Reading about referral programs for this guide, 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’

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.

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?

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.

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.

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.

But hey whatever works for you.

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.

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.

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 here.

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!

Yours truly,

Badis.

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