How Dropbox, Uber, Hotel Tonight and WealthFront leverage referrals to create an army of growth agents
With the increasing popularity of referral programs, it’s becoming increasingly clear, some companies just do it better than others.
Remove the Sketch Effect
One of my good friends kept sending me different invites to the extent I started considering marking his emails as spam. You want to make it easy for people to invite their friends without losing them.
How do you do it?
Reward both sides
Companies like Dropbox pioneered the model of the double-loop referral. By rewarding both sides of the referral they create an incentive for you to refer without making your friends feel you’re trying to take advantage of them. You’re getting something and they’re getting something, preferably the same or more.
Reward the referrer in a non-monetary way
Lyft referral program offers a free ride, while Uber’s referral offers $$ credit. The value is similar but psychologically people might feel less like you’re making a buck off of them if you’re getting a gift and not money (similar to wedding registries). Similarly, Dropbox is giving extra space, and companies like Fabletics are giving reward points that can be applied towards an outfit.
Make it easy to refer and redeem
Some companies use a long unique link or make the referral code box hard to find. Uber, Lyft, Hotel Tonight and others use a simple code (sometimes it’s simply your last name) which makes it super easy to remember and to refer even without accessing the app.
Wealthfront gives you a structured form letter to speed and ease the process.
Trigger referral request at the right moments
Remind your users about the referral programs at the moments where they’re most likely to pull the trigger on an invite. DropBox, for example, prompts you to invite friends when they see you’re about to run out of space. Other commerce sites, like Gilt, asks you to refer after you placed an order or when you’ve received your order and are asked for feedback. Prompt requests for referrals at your customers most greedy/needy moments.
Tap into the social network and make it personal
Make the referral programs more personal, it’s hard to come up with a random email when staring at an empty referral form. Use customers social graphs and trigger referral suggestions at the right moments. LinkedIn does a good job at encouraging you to endorse people from your network, this can similarly be applied for referral programs.
Introduce competition and make it a joint effort
One of the most brilliant referral program hacks was the Dropbox Space Race. When someone from your school joined Dropbox, s/he contributed towards everyone’s credit, by making the whole process transparent and displaying the numbers of each school, Dropbox introduced a friendly, yet fierce competition similar to college sports rivalries. When a student made a referral, s/he felt s/he was contributing to the greater good of the school – and took it very personally!
Referral programs are not a silver bullet for customer acquisition but if done right, they can turn your happiest customers into a referral army.