Referral marketing is still one of the most explosive forms of marketing. Customers convincing other customers to support your brand is the definition of viral growth.
It’s the type of growth that brands like Paypal and Airbnb achieved from their referral programs.
So, how can your business achieve viral growth? How can you upscale your business with a referral program?
We have 5 tips on running a successful referral program with examples from world-class referral programs.
Read on to get started…
1. Easy to Use Referral Program
GOAL: A referral program that is easy to understand and simple enough for people to use.
Referral programs can seriously upscale your business simply by allowing your present customers to refer new customers. It’s a wonderful scenario where the customer is now the salesperson.
Your customer will fetch your leads, and in some cases, even convince another customer to buy your product.
However, the customer still doesn’t work for you. So, referring new leads shouldn’t feel like work for them.
Design a referral program that’s efficient. Here are some tips:
- The terms of your referral program must be clear and simple.
- Your brand’s referral program should be easy to find on your website or app. You can use a pop-up or chatbot to inform new visitors about it whenever they land on your website.
- Allow users to easily share their referral link to other users over mobile social media and messaging apps.
- Create achievable milestones. Customers who have to perform miraculous tasks will be discouraged to participate further.
Keeping It Simple. Like Airbnb
Airbnb always had a referral program. However, in the early days, it was far from successful. Their referral program was hard to find online and was not available on mobile.
After tweaking their referral program, Airbnb saw an increase in signups and bookings by 300%.
Airbnb achieved massive growth by integrating their referral program with its mobile app. They also allowed users to submit and earn rewards with the mobile app.
Having all these options available in the mobile app is very convenient for Airbnb users. They don’t have to go out of their way to refer friends to the platform.
Because of this, users can conveniently refer as many people as possible, increasing Airbnb’s chances of acquiring new users.
2. Motivate People to Use Your Referral Program
GOAL: Increase reward levels for loyal customers who consistently refer new customers to you.
Consider working with a “tier” system. Allow customers to unlock new reward levels that offer higher discounts and exclusive perks.
This way, a customer will be motivated to consistently complete referral program tasks so they can progress to the next reward level.
If structured correctly, and your reward levels are attainable, customers will continue to use your brand over competitors.
They wouldn’t want to lose out on the hard work they put into moving up the reward tiers.
Let Your Customers Earn Vip Treatment. Like Uber
Uber doesn’t have an active referral program. However, they have a brilliantly structured rewards program. It’s definitely worth looking at because a similar concept can be applied to referral programs.
Uber app users that consistently use the app and its service will earn points. Earning points will move you into higher reward categories.
As a user progresses further up the reward levels, new exclusive perks like priority support and complimentary upgrades are unlocked.
Uber usually charges for such perks. However, loyal customers on their gold, platinum, and diamond tier reward levels will gain free access to these exclusive perks.
Having such a system means that Uber users can gain exclusive perks just by using the app. This will motivate users to stay with Uber and not go over to a competitor.
The same strategy can be applied to a referral program. Offer exclusive perks to loyal customers who continuously refer customers to you.
3. Offer Exclusive Rewards
GOAL: To get people excited about your brand by offering them exclusive, once in a lifetime rewards.
There’s nothing wrong with rewarding people with store discounts for every new customer they refer. However, it doesn’t have to end there.
Offer exclusive rewards like concert tickets or a spa day to one lucky person every month.
Exclusive rewards add excitement to referral programs because it gives active users a chance at winning a unique prize.
Party with Elon Musk. Like Tesla
Referral marketing isn’t new in the motor industry. However, Tesla stands out from the rest with its referral program because of its unique rewards.
In the past, Tesla offered lucky members an opportunity to visit the Tesla factory. They also offered invites to parties that were hosted by Elon Musk himself!
Tesla’s exclusive rewards are exceptional and will get any car enthusiast all revved up!
The rewards also inspire brand loyalty and add plenty of excitement and interest to the referral program.
So, apart from offering members supercharging credit or credit towards a new car, Tesla’s referral program offers memorable experiences. Meeting Elon Musk is certainly something worth talking about and remembering for the rest of your life.
4. Offer Valuable Rewards
GOAL: Allow customers to earn a long-lasting reward that will constantly remind them of your referral program.
Store discounts and vouchers are ideal rewards for a referral program. However, once a customer redeems a voucher, it’s gone for good.
Offering your customers something more valuable than vouchers will motivate them to keep referring new customers to you.
Why? Vouchers are short term and in most cases require customers to make a purchase.
Offering a FREE product or service that is long-lasting and does not require a purchase is valuable to a customer.
This can be additional services on top of what you are offering or a free product like a Bluetooth speaker or power bank. Whenever your customer sees or uses these products or services, they will instantly remember your brand and its referral program.
Free for Life. Like Dropbox
Dropbox offers its users 500MB of additional storage space simply for referring new users to the platform.
So, if you have a basic 2GB Dropbox account, your storage limit will increase to 2.5GB after your referral is approved.
You can actually increase your storage limit by a maximum of 16GB. Just by referring new users to the platform.
The Dropbox referral program is an excellent example of rewarding your customer with your own product. It’s also a good example of a long-lasting reward.
Every time a user logs into their account, they will be greeted by the extra storage that they earned. Also, knowing that you can potentially increase your storage by 16GB is an excellent incentive for customers to continue referring others to the platform.
5. Host a Referral Contest
GOAL: Let users compete in a referral contest over a few weeks, then award the top referrers with prizes.
A referral contest is similar to a social media contest that requires users to compete with each other to win prizes. Contestants will have to complete a number of specific tasks to be able to climb up the rankings to first place.
Your brand can sponsor a prize and get social media users to compete with each other to win that prize. The person with the most referrals wins!
The beauty of this strategy is that you get to ramp things up in a short space of time.
Instead of only seeing results after 3 months of launching your referral program, your referral contest can bring in massive amounts of new leads within 2 weeks!
Boost New Leads Quickly. Like Testbook
Personalized learning platform, Testbook, generated over 57K new email leads and over 7K app downloads from their referral contest.
Contestants competed with each other to win excellent prizes (laptop, smartphone, tablet, and truly wireless earbuds).
For every new user referred, a contestant would earn 100 points. The top 10 contestants with the most points won a prize.
Testbook also allowed contestants to perform additional “bonus actions” to earn more points. These bonus actions are tasks defined by Testbook, such as, “Follow us on Instagram” or “Comment and Like this post”.
This allowed Testbook to use their referral contest to increase their social media followers and engagement on their posts.
Because the contest only ran for a few weeks, contestants were encouraged to refer as many new users as possible during this time. This resulted in a massive boost in new leads, signups, app downloads, and social media engagement for Testbook.
Referral marketing still remains as one of the most powerful forms of marketing. Multi-billion dollar brands have managed to grow their startups using simple, yet effective referral programs.
With referral marketing, your customer is an ambassador for your brand and can help you sell your products or services. However, they will still require some form of incentive or compensation for every new customer they refer to you. You will also have to make it as easy as possible for them to refer people to your brand.
A simple referral program that is easy to understand and implement is always recommended. This will allow more referrals which will lead to effective growth for your business.
We hope you enjoyed this article. Tell us, have you ever participated or hosted a referral program before? Let us know in the comments below.
Jack Paxton is the co-founder of VYPER, a marketing tool that helps brands build email lists, social followings, and revenue using viral giveaways, referral, and reward programs. After millions of dollars spent testing different marketing strategies at his marketing agency. He then also co-founded Hyax a fast, conversion & design-focused course and funnel builder for creators.