Integrating a referral program has been proven to be the most effective way to drive new traffic. Before looking for a reliable MVP development company, make sure you know how to create a working referral program for your future startup.
First, let’s figure out together what the term ‘Referral program’ actually means. Basically, it’s is a recruiting strategy, that enables users to get some kind of benefits in exchange for referrals.
Two reasons why referral programs are super effective:
- We trust people more than advertising.
- When buying goods or services we usually rely on users’ experience.
Referred users tend to be more loyal than people, who were attracted by advertising content. It generally takes them less time to try a new product and then make the first purchase.
Below we shared a couple of things to keep in mind when building a referral program for startup. Check them all to let your small business grow:
Find a way to motivate users
To create a truly working referral program for startup, think of what you may offer to make someone share your product with others.
Some product owners may think something like ‘Hey, my product is freaking awesome. Why should I stimulate users, who are already happy with it? Let us disappoint you — ‘being awesome’ is just a natural stare of things. If a product is NOT awesome (the entire concept, UI/UX), nothing will work. Don’t sit it out waiting for new customers to come — it is nothing but a waste of time and money.
To make users recommend you, take into account their social activity. Be it an app for pet owners or a free-trial music marketplace, users are just ordinary people who care primarily about their own problems. Will they spare even a few minutes of their precious time to send referral-invites?
Being ‘just awesome’ isn’t truly awesome
You might say ‘Ok. How much should I pay for every new user?’ In some cases, money reward doesn’t even work. Why? Because some users may think that the product price isn’t attractive enough to make them believe that recommending ‘this thing’ to friends is a good idea. In this case, it’s better to give them stuff like extra storage space or free premium subscription.
A few examples for you to check:
When the majority of Dropbox users wanted to get extra storage space, the company launched a referral program with extra space for each new user invited. For every referral, both a user and a referral got 500MB of free storage space. With a free account, the user could invite up to 32 new users for a whopping total of 16 GB of bonus storage space. Pro account users earned 1 GB per referral, for a total of 32 GB of bonus storage space.
Trello gives a free month of Trello Gold (up to 12 months) for every person you get to join this app.
Figure out what a referral action will be
How to create a working referral program for startup? Find out what a user should do to get benefits. A user must achieve the main goal — attract new customers to your startup. And this is what you should reward for — for the provided value, not actions.
When people invite friends to Evernote, they earn points. Points can be used for monthly or annual subscriptions to Evernote Premium.
Reward not for sending invitations, but for new users
Is there anything else to keep in mind?
Clearly explain the required referral actions in your marketing messages. Help users understand what exactly they should do and how they’ll be rewarded. Use plain language and provide all the needed details — a quick demo or an overview with referral program rules will be more than enough.