Referral Marketing: Learn From the Best to Be the Best, Top 8 Techniques for Rapid Growth

referral marketing

This is a guest post by Jack Paxton, the co-founder of VYPER, a marketing tool that helps brands build email lists, social followings, and revenue using viral giveaways, referral, and reward programs. Jack spent millions of dollars testing different marketing strategies at his marketing agency. He then also co-founded Hyax a fast, conversion & design-focused course and funnel builder for creators.

Famous SaaS brands like Dropbox and PayPal witnessed explosive growth in their platforms. Since 2007, Dropbox has grown into a $4 billion-dollar company, and PayPal went from 1 million users to 5 million in the same year (2000).

Dropbox and PayPal are two entirely different businesses operating in different markets. However, they share a similar viral growth strategy, one that is still used today.

Any ideas on what this strategy might be?

You got it, they both harness the power of referral marketing.

SaaS brands worldwide, including us at Process Street, are realizing the benefits of referral marketing: to constantly acquire new customers, build platforms, and promote customer loyalty and trust.

In this article, we present world-famous referral programs to determine what made them successful and how you can do the same.

Click on the relevant links to jump to your section of choice. Alternatively, scroll down to read all we have to say, to optimize your growth strategy via referral programs.

Let’s jump to it!

What is referral marketing?

Referral marketing, also known as word-of-mouth marketing, allows brands to offer customers incentives for every person they successfully refer to you.

If you think about it, word-of-mouth marketing has been around for ages. For instance, before the rise of the internet, picture how shop owners would spread the word about an excellent product and service. Reliance was on the customers, to talk about their positive shopping experience with friends and family. Store visitors grew in number due to recommendations.

Referral marketing is a key part of your growth strategy

A growth strategy is a plan of action that allows you to achieve a higher market share than you currently have. There are many different types of growth strategies, from adding new locations to investing in customer acquisitions and expanding product lines.

In addition to this article, Process Street has a plethora of resources to help you optimize your organization’s growth strategy today. I have listed 6 top Process Street blog posts below, for extra reading regarding all things marketing and growth:

If you haven’t already visited, check out Process Street’s template library. You’ll find a range of checklist resources, ready-made to help you achieve your growth goals.

For example, below I have embedded Process Street’s Upsell Sequence Email Process. By using this checklist, you’ll implement a process designed from best-practice, to send a series of emails that upsell your product or service.

Click here to access our Upsell Sequence Email Process!

But our Upsell Sequence Email Process is one example of the many template resources we at Process Street have to offer. Sign up to Process Street for free and check out our template library, to perfect your growth strategy via whatever means suits you and your organization.

Process Street’s checklists are superpowered with features such as:

  • Stop tasks, controlling your business operations, making sure tasks are completed in the correct order. This helps prevent errors, and therefore wastage of time, energy, and resources.
  • Dynamic due dates, streamlining processes. Individuals are notified when a task is due for completion and can jump in and complete that task there-and-then. No wasted time, energy, and resources trying to contact/reach individuals for upcoming deadlines.
  • Role assignments, supporting efficient team collaboration.
  • Approvals, allowing decision-makers to give the go-ahead (or rejection) on important items. Also, the necessary comments can be provided. Approval tasks act as a filter removing error.
  • Embed Widget, allowing you to view and interact with other apps without leaving your checklists.

You can create any checklist in Process Street to achieve your marketing and growth goals. For more information on how to do this, watch: Basics of Creating and Editing Templates.

For this article, we’re breaking down the broad term growth strategy to concentrate on one specific method used for growth, referral marketing.

Today, referral marketing has been fine-tuned into a seamless process that offers immediate rewards to customers for every referral they make. Later in this article, we’ll look at how modern SaaS firms have perfected this process. We identify the key elements to their referral marketing strategy that contribute to viral and rapid growth – so keep reading.

A single customer can refer two new customers to you, and those two customers can then refer two more people to your brand each.

2 + 2 + 2 and so on… You can see how with referral marketing, the number of referred customers begins to mount up.

If your referral marketing offers valuable incentives to customers, they’ll continue to send new customers your way.

The above is a recipe for viral growth! If done correctly, you can strategically grow your customer base and upscale your business over time.

Billion-dollar firms like Airbnb and Tesla use referral marketing to acquire new customers to grow their network.

The power of referral marketing

For years, customers have been referring friends to their favorite stores. If a customer had an excellent experience with your brand, chances are, they’ll tell their friends and family.

