All Posts in Viral Marketing

June 5, 2018 - 4 comments

Virality and the 4 Steps To Design It In Your Product

One of the most promising acquisition channels startups explore - or at least should explore - is virality.

But what does virality mean?

Virality: vʌɪˈralɪti/

noun
the tendency of an image, video, or piece of information to be circulated rapidly and widely from one Internet user to another; the quality or fact of being viral.

Due to the explosion of digital marketing, marketers around the globe started using a new technique that allowed them to implement virality to products or services. Viral Marketing got born.

Viral marketing is scalable. Even if you’re an early stage company, it can help you get high-quality customers with low acquisition costs.

The difficult part you need to figure out, however, is how you can make your customers become your marketers. How one user brings others in.

A lot of people believe that virality happens either by luck or magic. Others think that all you need is a crazy video.

But this is not the case. PPAP (Pen Pineapple Apple Pen) is not what you’re looking for, and won’t get your business too far.

Viral marketing should be the heart of your product.

Virality is a business design problem, not a marketing or engineering effort . — Andrew Chen

Virality Vs. Word Of Mouth

First things first. Virality is not Word Of Mouth. They are closely related and one reinforces the other. But they’re not the same.

Word Of Mouth (WoM) happens when people love so much a product that they can’t stop talking about it. 

There are several ways of making people talk about your business. From offering them a great product and experience to giving them awesome support or asking them to pay $100 for a cheesesteak.

A few weeks ago, Typeform faced a minor issue and two of our forms, including Build Viral Loops in Public did not gather two submissions. We didn’t realize it before they told us so. And they went beyond that. They refunded our subscription for the last month. Wow! ✌️

When they notified us about it (I didn’t even expect that), they also included the exact reason of the issue as stated by their CTO.

Email from Typeform

At that moment, I realized that these guys are truly honest. And their customer support is great.

I immediately forwarded this email to my colleagues mentioning how cool that was and that we should do the same in any similar situation. — online WoM

I keep mentioning this incident in workshops and seminars. — offline WoM

 I also write about it right now, too. — online WoM

Their immediate action of letting us know about the issue without even noticing it, as well as their transparency, made us love Typeform even more. Not just because it is a great product, but also because their team treated us so special.

Typeform, we ❤ you guys! 🤗

Virality, on the other hand, happens when people spread the word about a product or service in the context of using it. 

When I invite someone to talk over Skype, it doesn’t mean I love it. But if I don’t have someone on Skype, I won’t be able to use it at all.

When virality is inherent to a product, the existing users gain value out of taking an action which, in turn, exposes the underlying platform to new users.

So, how can you design your product for viral growth?

Let me show you how we designed and engineered it into our own product.

Understanding what type of viral marketing fits to our product

Viral Loops is an all-in-one viral and referral marketing platform helping startups, professional bloggers and eCommerce stores acquire more customers and increase their revenues through referral programs, giveaways, sweepstakes and prelaunch campaigns.

The first thing we did was to understand the type of virality that could help our product grow while taking into account that we’re a B2B SaaS platform and not Snapchat.

I really like the way Philip La puts it. He categorizes product virality in two main types:

Pull Product Virality (PPV): Product virality where existing users require people in their network to join to gain value out of a feature.

Think of Dropbox, Slack and Facebook. You need to have your friends or colleagues in there, else you just can’t use it.

Distribution Product Virality (DPV): Product virality where existing users spread awareness of a product to their network.

Instagram has leveraged DPV extremely well. The time people post their photos on Instagram, they also share them on Facebook because of social currency.

Josh Elman also explains the different types of virality in one of his latest articles, at Greylock Perspectives.

In our case, we chose to start with DPV, as a marketer or blogger can use our platform without needing to have others in the same network.

How to design your product for viral growth

From the very first time, we knew that virality would be one of our main traction channels. Not only because it is a great channel, but also because if we can’t make it work for our own company, how will our customers?

Our design process was based on the four questions Sangeet Paul Choudarymentions in his book “Platform Scale: How an emerging business model helps startups build large empires with minimum investment.

1. Why will the sender send units out of the platform?

This is about finding the right sender incentives.

