In our last post, we spoke about how to generate word of mouth marketing for your eCommerce business. Your customers trust recommendation from friends and family more than any ads you put out, so directing your efforts towards generating word of mouth is more profitable.
One of the strategies we discussed was setting up a referral marketing campaign. Ideally, customers should be raving about your store and products already, but a good referral program makes it much easier for them to spread the word about you.
Some companies have spent years perfecting referral marketing strategies, and you can learn a lot simply by studying their successes and mistakes. Let’s look at 6 companies that have grown on the backs of their referral programs.
These Six Referral Programs Actually Work
Whether you’re a small business or large corporation, there’s hope for your referral program. Just ask the folks who launched programs for the following companies:
With cars in more than 45 countries around the world, Uber is officially one of the leading ride-sharing services on the planet. How has it grown so quickly? After all, it’s only been a company since 2009. If you guessed referrals, you’re correct (partly).
It wouldn’t be right to say that all of Uber’s success is contingent upon its referral program, but you’d be right to give it some of the credit. In the beginning, Uber had a double-sided incentive program, with both parties getting a $10 credit when new users signed up. Since then, Uber has made the program even friendlier by offering $20 credits to both the referrer and referred.
With more than 8 million users and 160,000 drivers in nearly 300 cities, it’s safe to say that Uber is doing something right.
Airbnb takes their referral program very seriously. After their first attempt failed, the second system reportedly took a five-person team three months and 30,000 lines of code to develop. However, it appears to have paid off. The company is worth an estimated $20 billion, and much of the business is indebted to the referral system that’s in place.
Their system works by giving users custom referral codes and encouraging them to share their codes with potential users by giving the referred a $25 credit. Even better, the referrer gets a $25 credit when the new user makes a qualifying reservation as a guest, and $75 more when they make a qualifying reservation as a host.
Not to be outdone by Uber, Lyft also uses a referral program to incentivize existing users to attract new customers. They also started with a $10 two-sided credit, but now offer even more liberal rewards. According to the most recent offer, referring one friend gets you a $20 credit, two friends equals a $60 referral credit and $25 bonus credits, five friends amounts to a $100 referral credit and $50 bonus credits, and 10 friends equals a $200 referral credit and $100 bonus credits.
One of the genius aspects of the Lyft referral program is that the referee is required to take their first ride before either party is rewarded. This limits the risk for Lyft and ensures that the referral is a profitable one.
While Zulily’s program is one-sided (only benefiting the referrer), it still works. Current customers are given a $15 credit for every new member they invite (when they place their first order). Where they really get it right is with the process.
They have great copy and a simple to follow call-to-action that makes the process of sending a referral easy and quick. Zulily breaks it down into simple steps and already has a well-crafted email waiting for the user to send.
Taggler’s program, on the other hand, employs a double-sided incentive system. Referrers can send out their invite link via email, Facebook/Twitter, or by copy/pasting their unique URL. Their invited friends, family and co-workers then receive $20 off their first order of custom apparel, while the referrer receives $20 in real cash per new customer. Similar to Lyft and Uber, the new customer that is invited has to pay for their order first before you can earn your referral cash.
Taggler doesn’t have a set limit to how much cash you can earn, so it provides a great opportunity for referrers to invite as many friends as possible to cash in.
Finally, let’s look at Hulu Plus. This is an example of a company that started with a single-sided program and transitioned to a double-sided program after experiencing less-than-satisfactory results.
Currently, Hulu Plus gives both parties two free weeks of Hulu Plus, with the referrer having the possibility to earn up to an entire year of free Hulu content. Each member has a custom referral code, making it easy for Hulu to track.
The latter aspect of the program brings up a good point. If you’re going to launch a double-sided reward program, make sure you have a system in place to track and quantify results easily. This lets you see who your most active and loyal customers are.
Ready, Set, Go
You’ll never achieve growth like these five companies unless you try. Learn from these examples, and don’t be afraid to start a referral program that does something new. However, keep the lessons you’ve learned here in mind as well. There seem to be some common trends for each of these brands.
You can start your referral program even before you launch your eCommerce store! That way, you can get people excited about your store and launch to a huge list of potential customers. Check out our guide on creating a pre-launch campaign to get started.