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Morgan Brown lists several ways you can learn from the most successful user-get-user programs ever invented and apply these principles to improve the performance of your referral program.
  • Improve NPS to Drive User-Get-User
  • Make User-Get-User Part of the Core Product Experience
  • Create Benefits for Both Sides
  • Make the User-Get-User Program Visible
  • Build a Double Viral Loop
  • Avoid the One Experience Fits All Approach
  • Use Psychological Triggers to Encourage Invites
  • MB

    Morgan Brown

    over 5 years ago #

    Thanks for sharing Everette. One of the things I learned rebuilding a referral program from the ground up is that there are some very core things that the great ones do that are different than how many sites tackle referrals.

    There are a bunch of key takeaways in the post but arguably the two most important are to: 1) make sure people love your product, otherwise the mechanics of your user-get-user program doesn't matter; and 2) make it a part of your core product experience and value–don't bolt it on.

    Of course there are many more than just seven things to do. Would love to hear others' thoughts. Also happy to answer questions around what I learned building a referral program for a (now) fairly large e-commerce startup in the early days.

    • VV

      Visakan Veerasamy

      over 5 years ago #

      Re: takeaways- Absolutely. Pure cash worked for PayPal for a very unique reason- because PayPal is a payments processing company. People sign up thinking that they're getting free money- and they ARE- but most importantly they also now have a PayPal account that they can use to receive and send transactions. Very unique circumstances!

      I'm curious to see if this can be replicated in say, Bitcoin transaction systems. I have a hunch that it'll work once it begins to get more widespread adoption.

  • BG

    Brandon Gains

    over 5 years ago #

    Awesome article Morgan!

    What are your thoughts on companies picking their incentive?

    In my experience it seems like companies pick the incentive before they consider anything else.

    Getting proper quantitative and qualitative research from your users will help you find which incentive is more likely to get users engaged with the program.

    It's also important to consider if your product has different tiers of users IE (free, paid) that they will have different motivations for making a referral.

    • MB

      Morgan Brown

      over 5 years ago #

      Hey Brandon, thanks!

      I definitely feel that choosing the right incentive is at the core of any great referral program. As @ivankirigin said in his 500 distro talk that I referenced, try to get away from money whenever possible. Too many people go right to cash, when in fact cash has all sorts of problems tied to it (besides being often the most expensive option).

      For SaaS companies, free seats, free upgrades, etc. are worth testing before testing straight cash incentives.

      For e-commerce companies, testing things like free shipping, upgraded shipping, and other perks can be powerful motivators.

      • AA

        Anuj Adhiya

        over 5 years ago #

        Also cash doesn't work because it's the least effective motivator: https://growthhackers.com/cash-is-for-saps/
        The free seats/upgrades etc all fall under the "access" category which works quite well

        • MB

          Morgan Brown

          over 5 years ago #

          Hey Anuj, definitely agree with you on where cash falls as a motivator. I reference Gabe's SAPS framework in the post.

          I think in some cases cash can work well, but the economics and prevalence of it have really made it tough. For example, Slack offers a $100 double-sided referral bonus. $100 is nothing to sneeze at so it's probably as effective and more tangible than something like a "free month" of the service.

          But for the majority of cases cash is a bad idea. Even when you give cash, positioning it as something else is more beneficial. For example Lyft says "Get a free ride...up to $25" so while the credit is really $25, the free ride is more tangible, motivating and relevant.

          The company also gets to market $25 and lower their CAC at the same time by taking advantage of the inherent breakage in the free ride model. If you give a free ride up to $25 and the ride costs $14 the user doesn't bank the $9, it goes back into the company's pockets and lowers the user-get-user cost structure. Wins all around.

  • ET

    Everette Taylor

    over 5 years ago #

    No problem @morgan - really looking forward to more posts from your blog. Signing up for email updates, I suggest others do the same. I'm all for high quality content.

    • MB

      Morgan Brown

      over 5 years ago #

      Thanks Everette – happy to answer questions about what the daily email looks like, etc. for anyone here.

  • LP

    Laxman Papineni

    over 5 years ago #

    I like "User-Get-User" instead of "Refer-A-Friend". Its easy to run referrals for in-app purchase web/mobile solutions. But the challenge lies when it comes to non-transaction businesses. Any insights on how these businesses can leverage it?

    • VV

      Visakan Veerasamy

      over 5 years ago #

      What do you mean by non-transaction businesses, precisely? Could you give some examples? We could figure things out from there!

      • LP

        Laxman Papineni

        over 5 years ago #

        @visakanv I mean sites/apps handing no purchases. Could be coupon sites or magazines, etc

        In case of transactional sites/apps you can give in-store credits, but when it comes these non-transactional businesses they have to go for third party coupons or etc.. Was just wondering, is there any other way of doing referrals for them

        • VV

          Visakan Veerasamy

          over 5 years ago #

          Ah, hm... I think you'll want to dissect the business model and figure out what sort of value you can give to people, besides $$. So for a magazine I imagine it might be exclusive content, or maybe entry to a VIP forum/lounge, etc? Really depends on the business model.

  • BM

    Bhavna Muraleedharan

    over 5 years ago #

    Many of our customers that use Viraltrics Referral solutions for their apps need repeated coaching and convincing to start using trigger based referrals. Mostly they are at loss determining which trigger and where.

  • CB

    Chris Brown

    over 5 years ago #

    For me the argument that cash is the most expensive doesn't hold water for most b2b SaaS companies. Giving a double ended $100 coupon will only ever cost $200, not bad if your CLV is in the thousands. However giving an double sided upgrade to the next tier could equal that every month.

    If your pricing tiers are based around features rather than usage, you only really have two options; free upgrades or cash. Are there any others?

    • MB

      Morgan Brown

      over 5 years ago #

      Hey Chris, I agree w/you in SaaS businesses, cash is actually cheaper than upgrades or free months. I mentioned in a comment that giving away $100 for Slack probably makes sense, but cash can be really hard in b2c situations where AOV and LTV can be low.

      Particularly in the b2b space for startups, giving away cash as an incentive may be far more favorable than free months of service or upgrades because free months or upgrades hurt MRR which is a key valuation metric for those businesses.

      There are incentives such as t-shirts and other limited edition swag (which are essentially cash, but have a higher perceived value than their cash equivalent). New Relic did this well. There are other incentives such as power user groups, access levels, etc. that can also work, but are not as common as cash.

      Thanks for weighing in!

      • LP

        Laxman Papineni

        over 5 years ago #

        As proven many time Cash is least motivating factor for referrals. @morgan Though T-shirts, stickers and etc work well, i strongly believe upgrading users for a month or 3 months doesn't really hurt when LTV is high, which is always true in B2B case.

        This gives customers the opportunity to taste the full version and turn into a paid customer, which is a big win for any B2B business.

        Just my thoughts, and it varies from business to business.

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