brand and its program.
You can communicate your new referral program to people using several different platforms such as:
- Your Company Website’s Home Page.
- Social Media Marketing on Facebook, LinkedIn, Twitter, and Instagram.
- Email Communication and Email marketing campaigns.
- Content marketing through onsite and offsite blog posts.
- Company Newsletters
- PR Releases and news publishing.
5. Measure, Calculate and Evolve.
Measuring results, identifying reasons behind it, and adjusting is part of the job. You can’t expect to get the campaign right the first time.
Throughout the program’s life cycle, you’ll get data and statistics that will help you identify KPIs, metrics, and effectiveness.
Based on your results, you can make adjustments and correct your mistakes to improve the conversion rate.
There are a few key metrics that you should keep an eye on while measuring your results.
- The percentage of your overall web traffic that signed up to become referrers?
- How many people make referrals, and through what channels are they coming from the most?
- How many customers are you converting as a result of this campaign?
- The total number of referrals per sign up
- The life cycle of a referrer and their relationship with the reward system.
- The CPA (cost per acquisition) per user of your referral marketing campaign.
- What part of the program are people going away from the most, and why?
Once you have all these lockdowns, you have to ensure that you make the necessary tweaks as suggested by the data and make your referral program much more shareable and accessible.
That’s the backbone of your strategy, where organic sharing on social media by people is likely to generate more engagement and activity for your web referral program.
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Conclusion
At the end of the day, the laws of the digital marketing world also apply to referral marketing. It’s all about the value and the user experience.
If you can analyze your target audience, identify their needs and wants, and design your referral program to match the description, you can win. The key is to provide a great customer experience to your consumers through your products and services.
Yes, even then, you will have to extensively market your program and make sure it reaches the right ears. Just ensure that the incentive structure is sustainable.
If you manage to get these things right, then you can run a successful web referral program for your brand. It will increase your engagement numbers, revenue numbers, and growth numbers. That’s just like some of the top brands have done in the world.
