Archives for July 2018

July 17, 2018 - No Comments!

How Referral Marketing will increase your ecommerce sales

When buying a new car, what’s the first thing you do? 🚗

If you’re like the vast majority of consumers, you talk to friends and family. 👨‍👩‍👧‍👦

Even if those close to you aren’t car experts, you’ll likely ask them which brands to buy and avoid.

Why?

Because you trust their opinions.

How do we know?

A recent study found that 82% of surveyed individuals said they consult friends and family before making a purchase.

82%!

That means more people seek out a referral than drink water daily. 🚰

As an e-Commerce retailer, this research should stop you in your tracks 🛑 and prompt you to evaluate your referral marketing strategy.

After all, missed referrals mean missed $$$. 💸💸💸

Don’t have a referral marketing strategy?

Grab a cup of coffee (or better yet, a glass of H2O). You’re in for a great read packed with tips to get your customers talking and, more importantly, referring new customers.

Reduce Bounce, Increase Cha-Ching

An effective e-commerce referral marketing strategy gets people to your site and turns those visitors into buyers, and then into ambassadors.

When your customers’ nearest and dearest receive an email singing your company’s praises (and then those loved ones click through your site), web traffic increases.

And that referred traffic…

Research suggests that referred individuals are substantially more likely to make a purchase than those who happen upon your site. In fact, consumers are four times more likely to 💰 buy something 💰 when a friend recommends it.

If you’re not already using referral marketing for your ecommerce, ask yourself:

“Why am I not doing something I know would increase the likelihood of customer purchases by a whopping four times?”

Dangle that Carrot

With numerous independent studies supporting the positive impact referral marketing communications have on buying behavior, can we agree on the importance of encouraging your customers to refer your products and/or services?

Good. Then let’s discuss the “how” of your referral marketing plan.

One word—incentivise.

Some might argue that you simply create a wonderful product and customer experience and the word will get out naturally.

Frankly...that only gets you part of the way.

Even when they’ve had positive online experiences, only 58% of consumers are likely to talk about them online.

That’s where referral marketing comes in—a meansHow Referral Marketing will increase your ecommerce sales to incentivize customers to blab about their amazing interactions with your business.

Just like a horse will do almost anything to get the carrot, customers are motivated by discounts, bonus gifts, VIP access or any number of perks that can come from simply delivering a complimentary tweet or referral email.

Powerful and well-planned referral marketing provides the carrot 🥕, or incentive, for happy-as-a-clam customers to shout their satisfaction from the mountain tops (or, at least, tweet it—’cause we all know mountain climbing is tough).

The key🗝️ is to implement an on-brand (dare I say, brilliant) referral marketing campaign. You can’t simply say, “Hey, tell your former college roommate about us, and we’ll give you $1 off your next purchase.”

Why not?

Consumers will make judgments about the quality of your referral marketing programme based heavily on what you’re offering as an incentive. And if the incentive is too meager, they’ll likely forego participating altogether.

Find Proof in the Payout

Along with Gilt, Airbnb, and Robinhood, the roster of businesses using referral marketing is overflowing with success stories.

Thanks to the inherent flexibility of referral marketing as a means of advertising, each company was able to prepare and implement a programme tailored to their products, their needs, and their customer base. Here are a few examples:

Paypal

Though now a household name, Elon Musk’s Paypal was once unknown. One secret to their growth? A strong referral marketing program that grew customer base from zero to 100,000 in just one month. 📅

And what more appropriate way for a company named PAYpal to incentivize than with cold, hard cash?

Paypal’s programme of choice was simple. Sign up for Paypal, and you get $20. 💵  Refer a friend who signs up; get another $20. 💵  

All told, the programme cost the company $60 million.

The company today, however, is valued by experts at $49.6 billion dollars.🤑 🤑

I guess Paypal’s risk has paid off.

Erin Condren

The drug of choice for consumers who’ve craved organization, ErinCondren.com, grew from obscurity to a $40 million valuation in 10 years.

Capitalising off the close-knit community of stationery lovers ✉️ and organic word-of-mouth has always been part of the Erin Condren growth model.

So adding a referral marketing program designed to amplify their social growth was a perfect and profitable fit.

ErinCondren.com customers take advantage of an ongoing referral program offering rewards to both the referrer and the referred. When a customer refers a friend, the friend receives a $10 discount offer.

If the friend makes a purchase, the referrer also receives a $10 voucher. Because users can refer as many friends as they want, devotees to the customized planners offered on the site can email their way to discounted and free products.

Amazon Prime

Everyone loves free, two-day shipping. 📦

But not everyone loved the $79 price tag when the service launched in 2005.

Despite the fact that Amazon.com boasted approximately 200 million users in 2012 — 7 years after the launch of Prime — the company had secured only 25 million paid Prime users.

To get customers over the sticker shock of this annual membership cost and induce more people to give Prime a go, Amazon turned to referral marketing.

Following the fall 2014 launch of Prime’s referral program in which referrers earn credits to spend on Amazon.com, the Prime membership count lept.

It continued to climb, more than tripling to 90 million subscribers by September of 2017.

Reap Returns on Investments in Referral Marketing

Money invested in referral marketing provides a more significant return than investing the same amount of money in traditional advertising, suggests research.

According to a Boston Consulting Group study, consumers trusted word of mouth anywhere from two to 10 times as much as traditional advertising. 🤝

Make your customers' top-notch experiences work for you. Define your company's referral carrot, then dangle it proudly for your consumers to covet.

Next, you can try our e-Commerce template (inspired by Gilt), and if you're a Shopify user you can run a Milestone Referral campaign, similar to the one we run for our ambassador program.