Our customers use our product to run their campaigns. So, inevitably they want to spread the word about their campaigns as much as they can. This way, they also spread the word about us.

This behavior is similar to when someone creates a Kickstarter campaign. When (s)he promotes his campaign, (s)he also promotes Kickstarter because this is the platform the campaign runs on.

Developer Economics’ Campaign

2. What is the minimum transferable unit on the platform that can move on an external network?

At this point, we needed to come up with our spreadable unit.

We took advantage of the classic marketing tactic “Powered by.” This is used by a lot of platforms out there, including Intercom, Eventbrite, and many others.

Waiting List of Ellp’s Campaign

Our spreadable units are our widgets and emails. We chose the “with ❤ by Viral Loops.” So, we use this badge everywhere. This brings more eyeballs to Viral Loops.

It also made us change our roadmap and come up with more widgets that will help our customers acquire more participants for their campaigns while increasing the virality of our product.

For example, we built a public embeddable leaderboard so our customers can put it on their main website in order to show off their advocates and engage them more.

3. Where will the unit of the platform meet non-users?

And now our external network.

Our customers share their campaign through several distribution channels they use for their marketing activities. So, by sharing the campaign, they share Viral Loops, too.

Viral Loops’ Referral Dashboard

On top of that, the participants of the campaigns (the customers of our customers) invite their friends through the sharing options we offer, including Facebook, Messenger, Twitter, Email, and others.

4. Why will a non-user on an external network convert to a user on the platform?

For the last question, we needed to think of the recipient incentives.

This was a bit tricky for us, as we cannot control who participates in the campaigns of our customers. So, we decided to focus on two things that can affect it:

  • Build features so our customers can acquire more users and run very successful campaigns.
  • Provide a stellar experience for the participants of the campaign through our widgets and the whole campaign setup.

This way if one of our target customers participates in a campaign of our users (e.g. a marketer or startup founder) and the experience is unique, then he will be curious to see how this campaign is built. And then, our tiny “ with ❤ by Viral Loops” will lead him to us!

If you believe viral marketing could work for your business, this is the easiest way to design your viral loops and start experimenting. As with every marketing campaign, there are 5 must-watch metrics for your Vira Marketing Campaign:

  1. The Viral Coefficient (K-Factor).
  2. The Participant Conversion Rate.
  3. The Participant Share Rate.
  4. The Invitation Click Through Rate.
  5. The Invitation Conversion Rate.

Have you followed another process? I’d love to hear about it. 😊

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

May 8, 2018 - No Comments!

These 5 podcasts are teaching you the importance of referral marketing

Even though Podcasts are around since 2004, my first encounter with one that made me stick was The Tim Ferris Show.

From there I started consuming content in that medium more and more, as it doesn't need so much of my attention- I can even wash the dishes without taking my eyes from my hands. 👀

If you pay any attention to how digital businesses shape their marketing efforts, you have probably realized that podcasting has a “renaissance” as more and more businesses invest time and money into it.

With podcasting content and talent, constantly improving it’s certain that podcasts are here to stay and possibly, you still have time to start one for your business.

But, why is podcasting so important for business? And why I’m writing a post about podcasting even though Viral Loops has nothing to do about it?

The reason podcasting is important.

There is a fanatic audience.

According to Edison Research, Podcast consumers are about 2% of all listeners. Before you say that this is a very small number, you should know that most podcast listeners spend almost 4 hours listening to content.

Plus, there are about 13 million podcast listeners worldwide. Do you still think that the number is small?

Distribution is expanding.

Almost everyone owns a smartphone. A large part of this population sticks their eyeballs on their screens from the moment they wake up, to the moment they go to sleep.

That being said, it’s only natural for big platforms like Android getting into play by offering their Podcasting app pre-installed (Apple already does this for some years).

That means that more and more people will get easier access to discovering new podcasts every day.

Did you know that 44% of all radio listening takes place in cars?

This is how has terrestrial radio remained relative despite it’s declining trend, and podcasts come as a modern counterpart to this old habit.

More and more vehicle come internet-enabled, and this will help provide easy access to streams.

