How to Build a Referral Program – Part 2
In the first post – How to Build a Referral Program – Part 1 – I discussed the reasons why you should create a referral program and described what you should and shouldn’t do to be successful. In this post, I am going to give you a few examples of online referral programs.
Examples of Great Online Referral Programs
Dropbox – Dropbox built their empire out of their referral program. Dropbox gives you and your friends an extra 500MB of storage space for each referral, up to 16GB.
This is a legendary referral program: Dropbox’s refer-a-friend feature permanently increased signups by 60%, with users sending 2.8 million direct referral invites by April 2010.
Why Dropbox’s referral program was so effective:
- Prior to the referral program, Dropbox was using SEM (search engine marketing) and affiliate marketing, with a CPA (cost per acquisition) of $288-$388!
- But the math didn’t work; their product was $99/year.
- Inspired by PayPal, they added a double-sided referral program, where both referrer and their friend get rewarded
- The referral rewards were extra storage space, something that was key to usage and enjoyment of their product
PayPal’s Referral Program literally gave users (and their friends) cash.
This program ended in 2003, but referrals helped PayPal achieve 7 to 10% daily growth, catapulting their user base to over 100 million members.
According to David Sacks, original COO of Paypal, Paypal used to literally pay people to invite their friends.
It turned out to yield better marketing ROI than traditional marketing channels.
Airbnb will give you $100 for every friend you invite.