No referral program is ever perfect.
There’s always room for improvement just like there is with any other marketing channel.
Do you test different versions of your Landing Pages? Email Campaigns?
Of course you do!
So why do referral programs not get the same attention?
Usually the top two reasons for this is the programs are hard-coded into the system or don’t have analytics built-in.
That’s why one of our core objectives is to teach everyone how to properly think about referral programs. Nothing gets us more fired up than finding a referral program that could be doing better.
So in this post we’re back to doing what we do best. Showing you some examples of referral programs so you can get a better idea of what we’re talking about.
This time we’re going to take a look at 4 different marketplace customer referral programs. This is an industry that can greatly benefit from a well implemented referral program. So let’s take a look and find ways these companies can improve.
What they offer – $25 is given to both the referrer and referee when the invited friend books their first trip.
Referrals are highly measurable, scalable and are all about identifying a growth pattern that’s already happening but amplifying it at a key moment. – Jason Bosinoff, PM Airbnb.
Positive interaction – Helping your friend out with their vacation budget is something they won’t soon forget.
A double-sided referral brings value to both parties when they participate in the offer. It feels like you’re both taking advantage of a deal and you’re both on level ground. Other arrangements like affiliate programs have one party profiting off of the other. Most consumers aren’t interested in this kind of deal.
Experiential virality – The Airbnb experience is a very social one.
People love talking about vacations they take. Attach that to a brand new service that offers a $25 credit for both parties and you have some strong network effects that are highly scalable.
Airbnb wrote a post about their process for designing and implementing their referral program, I highly recommend checking it out here.
The offer – Depending on your location you can earn up to $30 for both the sender and the recipient when the recipient redeems their first ride with Uber.
Why it works: Social credit – If you save me $30 on my next ride your reputation goes up in my books.
Whether it’s building a personal friendship or business connection this referral mechanism works because it’s not one-sided. Both of us are receiving something of value and more than likely I’m going to remember it next time you need a favor.
Experiential virality – That referral can expose not just a brand new user to Uber, but can also expose up to 3 of their friends to the experience of ordering an on-demand car service. This can be a great way to increase the reach and positive word of mouth making that $30 go much farther.
What they offer –
A single-sided reward for the sender that offers 25% of all referred customer ticket fees generated for one year.
One-Sided vs Two-Sided – This is an example of a company using the branding of a referral program but in reality, they’re offering an affiliate program.
Although they may seem similar in structure, it’s a very different value proposition. A one-sided reward incentive means that you have users profiting off of their friends and network, which many of them simply aren’t interested in.
Benefits of Double-sided Programs –
A double-sided referral program gives an incentive to both parties which gives the sender the motivation to share as they feel like they are being helpful and are seen like an expert. Also, the recipient feels like they’re getting an inside deal.
What they offer: Istockphoto has a choose your own reward-type program. With the options to earn Cash, Credit or Commission rewards.
$20 for every new customer who makes a purchase of 30 credits or more within 30 days.
20 credits for every new customer who makes a purchase of 30 credits or more within 30 days.
20% on the sale of a new customers’ first credit pack purchase within 30 days.
Why it works: Giving their users the ability to pick the best reward is key to this programs’ success. Since your users will have different motivations when they are looking to make a referral.
One may be a power user who would value credit over a cash incentive as they more inclined to get some savings off their monthly bill. The other may be a casual user who is more interested in earning some spare cash instead of buying more of your product.
Identifying who your user-base is and what their motivations are can guide you to pick the best reward variety in your referral program.
Wrapping Up –
The goal of this article is to show you some of the stronger implemented customer referral programs in the marketplace industry. Not all of these programs are perfect, but they approached the programs as a core marketing channel and realized how essential user word-of-mouth is for new user acquisition.
Many companies won’t be able to commit the amount of engineering, design and marketing resources that is needed to create their own programs from scratch. That’s why we create content aimed to keep you up to date with the state of user acquisition and product marketing so you can use these insights to unlock company growth.