Those two reasons alone, are enough for you to consider starting a podcast for your business.

Podcasting is a great (and more humanitarian) way to let people know about your ideas, educate, entertain and provoke them to start a dialogue.

If you decide to do it, the only advice I have for you is the same that I always give when it comes to creating content;

Be consistent, and iterate. 💪

Why am I writing about podcasts?

Where there’s smoke, there’s also fire, right?

No, I’m not starting my own podcast (not yet). The reason behind this prolonged introduction to podcasts is simply to present to you, some that our own CEO- yes, Savvas, recently participated in.

Here they are:

Using Viral Marketing to grow your audience with Savvas Zortikis from Viral Loops.


Grow Like Dropbox: Data Inspired Viral Marketing.

How Viral Loops Replicated Amazon’s Growth Model w/ Savvas Zortikis.

Fireside chat series: Savvas Zortikis, CEO & co-founder of Viral Loops.

Savvas Zortikis: CEO of Viral Loops & Co-founder of Growthrocks II Growth Framework (Sean Ellis + Brian Balfour) II ViralLoop Growth II Part 1.

Before you go!

Don’t be a party pooper. Go on and listen to the podcasts and let Savvas know your thoughts and questions!

You can contact him either on Facebook or LinkedIn.

Until the next time, keep being awesome 🙂

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

April 17, 2018 - No Comments!

Why Your Company Needs A Pre-Launch Campaign

As we recently wrote, It’s easy to get caught up in modern digital marketing tactics, but good old-fashioned marketing is unbeatable.

Take Forever21 (or any other mainstream brand name), for example. Last week they launched their new collection in collaboration with Kylie and Kendal Jenner.

Why Your Company Needs A Pre-Launch Campaign
They created a huge prelaunch hype.

By the day that the store began selling this clothing line, the girls which were supposed to buy it, already raved about it.

Pre-launch campaigns play a major role in how people will perceive your product even before they get it in their hands.

It’s true that Forever21’s success is due to the celebrities involved, and like most of us, you may not have that kind of resources.

So what do you do? And why the heck do we write about pre-launch campaigns by using Ambassador Referral Campaigns?

We have the answer to both questions. Let’s get straight to it.

What do you have in stash for early adopters?

This is a crucial question to ask.

The is no straight answer to that, but there are some options:

  • Discounts.
  • Extended product features.
  • Early access.

Note: If you want to learn more about what kind of rewards you can offer for your ambassadors, we have an exclusive guide (which we update weekly) about it delivered straight to your messenger inbox!

I think that providing discounts is pretty straight-forward, so I’ll move right to proving extended product features.

Think of something in the same lines with Dropbox providing extra space on the cloud for the more people you referred.

So, if you for example run subscription-model business with different pricing plans, you can either give early adopters the chance to use it for free or get the perks of a higher plan even if they purchase a smaller one.

Now, have you ever heard of FOMO?

Why Your Company Needs A Pre-Launch Campaign

FOMO a.k.a. Fear Of Missing Out is a powerful force.

So powerful, in fact, that simply making potential customers feel like they might be missing out on something can often move them to action.

56% of surveyed adults admit that FOMO impacts their media usage habits, for example, compelling them to look at social media again and again.

Marketers can harness FOMO by creating an impression of exclusivity through the use of wait lists, limited supply, and time limits.

FOMO is the principle that makes giving early access to users so important on pre-launch campaigns.

And  Robinhood took advantage of that principle.

As a part of their pre-launch strategy, the Robinhood team invited potential app lovers to gain invitation-only, early access to its private beta.

Instead of inviting potential Robinhood users to join a mailing list, the company appealed to its interested fans’ desire to be the first to benefit from what Robinhood had to offer.

And this offer was so enticing, that it got the attention of Hacker News, which was “Every engineer's dream in the Valley," according to co-founder Vlad Tenev.

How can you do it for your business?

Well the first step you must take is to set up your ambassador referral program, and our Milestone Referral Template is the best choice for running a pre-launch campaign for your new product.

Here's how it works.

Your participants join the Milestone Referral campaign and reach milestones as they refer more and more friends to join the campaign.

