7 top Referral Programs for your business.... #46
- Adrian Dionisio - business737 owner
- Dec 13, 2021
- 4 min read
Updated: Mar 23, 2024
Referral systems can improve any business. They will help increase the bottom line. They will help you make more money. Effective referral systems will excite customers enough to recommend your business to others.
Your customers often won't waste their time conducting research to decide which businesses to buy from. Referral strategies encourage previous happy, loyal customers to become brand advocates. They can produce a great number of new customers for your business.
Any business can create their own referral programs as a way to reach more people. Referral program are extremely effective in generating a system that incentivizes previous customers to recommend your business to their family and friends.
Do you know that customers rely on word-of-mouth more than paid media. Around 75% of all consumers say recommendations from people they know are key drivers of their purchasing decisions.
Here are some referral programs from some of the world's most successful businesses. You can tailor and use them in your business today - they will prove to be very powerful and effective.
1. PayPal - implement their referral system
Your business can implement the referral program that PayPal used to acquire 100m users.
In the early days of PayPal the gave money away to new users and referred users.
It worked so well they had to reduce the amount of money they gave away. At, first PayPal gave you $20 for signing up, and $20 to anyone you referred. They then dropped it to $10 and eventually to $5.
PayPal spent roughly $60m on their referral incentives. For PayPal, the daily growth rate was 7 - 10%. Plus, the user base surpassed 100m users. PayPal owner Elon Musk compared it to bacteria in a Petri dish;
"Your referral program needs to expand quickly, and it has to happen fast. Free money makes that happen".
2. Tesla - implement their referral program
Owner Elon Musk saw how effective referral programs were for PayPal. Naturally he was going to implement the same tactic for his other business.
Tesla gave away $1000 per successful referral, access to exclusive events, and a “founder series” Model X.
Tesla gave $1000 to Tesla owners whose referrals resulted in the purchase of a Model S. The friend would also get $1000. Plus, Tesla fans aren’t just any fans — they’re raving fans who are obsessed with Tesla’s every move. So, Tesla incentivized them:
- Get 5 referrals and you’ll get an invite to the Giga factory grand opening party.
- Get 10 referrals and you’ll get the right to purchase a special “founder series” Model X. Wow.
3. DropBox - implement their referral program
DropBox used referral programs to grow 3900% in 15 months. They followed in the footsteps of PayPal. They created a 2-sided referral program.
- Sign-up and receive free storage in the cloud.
- Refer a friend and you get 500MB of free storage.
- Your friend gets 500MB of free storage
The key was both parties winning and the results speak for themselves:
- 100k Users in Sept 2008
-> 4m users by Dec 2009
- 3900% growth in 15 months
- 2x its user base every 3 months for 15 month
4. Airbnb - implement their referral program
Airbnb generated 900% year on year growth for 1st-time bookings.
They launched version 1 of their referral program in 2011.
- Refer a friend, and you’ll receive $25 when they take a trip
- Refer a friend, and you’ll receive $75 when they rent out their place
Version 2.0 focused on distribution and driving awareness to their referral program. They added things like:
- Direct invites via email
- Importing contacts
- Header to their site
The referral incentives remained the same. The results speak for themselves. Referrals drove 900% year-on-year growth for 1st-time bookings
5. Amazon Prime - implement their referral program
Amazon Prime had an amazing referral program. Their customer research showed that Prime Members:
- Spent 2x as much as non-Prime members
- They also order more frequently than non-prime members
Their strategy was simple. Refer a friend, and when they make a purchase over $5, you’ll get $5 to spend on Amazon. Simple yet very effective. Refer friends and make money to spend on Amazon.
6. Google - implement their referral program
Google's aim was to drive users to their Google Apps. They set up a referral program and created 3 easy to navigate panels to tell you how to partake.
- For every user who signed up through your referral link, you would get $20
- You can do this until you reach $2000
- A few days later, you’d receive an additional 20% off for the first year of Google Apps.
Referral System Overview
1. Ask for referrals from satisfied and happy customers on a consistent basis.
2. Let your customers know about the rewards for your referral system.
3. Make sure your reward system is in place and make it as generous as you can, whether with cash or free services.
4. Create a compelling referral incentive that excites the prospect enough to give your business a try.
5. Follow up immediately with every new referral consistently and systematically.
Remember 9 out of 10 people trust peer recommendations. This is why you want to motivate your customers to become "promoters" of your business. You do this by enticing them to share information about what you do with anyone and everyone they know.
A word of mouth recommendation drives at least x 5 more sales than a paid impression
Customers acquired through word-of-mouth spend x 2 more and make x 2 as many referrals themselves
Referred leads convert 30% better and have a 16% higher lifetime value than leads acquired via other channels.
Half of all consumers would pick word of mouth if they could only select one source for information on potential purchases.
Comments