People trust their friend’s opinions over brands. In most cases, your customers are better than you at convincing their friends to buy your product. The power of influence from friends and family plays a major role in reputation marketing, which leads to referral marketing.

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Your customers have direct access to people they think will most likely want to do business with you, meaning they can pick out high-quality leads better than you can.

However, customers will not do this indefinitely unless you develop a referral program that offers your customers an incentive for every new referral they make. Such developments allow you to grow your business via referral marketing.

How to create a successful referral program

A referral program is referral marketing in action. A referral program primes and rewards customers for spreading the word about your product or service.

A single customer can generate a bunch of high-quality leads over time. However, you’ll have to guide them through the process so referral submission is successful before granting referral rewards. This is why you need a carefully structured referral program.

If done correctly, the entire process will be efficient and effective, to seamlessly generate new leads and customers for you.

For a start, you’ll need to structure the program according to the referral marketing benefits/goals you wish to achieve. Next, implement best referral marketing techniques, as listed below:

  1. Apply the mindset that your customers work for you.
  2. Quickly build trust.
  3. Use a highly-targeted audience.
  4. Create a viral program.
  5. Offer excellent rewards.
  6. Be flexible and adaptable.
  7. Offer your service to minimize investment.
  8. Incentivize referrals of high-quality leads.

These are top techniques used by Airbnb, PayPal, Evernote, and more! Below we discuss the referral programs used by these industry experts, stating the techniques used in context.

Case study: How Airbnb re-built a successful referral program

Even in the early days, Airbnb had a referral program. However, this program never took off until complete restructuring to meet their referral program requirements.

Airbnb went back to the drawing board to revisit their goals and to build their referral program again from scratch. After careful consideration, Airbnb re-launched a new referral program that instantly increased signups by 25%.

How did Airbnb’s new referral program deliver such impressive results?

Below are 4 top tips used by Airbnb that helped the organization deliver success.

Tip #1: Customers work for you 👩‍👩‍👧‍👦

Create a referral program that is clear and easy to use. Offer a simple incentive like a discount, a free product, or even cash for every referral. The task of referring someone to you should be easy to understand, easy to complete, and satisfactory for your customers.

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Airbnb allows its users to easily send out custom invite links to their friends and family. They’re also clear about how their users can potentially earn from the referral program.

Tip #2: Build trust faster 🤝

People who discover your brand through a friend are more likely to develop a relationship (and trust) with your brand quicker than if you directly contact them. Your referral program can build trust with new referred customers even further by offering them an incentive as well for joining your platform (or making a purchase).

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In this vein, why not consider using chatbots to let your audience know about your program?

Airbnb also gives new users monetary rewards on their next trip by joining. This is a great incentive for new users to complete the signup process.

Tip #3: Highly-targeted audience 🎯

Be specific on what you consider as a successful referral. For instance, a successful referral only takes place once a customer signed up for your platform and has made a payment. Such a requirement will restrict references to high-quality leads only.

Airbnb clearly states that you’ll receive credit after your referral has made a booking on their platform. This strategy forces users to refer to people that travel often and would benefit from Airbnb’s platform.

Tip #4: Create a Viral Platform 👩‍💻

A referral program that isn’t complicated, easy to access, and has great incentives can potentially go viral. This can lead to high volumes of transactions being made on the platform. Your referral program must be easily accessible to these users.

Airbnb’s previous referral program was hidden away on their website. Today, their referral program is easily accessible on all platforms. It’s optimized for mobile, allowing people with smartphones to easily send referral links from the Airbnb app via popular apps such as Whatsapp and Facebook.

Referral program examples

For more top referral marketing techniques, we’ll look at four more world-renowned referral programs that have generated millions of new customers and billions in revenue.

Dropbox offers excellent rewards

Dropbox offers its users 500MB of additional storage for every person they refer to the online storage platform.

Offering your users your product or service for free can be an excellent incentive for them to refer more users to your platform. This strategy allows you to turn your product/service into a currency to be traded for new leads and customers.

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People are willing to pay Dropbox for online storage, making it a valued service.

Offering free storage for every referral gives customers monetary rewards through referrals. Being able to save money (or gain more storage) means a lot to the consumer and isn’t too costly for Dropbox.

Dropbox used this strategy to grow its platform from 1 million users to 4 million within a year. To achieve such growth, Dropbox invested little.

