My guide to throwing great referral campaigns

[jenny_8675309]

While preparing this write-up on referral programs, the first thing I thought about was:

If I see another Dropbox example, I swear I’ll lose my sh$#!

Jokes aside, referral programs can be life-changing for your business. In short, a referral program is when you reward people for talking about your business. It’s not purely word-of-mouth, it’s not really corruption. Let’s say it’s in between. Here is how to rock them:‘Promise I won’t talk about Dropbox’

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TLDR: First, choose if you want a middle or bottom-funnel referral program. Make sure the rewards are exciting and say something about your brand. Make sure to have a great referral CPA. If you can make it like a game, and give a higher purpose for people to participate. Email and in-product are usually the best places to advertise your referral program.

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1/ Just a nudge​

Referrals work because people are already on the verge of telling their friends. Only fans of your content or customers already in love with your product will play the game. You’re only pushing them over the edge.

The formula is: great product or content + fans + nudge = accelerate word of mouth.

2/ Audience or orders?​

‍Choose the objective of your referral program. You can focus on growing fans of your content or fans of your product. The question is which part of the funnel do you want to strengthen more?

If you choose a middle-funnel referral program: you'll ask for emails, you'll get more subscribers, but you need a great content offer.

If you choose a bottom-funnel referral program: you'll ask for orders, you'll get more sales, but you need an established product with fans.

3/ Perceived value​

It’s ok if the gift value is “objectively” quite low. Don’t forget you’re talking to fans. They don’t just do it for the gift, there is social value in it too.

The formula is: Action requested =< (gift value + social reward of sharing something good)

4/ Don't underestimate your fans​

Offer exciting and valuable rewards. Some of your fans will work really hard for those rewards. Tesla offered a $250k limited-edition car. Very hard to get. Well, Andy Slye got it.

Andy is a Tech YouTuber and the world’s #1 Tesla referrer. He earned +$500k in referral rewards. Andy generated Tesla 1200+ referred customers, millions of views on YouTube, and + $54M in sales (est.).

5/ Express your brand​

An Amazon gift card is nice. But how about gifting something that:

• shows who you are
• reinforces the sense of belonging to a tribe?

6/ One reward VS journey of rewards​

You can create a journey of rewards with multiple milestones, or you can focus on one reward. Both have advantages. I tend to like the journey more because:

• it’s less transactional,
• there’s a progression that is quite fun and
• it covers the customer’s lifetime.

Example of one reward: Refer a friend, give 20% off, get $75.

Example of a journey of rewards: Refer 5 people get a shave cream, refer 10 people get a new blade, etc...

7/ Cost Per Acquisition nailed​

Morning brew is a newsletter/media company. Their referral program grew their subscribers from 100k to 1.5m in 18 months. And they couldn’t have dreamt of a cheaper acquisition channel. Their referral CPA was $0.25 compared to a $3 CPA on traditional paid channels. Make sure you nail your CPA as well.

8/ We love to play​

Highlight the referral count of your referrers. It has to feel like a game and you're scoring points.

Make sure you're encouraging participants to unlock the next milestone and the prizes are clearly displayed.

9/ We love causes​

Many people don’t like to claim rewards:

• they might not need it;
• it might make them feel uncomfortable, selfish, or greedy.

Give a more noble reason for people to talk about your brand. Just like Tesla does. They display how many pounds of CO2 and how many gallons of gasoline are saved thanks to your referrals.

10/ Promote it where your fans are​

‍Email and in-product are usually the best places to advertise your referral program. This is where your fans hang out and will be more receptive.

11/ Limited time​

You don’t have to commit to a referral program forever. It can be a temporary stunt. T-Mobile did this in 2016. They offered stock in the company in exchange for referrals. The PR wave that came from it was impressive.

Bonus (1)​

Should you offer the reward to the referrer only or to the friend as well? Two-sided incentives (ex: “Give $15, Get $15”) are usually encouraged because:

• the referrer looks more generous,
• it prompts the friend to make a purchase.

Bonus (2)​

‍**Referral code or unique link?** Usually, if you’re dealing with high-value referrals for example like selling Teslas, you’d prefer to use a code. Unique referral links are not very reliable. With incognito mode, ad blockers, etc. it can fail to track.

Bonus (3)​

If you’re offering gifts (objects or experiences), choose ones that generate conversations, pictures and will be seen by others. This explains the unusually high number of gifts being stickers, mugs, hoodies, travel...

Thanks for reading! Anything to add to this guide? Lmk in the comments.

B.

PS: You can read the full case study here with illustrated concepts.

 

[recycler]

@jenny_8675309 Great guide thank you

 

[desertpelican]

@jenny_8675309 Thank you for the insightful guide! I truly appreciate the wealth of information provided. Armed with the knowledge I've gathered, I am now gearing up to participate in a referral program myself. Currently, I am thoroughly examining the details of this Referral Program https://smartyads.com/referral-program offered by SmartyAds, and it seems to be a promising opportunity.