Finally, sit back and watch as the referrals (and dollars) roll in.

Note: Puggy recently started spreading her knowledge on Referral Marketing, so 👉 Push the "Send to Messenger" button below to grab her exclusive content 🐶

July 3, 2018 - No Comments!

How Airbnb’s Referral Program Built a Billion $ Growth Formula

Remember when people first started using “google” as a verb?

It’s every startup’s dream—beyond making lots and lots of money, of course.

It’s the arrival. The moment when there’s a universal acceptance that your company as the go-to provider of a product or service…so much so, that people now use your brand as generic noun or verb.

Pass the Kleenex. Xerox a copy. Relax in the jacuzzi. Enjoy fish and chips with a coke.

And now...paying to stay overnight in a neighborhood flat or borrowing a local family’s rollaway bed while you travel...you’re airbnbing.  

So how did this scrappy, born-out-of-necessity, startup make their claim to fame?

For starters, they had a great idea. But everybody’s got an idea, right? What brought Airbnb to billion-dollar status was how they grew that idea, that is, how they increased their number of guest arrivals from 21,000 in 2009 to 80,000,000 in 2016. 😲

It was its well-timed and well-implemented referral marketing program.

Let’s talk about how they did it.

How Airbnb Built a Billion $ Growth Formula

Let your customers do the convincing

So you’ve got a new product, but the world is not knocking down your door to download your app or use your service?

Well, you’re not alone.

Not everyone wants to be an early adopter, and that was certainly the case for Airbnb.

What’s more, when Airbnb launched their service model, they were met with concerns—travels and hosts alike worried if they could trust a stranger.

Jumping that hurdle began with this fundamental insight: a whopping 92 percent of people say that they find recommendations from a peer more compelling than advertising.

We know how powerful word-of-mouth advertising is when used to sell any product or service. But for the services Airbnb offers, the power of a word-of-mouth was be even more critical for accelerating growth.

By building a refer-a-friend-like program that gave experienced customers the mic—along with background checks and a hefty insurance policy—Airbnb could reduce (if not eliminate) those fears, making travelers and their hosts more travel-ready.

Current customers became the trusted brand advocates new customers really want and need to hear from.

As Jason Bosinoff, Airbnb engineering manager, said in an article for Medium, “Airbnb experiences are so personal. People use Airbnb to unlock incredible experiences — anything from weekend getaways with friends, cultural exchanges, and once-in-a-lifetime events like honeymoons.”

And the referral approach is just that...personal.

Go big…and go home

When starting a referral program, everyone has the same question: What will entice people to sign on, sign up and most importantly, to refer others to do the same?

For Airbnb, the answer was simple.

Experiences. 🗽 🌉 🗼

They wanted to build a database of world travelers, ready to rent apartments, rooms, and homes the around the globe.

So the home-sharing company incentivized would-be travelers offering travel credits—$25 when a referred friend rented from Airbnb and $75 when a referred friend listed his or her property for rent on the site.

What’s particularly advantageous about this referral tactic is that Airbnb can detract swag hunters simply looking to collect loot or swag and instead, increase referrals of people who would actually travel. ✈🚆 🚁 🚍 

How Airbnb Built a Billion $ Growth Formula

Travelers who participate in the program can earn up to $5000 worth of lodging fees they can use to try out the service. 💰 🤑 💰

That’s certainly enough to pay for lots of mini-breaks weekends. 🚗 🏘

It’s up to the traveler to decide whether to spend these credits as they are earned, or save them up and use all at once.

Sounds really awesome to a traveler, doesn’t it?

For Airbnb, however, the approach was a little risky.

Here’s why...

To offer these travel incentives, Airbnb had to open up their wallet and pay some cold-hard-cash. When a traveler got a credit for accommodations, Airbnb still had to pay the host.

With this double-sided reward model, Airbnb was (and still is) putting their money where their mouth is betting that once customers try their service, they’ll return. Otherwise, Airbnb is just tossing money out the window.

If you’re confident in your product or service model — as Airbnb was — taking this sort risk just might be worth it, as the reward can be so sweet.

BTW if you want to build a referral program similar to Airbnb, we have a video tutorial about it:

Know your bullseye and keep score

Before you launch a referral program, you need to set a realistic goal and identify metrics that you’ll use to measure success or failure.

How Airbnb Built a Billion $ Growth Formula

Airbnb made sure they were aiming at a reasonable target by first running a closed beta test of its referral program.

To start, Airbnb offers the travel credit incentives for referral only to their existing 2,161 existing members.

The result? 2,107 new members joined, this nearly 1:1 growth ratio was a clear indication that this program would be a likely success.

From there, Airbnb identified six specific metrics to track, including:

  • Number of monthly active users sending invites
  • Number of invites per inviter
  • Conversion rate to new user
  • Conversion rate to new guest
  • Conversion rate to new host
  • Revenue impact potential

They looked at their growth in these areas historically (before the referral program) to see what they could reasonably expect from this program.

The results determined that the Airbnb team could expect their numbers in these categories to increase anywhere from 20 to 90 times their current standings.

This range provided a way to decide if the live referral program was successful in their attempts at bolstering their business through referral.

To see how their actual performance measured against their projection, Airbnb tracked growth every step, A/B testing new content and landing pages and using customized dashboards to make the information accessible.

And Airbnbers surely delighted in watching the numbers climb, as we know now exactly how successful this effort proved to be.

Ultimately, what Airbnb is trying to do is build a community of travel-loving followers. And their referral program is only one of the ways they are making “airbnbing” a choice preferable to booking some boring old hotel room.