Launching a referral program is the most advantageous action you can take to benefit your business.
There is no better way to establish credibility than by allowing your top customers to vouch for you since, ultimately, customers trust each other more than they trust brands.
Furthermore, when executed correctly, referral marketing can enable you to gain additional customers without depleting your marketing funds. Additionally, referrals also attract the most loyal customer base.
It is satisfactory. However, the issue arises when managing a referral program becomes too overwhelming, quickly.
You inevitably find yourself asking:
Am I providing the correct rewards?
Am I adequately promoting my referral program?
Am I excessively promoting it?
What can I do to stay updated on all these referrals?
If you are feeling overwhelmed, it is beneficial to observe how the most successful companies approached the situation. Are you searching for the finest referral program examples?
1. Airbnb
By allowing homeowners to turn their homes into rentable property, Airbnb disrupted the hospitality industry and has experienced rapid growth since its launch in 2008. In August 2017, the community-driven hospitality platform surpassed 4 million listings, which is more than the combined number of rooms in the top 5 major hotel brands.
Airbnb’s referral program has played a significant role in its success.
Airbnb Referrals 1.0
In 2011, the company introduced their initial refer-a-friend program, Referrals 1.0, using Referrals 1.0 as the platform.
How Airbnb’s referral program worked:
- Refer a friend to Airbnb, and you receive $25 when they take a trip.
- Refer a friend to Airbnb, and you receive $75 when they rent out their home.
Referrals 1.0 had an initial success but lost momentum later due to insufficient promotion. What was the reason for not promoting it adequately? Gustaf Alströmer, Growth Product Manager at Airbnb, explains that it was because they were not particularly proud of the referral program.
Airbnb Referrals 2.0
Airbnb revamped its referral program and introduced Referrals 2.0 during the period of increasing mobile adoption. Airbnb users were then given the opportunity to import their Gmail contacts and send personalized invitations using Referrals 2.0.
In addition, Airbnb found that motivating their users by appealing to self-interest is not always the most effective approach. It was revealed that customers are more inclined to make referrals if it benefits their friends rather than themselves.
By conducting A/B testing on their referral emails, they discovered how they found out.
2. Tesla
When individuals think of “Tesla,” what is the initial thought that comes to mind? Correct—electric vehicles.
Although Tesla was not the first car manufacturer to produce electric cars, they were able to dominate that specific market due to their inspiring vision, which in turn fosters strong customer loyalty and advocacy. As evidenced by Experian’s findings, Tesla has the highest level of customer loyalty among all car brands.
By capitalizing on their loyal customer base, Tesla achieved remarkable success through their referral program, which resulted in a 40 times return on investment, all achieved without allocating any funds for advertising.
How Tesla’s referral program worked:
Over the years, Tesla’s referral program has undergone various changes. However, if there’s one thing they consistently got right, it’s understanding the desires of their most devoted supporters.
Do Tesla’s most devoted supporters desire anything in particular? Perhaps more Tesla merchandise? Certainly. However, above all else, what they truly crave is the chance to proudly display their loyalty.
Tesla pleased them by providing significant, innovative, and exclusive incentives.
Tesla’s referral program incentive structure:
- Refer a friend, and they get $1,000 in Tesla credit when they buy a car.
- Referrers get automatic entry to win a Ludacris P90 Model X
- Referrers also earn the following rewards based on the number of referrals.
Receive an invitation to Tesla’s next unveiling event by referring 10 people.
There are five referrals for Tesla wheel rims that cannot be bought.
The text can be rephrased as follows: There are three referrals required in order to obtain a Tesla owners jacket that is not obtainable through purchase.
There are two referrals available for a Tesla duffel bag that cannot be purchased by the general public.
3. 24 Hour Fitness
To date, 24 Hour Fitness has 400 clubs and 4 million members worldwide, making it one of the largest fitness club chains in the U.S.
The company’s growth was greatly influenced by the referral program of the fitness company. Specifically, the company achieved more than 330k referrals within the initial 3-month period of launching the program.
What was the method used by them?
There are two things to consider:
- By offering rewards to the new customer instead of the referrer.
- By leveraging social media.
Offering rewards to the new customer via a one-sided referral structure
Once again, we have a situation where a brand is well aware of the desires and necessities of their customers.
If you’re someone who wants to stay in shape but requires ongoing motivation to remain committed to their goals, chances are you accompany a coworker to the gym. This is because having a friend who will push you to achieve your daily fitness objectives is beneficial.
Finding the perfect workout partner can be challenging, but 24 Hour Fitness overcame this obstacle by introducing a referral program. This program enabled customers to provide their potential workout buddies with a complimentary three-day pass to the closest 24 Hour Fitness center.
Referral marketing commonly refers to this type of incentive structure as a one-sided referral structure, which comes in two variations – one that solely rewards the referrer and another that exclusively rewards the new customer. 24 Hour Fitness opted for the latter, and the outcome was highly successful.
4. Google Apps
The Google Apps referral program follows a one-sided format, providing a $15 reward for each paying user. It appears that the Google Apps referral marketing team has modified the program to prioritize affiliates, as they no longer provide a reward for newly referred users. While the design of the Google Apps refer-a-friend page is satisfactory, the headline lacks impact. If you are offering a financial incentive, it is crucial to mention it in the header of your landing page. Money is a powerful motivator.
5. SugarSync
File storage competitor SugarSync has implemented a referral program that operates on a tiered system, providing rewards of 500MB and 10GB to both sides. This strategic approach motivates customers to invite power users in order to attain the most lucrative incentives.
6. Evernote
Evernote, a widely used note-taking software, operates a refer-a-friend program that offers incentives to users who invite their friends. This program grants points to users who successfully refer others for signing up or purchasing premium subscriptions. These points can later be exchanged for additional storage capacity or complimentary months.
7. EquityFeed
EquityFeed, a stock trading platform, gives a 10% discount to their customers who refer new paid customers. Their referral program remains a highly profitable channel for acquiring customers and has a high conversion rate from trial to paid.
8. Marin Software
Marin Software, a provider of enterprise software, has the capability to allocate a maximum of $2,000 for each successful referral due to the fact that their customers spend anywhere from $10,000 to $100,000 per month. By participating in Marin’s refer-a-friend initiative, referred customers can receive rewards of $500, $1,500, or $2,000 based on the subscription plan they choose.
9. LastPass
LastPass, a top SaaS password storage provider, operates a referral program that offers one month of their Premium plan for each successful referral. The LastPass referral program is promoted within their web application, specifically in their dashboard, with a minimal call to action (CTA). More details about their program can be found in our article.
10. HubStaff
Hubstaff, a reputable time tracking provider with a strong Software as a Service (SaaS) background, incentivizes user referrals by offering a mutual 10% discount. Continuously striving to enhance their referral program, the Hubstaff team actively promotes their refer-a-friend initiative on various platforms, including their website, web app, and FAQ pages. By constantly seeking ways to enhance the customer experience and encourage recommendations, Hubstaff aims to further highlight the value of their product to potential customers.
