When looking at successful companies like Airbnb or Dropbox, it’s easy to forget that they too were once a burgeoning startup. Like any other business, they started from obscurity and had to determine themselves before customers prior to making a splash. But that which was their strategy? It’s called referral marketing, and it’s something your business must try.
By March of the year, Airbnb is valued around $20 to $25 billion. That’s nearly double what it had been worth this time this past year — impressive for a company that didn’t even exist ten years ago. But more impressive is how they achieved such staggering growth when it concerns a couple of years.
three ways to Boost Person to person and Referrals for Your Business
The answer is easy: referrals. Airbnb took an easy referral approach by sending email invitations to existing participants. The offer was enticing: referrers would get a $25 travel credit when new members took their first trip. Then, they might receive yet another $75 credit if they hosted a guest for the very first time.
From Airbnb’s perspective, the referral program was a no-brainer. In the end, they were only spending money on referrals after new users made a purchase. This ensured that they weren’t wasting hardly any money on unprofitable referrals. This program worked (but still does), helping Airbnb to accomplish incredible growth, where the final number of users has practically doubled every year since 2012.
Dropbox also encouraged growth by starting a motivation program. They did so out necessarily more than desire, however the rewards were incredible. With PPC ads very costly and long-tail keyphrases too competitive, Dropbox made a decision to launch a double-sided referral program, with both referrer and the referred having incentive to do this.
How Finder’s Fees Could be a Catalyst for Business Growth
As well as the referred member getting benefits, the referrer was presented with extra space for storage (an essential component of product enjoyment). This program permanently increased signups by an impressive 60 percent, with an increase of than 2.8 million direct referral invites occurring in the first 1 . 5 years. Actually, 35 percent of most signups now result from the referral program.
While both of these case studies are excellent, they’re useless in the event that you can’t apply anything to your business. In the end, a case study is valuable if it can help you to improve or even to change. Here are several tangible takeaways from both of these examples:
Target the proper customer segment. Despite everything you may think, a referral program shouldn’t necessarily target your complete customer base. Instead, you is going after your most active customers. The reasoning is that your most loyal supporters will give positive recommendations with their friends. Coupled with the official referral, these personal anecdotes make this program exponentially better.
Offer benefits for both sides. Jason Wei, co-founder of the Los Angeles-based startup Taggler says, "The problem with many referral programs is that they only benefit one side. It generates an issue where one side of the equation has little motivation to do this. Two-sided referral programs, alternatively, encourage existing users to talk about, while simultaneously mitigating risk for new users. For instance, for new customers you can expect a $20 promo code and in addition give $20 in actual money to the referrers."
Pick the best rewards. Furthermore, it’s vital that you pick the best rewards. Dropbox did this giving both parties extra space for storage. This is an essential component of the core product and sometimes appears as invaluable by users. You should give up something if you wish users to jump onboard.
Streamline the CTA. You can’t launch an effective referral program unless this program is easy to comprehend. Basically, the call-to-action should be built-into the signup process and website. In the event that you can’t clearly explain this program in a few bullet points, it’s too complex. Break it into actionable steps, and make it as easy as clicking a couple of buttons and typing within an email address. Additionally, the e-mail that the referred individual gets should be simple and personable. They should comprehend who’s sending the referral and what the worthiness is after reading the first handful of sentences.
When you can’t create a carbon copy of another business’s referral program and expect the same results, you can learn a whole lot by studying a few of their components and strategies. Use Airbnb and Dropbox as examples, and consider the best way to develop your own referral program starting today.
Are Paid Referrals Worth the price?