Hello, folks! It’s our last “Learn from” article for 2020! Our guests today have run referral programs for over 30,000 online stores and counting!
Raul Galera, Partner Manager at ReferralCandy, will provide some great referral program examples that will inspire you to tackle a new marketing channel for your own business.
Let’s hear him out!
Retaining customers is important, but how about making them active advocates for your business?
Referral programs have helped several leading businesses grow by leveraging their biggest assets: their customers. The programs are designed to encourage customers to invite their friends, family members, and acquaintances to make a purchase from your business.
But this would only be possible if the customers are satisfied with you and think your products are good enough before recommending it to others.
In this article, we’ll help you understand how to build an attractive referral marketing program by examining some of the best examples carried out by other companies.
Excited? Let’s get started!
Real-life Tony Stark and Tesla founder, Elon Musk, had a tough task ahead of him when creating a referral program for Tesla Motors.
The brand itself is forward-thinking and futurist – something they had to incorporate in their referral program as seamlessly as possible. It also meant they had to branch away from the traditional product discount reward for that out-of-the-box value associated with Tesla and Musk himself.
Which is exactly what they did.
Tesla’s referral program gave the referrer the chance to obtain an invite to tour Tesla’s factory and attend their grand opening party. They could also purchase a Founder Series Model X, which wasn’t available to the public, and the first owner who achieved ten orders in Asia, North America, and Europe would receive a free model X SVU.
As for the referee, every Tesla owner could give friends up to ten US$1000 discounts.
Since 2019, Tesla has again switched their referral program to make it tantalizing enough for their current customers.
The new program allows successful referrers to earn 1000 miles of free supercharging when anyone purchases a new Tesla car using their referral code. There’s also a chance to win a Model Y every month or Roadster supercar every quarter based on the number of successful referrals they have.
After their second referral program, Tesla was making a return multiple in excess of 42x, and every dollar spent towards their referral program. In fact, nearly 25% of their sales in Q4 2015 came from the referral program.
Tesla was successful in leveraging their customers’ satisfaction in its favor. The company used tiered rewards to drive repeat referrals, which was incredibly smart to score more customers.
Plus, offering the clearly valuable rewards further tempted owners to refer Tesla cars to their networks.
Uber is a brand that needs no introduction. While several people already use the app daily, with their effective referral program in place, the company was able to attract even more people to use their service.
Uber offers two separate referral programs, which worked together perfectly well to help them maximize their revenue.
Every user is allotted their personal referral code after signing up for Uber. The company ensures complete transparency about the list of people users have referred and the status of those referrals on the earning tab of the app.
Their program is pretty straightforward too.
The referee must create an account using the referral code of the referrer. When the former uses the code, both the parties will get their next Uber trip free.
The double-sided referral program of Uber resulted in a 12x ROI, which is a milestone in itself.
Uber used incentives that resulted in a mutually beneficial relationship between the referrer and referee. This made it more likely for both parties to act since they liked the offered benefit.
This is a clear example of making a referral program that benefits both the involved parties could be useful in bringing in more business.
You’ll find Dropbox’s name on most articles discussing good referral programs, and this is no exception.
Dropbox’s referral program was created to benefit their current customers, allowing them to earn more space in their Dropbox account by inviting friends to join the cloud-sharing service. This is enticing because otherwise, the subscribers would have had to pay for additional storage. So if they want to avoid this cost, they simply have to get their friends on the platform.
Customers on the Dropbox Basic plan could earn 500MB per referral, with the potential of going up to 16GB for the referrer. Plus and Professional plan subscribers would be rewarded 1GB per referral with a cap of 32GB.
All the subscribers needed to get these benefits is a personal referral code – and friends and family that will use it.
Dropbox’s referral program helped them grow their customer base from 100,000 to 4,000,000 users in just 15 months.
Guys, that’s about 30% growth for every consecutive month!
Dropbox offered a freemium model to its customers. And the fact that customers wanted to sustain their Premium plan worked wonders in helping the company achieve its primary goals.
Koodo Mobile has one of the most successful referral programs, which makes sense considering the wireless provider has been awarded the highest customer satisfaction rate by JD Power and Associates thrice in a row.
The company quickly realized that acquiring new customers through traditional means was proving to be an expensive affair for them. In their bid to bring in new customers at a lower cost, they came up with a referral program that appealed to current customers and prospects alike.
The referral program awarded the referrer $25 off on their tab, while the referee was rewarded with $25 off on their first bill.
As one would expect, Koodo Mobile successfully reduced its customer acquisition cost by 167% and scored more than 10x ROI in 2019.
Koodo Mobile successfully tempted their customers to enroll for a single sign-on and worked on their program design, giving it a fun and bright branding to make them more appealing and friendly to their clientele.
In fact, the company made referrals an integral part of their marketing strategy and ended up launching campaigns across Canada to make it available in different languages to maximize engagement and accessibility.
If you know anything about referral marketing, you may have already heard about Airbnb‘s referral marketing campaign.
If not, you’re looking in the wrong places.
To think that Airbnb started when the founders rented out an air mattress in their living room makes their glorious growth even more impressive, which is also how we’ll describe their referral program.
The company offers a two-way incentive program to users. According to the rules, the referral will become eligible to get US$18 per qualifying stay, along with US$10 per qualifying experience. The referee can earn up to US$46 account credit as well.
Airbnb is a referral program that helps increase their bookings by over 25%, and after they changed their program a bit, the referral has increased by more than 300%!
One of the things that Airbnb did right was ensuring that their customers were having a good experience when staying in their property. The other thing that they did right was correctly leveraging their users’ desire to help.
Airbnb used A/B testing to understand how they could position the reward from their referral program as a gift to a friend, which, in turn, helped them get better results as opposed to positioning the reward as a prize for the user themselves.
Evernote is an underdog company that took the world by storm. They’re primarily a note-taking app that, since their launch in 2008, has managed to acquire more than 100 million users globally and record a US$1 billion valuation – all of this with a US$0 budget for user acquisition.
What worked for the company was its excellent product that their customers loved.
Evernote users were more than happy to do word-of-mouth publicity on behalf of the company because of their satisfactory experience, and of course, a great referral program, which eventually took the company to the heights of success with zero additional expense.
Users earned 10 points for their first three referrals, making them eligible for three months of Premium or 3GB of additional monthly upload. Also, whenever a referred friend ended up purchasing the Premium plan, the referrer would earn additional 5 points.
The referee would win a free month of Premium if they used a referral code.
Currently, Evernote has 220 million users, but 13% of their first 100 million were referrals by other users.
Evernote had many things going for it: a great product, an amazing freemium model, and a simple, easy-to-use interface. Their referral program is also very straightforward, which encouraged customers to keep making referrals if they wanted to sustain their free trial of Premium.
Cut Your Costs Through Referral Marketing
Referral marketing and word-of-mouth publicity is a traditional marketing tactic that has been tried and tested over time (and again!) and always proved helpful for businesses.
You might have already worked out strategies to reduce customer churn and get more repeat business. But having a good referral plan in place could also be very useful to help you scale your business, acquire more customers, and earn more revenue.
If you’re just starting out with your referral marketing campaign, make sure you incorporate all the key takeaways from our above-listed programs. After all, there’s a reason why they’re so successful.
Raul Galera is the Partner Manager at ReferralCandy and CandyBar, two tools helping small and medium businesses run customer referral and loyalty programs. He's been working in the tech sector for the past seven years and regularly writes about marketing, e-commerce, and tech.