Why Your Company Needs A Pre-Launch Campaign

For example, the first milestone can be at 5 referrals, then at 15, 30 and so on.

To do a pre-launch campaign with this concept you may have the milestones to be specific dates that campaign participants are going to get access your product, starting with the date that is furthest away.

The more friends a participant brings to your campaign, the earlier they will get access.

Take a look at the following God-awful example graphic (sorry, I promise to improve my design skills):

Why Your Company Needs A Pre-Launch Campaign

The participants that refer just 5 friends will get access in late June but those that bring at least 25 referrals will get access first on May 1st.

The gamification aspect of the Milestone Referral template makes it very appealing to your campaign participants and you can get great engagement on such a campaign.

TL;DR

Pre-launch campaigns play a major role in how people will perceive your product even before they get it in their hands.

By providing extra space in the cloud for the more people you referred, Dropbox opened the way for referral marketing, and one of the best ways to get the chance to achieve similar results is by running a Pre-Launch campaign using an Ambassador program.

People like to be rewarded, but they always want more.

That being said, you can set up your ambassador referral program using our Milestone Referral Template - which BTW, is the best choice for running a pre-launch campaign for your new product.

Until the next time,
Keep being awesome 😎

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

April 11, 2018 - No Comments!

The Importance Of Copywriting in Referral Marketing

You may have developed the most enticing program in referral marketing history.

You could literally plan to fly customers to the moon and back 🚀👩‍🚀🌑 for referring friends.

Yet no out-of-this-world incentive makes any difference if your customers don’t understand how your program works.

The Importance Of Copywriting in Referral Marketing

As an eCommerce retailer, you don’t have the luxury of sitting down with customers over a cup of tea ☕ and offering a verbal explanation.

Instead, the only meaningful way to communicate the important deets of your program is through...drum roll, please...

Effective copywriting.

And producing effective copy is a three-fold endeavor. Your copy must clearly explain your program, effectively sell your program to customers and ultimately endear your customers to your brand.

Admittedly, that’s a lot to keep track of.

The Importance Of Copywriting in Referral Marketing

That’s why we’re here to help.

We want to share our top 3 copywriting quick tips.

1. Speak Their Language

There’s a time and place for high-brow content. But in most businesses, that place is not in the referral marketing campaign copy.

If you’re trying to connect with your customers (whether through the copy on your site or in your e-newsletters), stuffy, complicated language is not likely to be an effective tool.

Often, speaking too formally can leave customers feeling disconnected (at best) or alienated (at worst).

The Importance Of Copywriting in Referral Marketing

When introducing a referral program, customers must see you as a business that both values their patronage and wants to become partners. Appearing to be a lofty company that looks down upon their customers while swimming in a pool of money isn’t an approach that will get you too far.

The easiest way to avoid this perception is to speak simply, directly and colloquially in your copywriting.

Brand #Goals: Some companies — particularly those selling products that have traditionally been considered high-brow — argue that it’s difficult to maintain a professional appearance while writing copy that’s accessible.

The Importance Of Copywriting in Referral Marketing

New York Based grooming products company Harry’s boasts a traditionally formal clientele, but they have taken to speaking directly to their customer in simple, easy-to-understand speech. In fact, they are running within direction.

And we’re talking Usain-Bolt-level running.

The Importance Of Copywriting in Referral Marketing

All of the content on Harry’s website, as well as the content in their magazine, 5 o’clock (as in 5 o’clock shadow—get it? 🤣🤣🤣), speaks directly to their customers.

Their recently published five-year wrap-up, for example, begins “Phew, five years just flew by. Here, a look at our ups, downs, and side to sides...”

Now if that’s not customer-friendly speak, we are not sure what is.

2. Develop a Distinctive Voice

Do you remember the nap-inducing 😴😴, monotonous voice of the teacher from Peanuts?

The Importance Of Copywriting in Referral Marketing

Consider her an example of how not to speak to your customers.

Sending out copy that sounds like “wah, wah, wah, wah, wah, wah, wah” is not a good way to win friends and influence people.