Key takeaways:

  • Offering your product as a reward for referrals can be valuable to your users who would otherwise pay for your product.
  • The Dropbox referral program is an ongoing campaign that can both gradually and rapidly acquire new customers.
  • There is a low investment in referral rewards needed if you offer your product or service (this varies according to industry).

PayPal made their referral program adaptable and flexible

PayPal offers people $20 to open a new account and $20 for every new user they bring to the platform.

The famous online payment platform gave money to customers joining the platform. They also gave people money for every new user they referred.

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PayPal invested a huge amount of early funds into their referral program. For instance, users would be offered $20 within the first month of launching its referral program.

As the referral program’s funding began to decrease, PayPal changed their offer to $10 per referral and further reduced it to $5 later on. This allowed them to stretch their funding so that they could acquire more users.

PayPal used this strategy to acquire 100k new users within the first month of introducing the referral program.

The PayPal referral program isn’t ongoing. It’s only implemented strategically, during a specific time or within a specific region.

For instance, suppose Paypal is looking to acquire new users in Asia before December. In that case, they’ll run their referral program in that region only during the months leading up to December.

PayPal can choose to invest in their referral program to acquire new users instead of using traditional ads.

Key takeaways:

  • Directly invest cash into your referral program to acquire new customers.
  • Referral programs do not have to be ongoing and can be launched exclusively in specific regions.
  • Offering users a cash payout for every referral can lead to rapid growth.
  • The amount you offer can easily be adjusted to suit your budget.

Evernote offered their service to minimize reward investment

Evernote rewards its users with points for every new user they successfully refer to the platform.

Points can be used to activate Evernote Premium monthly or annual subscriptions. Evernote sometimes offers additional perks that can be unlocked with points, like extra storage, gift cards, and VIP invitations to the Evernote Conference.

Evernote’s approach to their reward program is similar to that of Dropbox. They offer users a chance to earn their service for free by successfully referring new users to the platform.

However, Evernote offers a month of their premium service to any new user that joins the platform via referrals. This means that all parties stand to gain from every referral.

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Evernote uses its referral program to maximize platform users. In 2020, the number of users grew to 75 million.

Key takeaways:

  • It is possible to develop an automated referral program built for generating free users and paying customers.
  • Users earn points that unlock exclusive perks for every new referral. New users referred to the platform qualify for a free month of Evernote premium.
  • The referral program was not a major investment for Evernote.

Process Street incentivizes referrals of high-quality leads

We couldn’t publish an article on referral marketing without acknowledging Process Street’s partner program.

Process Street is a business process management software, providing superpowered checklists for a no-code means of establishing managemental control of an organization’s operations.

Process Street’s partner program is easy to set up and use – all you have to do is share a unique link that will take viewers to our home page. If the referred user signs up to a Process Street account there, then you’ll earn a 20% cut of what their contract is worth.

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The best part about Process Street’s referral program is it doesn’t affect your clients in any way – they don’t have to pay anything extra. Signing up to Process Street is free, creating a win-win situation. The clients obtain free access to Process Street’s BPM software, and you gain monetary rewards if the client chooses to upgrade their plan.

Using referral marketing has played a key part in Process Street’s ongoing and rapid growth.

Key takeaways:

  • The referral program is not a major investment from Process Street.
  • The referral program creates an incentive for users to refer high-quality leads to establish valuable contracts.

Referral Programs: A Gateway to Viral Growth

Referral marketing is not a new concept. Customers have been referring brands to their friends for a long time. However, new-age startups like Dropbox and PayPal have cracked the code for hosting an organized referral program that can effectively upscale your business.

These SaaS brands were able to effectively acquire millions of users earlier on with their referral programs. This allowed them to generate massive income, acquire more funding, and eventually expand their businesses.

Use these aforementioned top tips when developing your referral program, and reap the rewards.

What are your experiences with referral programs? What successes and challenges have you faced? Let us know in the comments below.

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Jane Courtnell

Hi there, I am a Junior Content Writer at Process Street. I graduated in Biology, specializing in Environmental Science at Imperial College London. During my degree, I developed an enthusiasm for writing to communicate environmental issues. I continued my studies at Imperial College's Business School, and with this, my writing progressed looking at sustainability in a business sense. When I am not writing I enjoy being in the mountains, running and rock climbing. Follow me at @JaneCourtnell.


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