Referral marketing works excellent for lead generation;, especially during the prelaunch period.
One can use referral marketing to campaigns to also generate more subscribers for their newsletter. That’s precisely what companies like The Hustle, Morning Brew, and The Skimm did.
But is that it?
Is referral marketing just a mechanism placed on the top of the funnel to lure people into trying a new product?
If you take a look at the classic AARRR framework, you’ll understand that referrals are meant to be made by retained, happy users.
Most of the time, businesses use referral marketing to reduce their acquisition costs, and that’s it. They do it in a “campaign way.” That means that they build a referral campaign, they run it for a specific amount of time, and then they stop.
On the other hand, you have companies like Dropbox and Uber that leveraged referrals as an integral part of their growth engine.
In this article, we’re going to see why & how to build an ongoing referral program for your web app.
Why you need a referral program for your web app.
Once, I was asked to name three reasons why a web app needs an ongoing referral program. That’s an easy answer:
- People are more likely to use a product if a friend or colleague refers it.
- Referrals decrease both the overall customer acquisition cost and cost per lead- if you’re running ads.
- You can reward happy users with expanded product experience, for referring their friends.
Do you need more proof?
I’ve made a list of all the numbers that prove the importance of referral marketing a few months ago.
But what does “You can reward happy users with expanded product experience, for referring their friends.” mean?
To answer, I’ll present two examples:
- Dropbox.
- Uber.
Dropbox.
In case you were living under a rock for the past decade, Dropbox managed to take the world by storm, achieving “unicorn level” growth over the company’s first years.
Dropbox used referral marketing to boost signups by 3900%.
The program’s rewarding system was crucial to its success. Instead of bribing users with money, or whatever other gifts, Dropbox incentivized users to refer their friends in exchange for more storage space.
Uber.
Another unicorn company that you’ve probably heard of. While some might argue about whether Uber is a successful company or not, it’s undeniable that it became a cultural phenomenon.
Uber integrated not one, but two different referral programs inside their product. The best part is that the programs had a 12X ROI.
In a similar fashion with Dropbox, Uber decided to incentivize referrals with travel credit for their app. Users of the app have immediate access to their referral link for the main menu, and they can send it to their friends- which they also receive travel credit for accepting the invitation.
Now let’s take a look at how you can approach building a referral program for your web app.
How to create a referral program for your web app.
Before you start building the referral program for your web app, you first have to plan and design it.
If you don’t know where to start, I have a short cheat sheet for you:
- Use internal currency as a reward for successful referrals.
- Make the referral program a part of your onboarding process.
- Give users a clear view of the benefits of your referring their friends.
- Make sharing easy.
- Place your referral program somewhere that’s immediately visible to users.
Internal currency as a referral reward.
When we took a look at the examples of Dropbox and Uber, it was evident that the two companies used some sort of internal currency for rewarding successful referrals.
Dropbox gave free storage space and Uber credit for rides.
The use of internal currency is an excellent way to “push” users to use your product even more.
An excellent example is Netflix, which gave a free month for every successful referral.
Making the referral program a part of the user onboarding process.
We live in an age where we want things to be fast.
Let’s say that someone signs up for your web app. Should you wait for another time to ask them to join your referral program?
The answer is, “No.”
The optimal thing to do is for people to become part of your referral program the moment they sign up for your product.
If the rewards you’re offering in exchange for referrals are essential for the use of the product, then you should highlight the importance of the program to your users right away.
Sharing shouldn’t take more than 30 seconds.
Again, trying to save your users’ time is essential.
The easier the process the sharing is, the more your users are going to share their referral links with their friends/colleagues.
⚡Pro tip:
Almost everyone uses text apps, like Facebook Messenger. Make sure to include so of these apps as a sharing option.
Your program should be visible and accessible.
This is rather obvious but often overlooked. Your users must be able to have immediate access to their unique referral link (in case they want to share it again), and also to the number of successful referrals, or the rewards they’ve attained.
Recently, Active Campaign started their referral program, and users have access to it from the main menu of the app.
How to create a referral program for your web app with Viral Loops.
Most of the cases described in the above sections are companies that built their referral programs in-house. But what if you don’t have the resources to do it on your own?
What if you want to use a software solution like Viral Loops for your web app’s referral program? Can you do it?
AFFIRMATIVE.
The first thing you have to do is to create your Viral Loops account.
The challenge here is to include your users to your referral program the moment they signup for your product.
All of our templates come with their form widgets, but there are two that you can use to connect them with your custom sign up forms.
You can connect your custom form with your Viral Loops campaign either by adding a Javascript to your form or by using an API call.
Bear in mind that even if you skip using our Form Widget to capture participation for your campaign, you will still need to add it somewhere else on your website as it’s the only widget through which participants can get their unique link and invite others (just like in Active Campaign’s example)
To do that, you need to add the campaign snippet and Form Widget on any page you want to redirect them to.
If you want to learn how to integrate Viral Loops with your custom forms, I recommend to read our documentation:
Before you go.
Referral programs could be an essential part of your web app’s growth.
Companies like Dropbox, Uber, and Netflix showed that referral marketing is not just a lead generation tactic, but can also as a catalyst for user retention.
If you’re planning to create a referral program for your product, make sure to make it a part of your onboarding process and use the internal currency to reward successful referrals.
Design your program, and we’ll provide you with the tools to build it.
Apostle Mengoulis
Apostle is a core member of the founding team at Viral Loops. He has worked closely with hundreds of referral marketing campaigns made with Viral Loops. Apostle has years of experience in growing and marketing companies and co-founded Growth Hacking University.
1 comment
Thank Apostle for such information. I really enjoy the blog.