Brand #Goals: When it comes to adopting a voice, MailChimp is making it happen.

Like, seriously. We’ve got a bit of a #BrandCrush going on.

The Importance Of Copywriting in Referral Marketing

Every bit of copy MailChimp puts out there into the universe sounds definitively MailChimp-y. 📫🐵

It’s spunky.

It’s playful.

It’s thoughtful.

MailChimp’s voice is distinctive enough that when given three pieces of text, a regular MailChimp reader could likely pick the piece that belongs to MailChimp

Which sounds like a really weird party 🎉 game 🎲, but we’re down!

Producing work that sounds definitively you should always be your goal.

Quick Tip - Don’t know what your brand should sound like? Start by listening. Listen to what’s going on in your office and to your customers. Then decide how to use what you picked up to differentiate your brand from your competitors. Pick single words or even more complex phrases to adopt as branded lingo and use them in your copy. Now you sound like your brand!  

3. Avoid Passivity

How do you want customers to see your business?

Do you want them to perceive you as weak, passive, ineffectual?

The Importance Of Copywriting in Referral Marketing

Or do you want them to see you as active, vibrant and thriving?

The Importance Of Copywriting in Referral Marketing

If you’re going for the latter, you want to avoid passive voice.

Quick refresher: If the person doing the action isn’t the subject of the sentence, the sentence is passive.

"The taco was eaten by the dog." - Passive 🌮🐶

"The dog ate the taco." - Active 🐶🌮

For the sake of your referral marketing copywriting success, it’s time to dust off those cobwebby lower school English skills and finally put them to work for you.

When content is written (did you catch that that was passive? 💯) in passive voice, it sounds stilted and is generally more difficult to for people to read.

Your content should be engaging.

Your content should be accessible.

Your content should be active.

Brand #Goals: Airbnb is a brand that’s synonymous with the word active.

Going places.

Doing things.

Experiencing life.

There’s not a passive bone in Airbnb’s body of copy.

The Airbnb blog is full of posts about people visiting new places, eating new foods and getting some serious breaks on accommodation rates.

By keeping it active, Airbnb not only makes their content more readable, they also encourage their readers to follow the leader and get out there and experience the world.

The Importance Of Copywriting in Referral Marketing

Take this sentence, for example:

“Get out on the water with an experienced captain and you’ll get a fresh vantage point on the sights—like Mt. Tibidabo and Montjuïc—and you might even spot a dolphin or a finback whale.”

Not only is this active “get a fresh vantage point”😊 instead of “a fresh vantage point was gotten,”☹️ — it also even further amps up the active feel by making the subject of the sentence you.

And, IDK about you guys, but I want to go see a finback whale. Like, right now.

Copywriting + Referral Marketing: A Match Made in Heaven

Like peanut butter and jelly.

Tea and crumpets.

Beer and peanuts.

Copywriting and referral marketing are an inseparable duo.

The Importance Of Copywriting in Referral Marketing

By:

  1. Speaking customers’ language ✅
  2. Developing a distinctive voice ✅
  3. Avoiding passivity ✅

You can improve the effectiveness of your referral marketing efforts and grow your brand—easy as 1, 2, 3.

Until the next time,
Keep being awesome 😎

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

March 21, 2018 - No Comments!

4 Mistakes That Kill Your Referral Marketing Campaigns

They say to err is human.

4 Mistakes That Kill Your Referral Marketing Campaigns

No big deal if your error is missing a typo when editing your business cards and having to reprint them. ☎️📧

Or ordering 20 boxes of paper when you meant to order 2. 🖨️📄

But when you’re running an e-commerce startup or small business, some errors can have serious financial ramifications.

Ultimately, errors often mean lost profits.😭

One common marketing technique that’s prone to errors is referral marketing.  

Don’t get me wrong—an effective (read: error-free) referral marketing program is a surefire way to gain customers and boost sales.

Customers are, after all, four times more likely to buy a product recommended by friends or family.  

But if you’re looking to secure some profitable referral buzz,  🐝 do yourself a favor.

Take a look at the most common referral marketing mistakes we see and how you can successfully avoid potential pitfalls that could cost you both money, time and loss of potential sales — neither of which you likely have to spare.

Selecting Boring Incentives

To develop a successful referral program, you must tempt customers with rewards attractive enough to entice them to take the time to log on to social media and actually refer potential clients to your business.

And without spending a fortune. 💰💰💰

One of the biggest referral marketing mistakes we see, is companies (from big businesses to fledgling e-commerce sites) trying to save a buck as they attempt to entice customers with lackluster incentives.

Let’s face it. You’re not going to gain many new prospects offering customers a logoed stress ball or free promotional pen. 😴 💤

How much excitement do you think these bland offerings will elicit?

#SpoilerAlert. Not much.

 4 Mistakes That Kill Your Referral Marketing Campaigns

Do this instead: Give customers what they really want. And be willing to spend some money to do it.

4 Mistakes That Kill Your Referral Marketing Campaigns

Gilt did this masterfully, developing a comprehensive insider program to encourage referrals.

To appeal to their broad customer base, Gilt didn’t just go with one incentive but instead established a tiered system of rewards including everything from free merchandise to insider access to their best flash sales.

Complicating the #$&! Out of Your Program

You have only seconds to get the details of your referral program across to your visitors.

Some stats to consider:

The average webpage visit lasts less than a minute.

Readers spend between 15 and 20 seconds per individual email.

4 Mistakes That Kill Your Referral Marketing Campaigns

You don’t have much time to share the details of your program. Between 15 seconds and a minute. Take much longer, and you can almost guarantee a New-Yorker-style “fuggetaboutit” from customers.

The longer your explanation, the less likely your customers will understand and participate in your campaign. In addition, developing a program that’s too complex can also make it look like you’ve got to hide.

Fine print for days leads customers to wonder...am I being played?

4 Mistakes That Kill Your Referral Marketing Campaigns

And you’re certainly not going to get a customer referral from someone who’s suspicious of your intentions.

Do this instead: Keep. It. Simple.

E-commerce company, Robinhood, kept it simple – and won big-time – as they prepared to launch in 2017.

✅ Their pitch was clear and uncomplicated – $0 commission stock trading.

✅ Their process was streamlined – simply sign up with your email address.

✅ Their intentions were direct – customers only had one option – opt-in.

✅ Their follow-up email was automatic — ensuring customers felt the love. 💓

By making it easy for customers to sign up and share their referrals, Robinhood got what they wanted – a bank of potential clients ready and eager to use their product upon launch.

Putting it on Autopilot

Your referral marketing strategy is not something that you can set and forget. ⏰

If you want your program to translate to sales, you need to review, revisit and revamp (if necessary) on a regular basis.

Failing to review your program is one of the biggest mistakes we see. It could mean that you’re tossing money out the window, continuing to fund a referral program that’s not doing much to bring people your way.

Which, basically, means you’re burning cash.

4 Mistakes That Kill Your Referral Marketing Campaigns

Do this instead: Before you launch your program, develop a follow-up plan for assessing its effectiveness.

One company that got that right is Airbnb.

They established six specific metrics to track the ongoing health of their program.

By setting success measures from the start, Airbnb kept all stakeholders in the loop and ensured everyone was rowing in the same direction. 🚣‍🚣🚣🏽‍

Pro Tip - Conducting ongoing assessments is decidedly easier if you use a robust referral marketing software to systematically track the health of your program and deliver up-to-date data to you when you need it. 📊

Giving Up Too Soon

You want sales…

And you want them now.

So when you see that a program you launched two weeks ago isn’t bringing in the millions you hoped for, you feel compelled through throw in the towel.

4 Mistakes That Kill Your Referral Marketing Campaigns

The unfortunate truth of the matter is that results take time.  

It doesn’t matter if what marketing strategy you’re implementing. Whether you’re trying email marketing or starting a simple campaign to increase click-through rates, marketing programs need time to bake. Be consistent and tweak your program...but don’t give up.

Do this instead: In order to avoid falling victim to this common mistake, you need to undergo a complete paradigm shift.

4 Mistakes That Kill Your Referral Marketing Campaigns

Don’t think of your referral marketing efforts as a quick fix that will patch up the holes in your company. Instead, think of it as an ongoing system that will continually feed your company a healthy diet of new customers.

That’s what MailChimp did, fulling investing in this method of marketing and continually reinventing their referral program — with snazzy new incentives.

In the 17 years since MailChimp launched, referral marketing made a major difference.

If MailChimp had given up the first time someone wasn’t as enthusiastic about the prospect of winning a cat 😺 hat 🎩 as they had hoped, none of this would have happened.

With time and effort, though, referral marketing can produce the growth you seek.

It happened for MailChimp.

It can happen for you.

TL;DR

Let's recap. If you want your referral marketing campaign to live up to its true potential, you MUST NOT:

  1. Select Boring Incentives.
  2. Make your referral marketing campaign complicated.
  3. Put your campaign in autopilot mode.
  4. Give up too soon!

The devil's in the details. As long as you pay attention to avoiding the aforementioned mistakes, you're- more or less, good to go!

For the rest (meaning, building and running your referral marketing campaign), you have our assistance😎

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

February 16, 2018 - No Comments!

5 Must watch metrics for your Referral Campaign

I’m not going to boast about how much you need to run a referral campaign for your business.

I know that you know about that. You don’t need me😎

I’m writing these lines because I want to help you make sure that your Viral Loops referral campaign, is going to perform the way it deserves.

We keep a close eye on all of our users’ campaigns, and we’ve identified what are the things that make or break a campaign, and in what metrics they translate into.

I have a spoiler for you; whatever you do (even outside your referral campaign), keep your copywriting in top priority👀

People don’t buy products; they buy experiences. Write your copy in a way that communicates that.

Now, to our main subject:

Here are the 5 Must watch metrics for your Referral Campaign.

The Viral Coefficient (K-Factor)

The k-factor is the total number of registrations per unique inviting user.

If 1 in 5 of your users will successfully recruit a new user in their first month, your viral factor is 1/5 = 0.2, and our initial 5,000 users will recruit another 5,000 * 0.2 = 1,000 users in month 1.

I will get you out of the trouble to look for industry benchmarks on that by saying that for a consumer internet product,

A sustainable viral factor of 0.15 to 0.25 is good, 0.4 is great,  and around 0.7 is outstanding.  

🤩

Participant Conversion Rate

How many of the unique visits to your campaign’s page, turn into participants?

This metric is a critical indicator of whether your campaign is doing good, great or completely bad.

If your participant conversion rate is bad, here are some reasons why:

  • You don’t make it clear and easy for users to participate.
  • Your copy doesn’t showcase the benefits for the end users.
  • The rewards you offer are not a good fit.
  • The whole campaign doesn’t align with your brand.

Participant Share Rate

Your Participant share rate is the average number of unique shares per campaign participant. The bigger this rate is, the bigger is your campaign’s organic reach, which translates into lower CPA for you.

If your participant share rate is low, there are a few tweaks that might save the day:

  • Make sharing as easy as possible. You should add the ability for your participants to share on as many touch points as possible.
  • Offer rewards of very high value for the super campaign advocates (you can use our Milestone template for that).
  • In addition, you can point out to your participant how close they are to attaining a certain milestone.

Invitation Click Through Rate

Invitation Click Through Rate is the percentage of people who click your participant’s invitation to your campaign.

This number tends to be high, due to the fact that most people will see an invitation from a person that they might have a personal relationship with. 🤝

There are some tricks that ensure that you’ll attain a higher invitation CTR:

  • You should allow users to customize their invitation message.
  • Personalize your invitation emails by adding your original participant’s info in it.

Invitation Conversion Rate

When your participant’s friend has clicked through on the invitation they received, they land on your referral campaign’s page.

The invitation Conversion Rate is the percentage of the people coming from invitations, that actually become participants of your campaign.

In this stage consistency between the invitation and what the new user sees on your campaign’s page, is crucial. That’s the reason you should prompt your participants to invite their friends by communicating the true value of your campaign.

TL;DR

In order to recap, there are 5 must-watch metrics you should keep your eyes on while running your referral campaign:

  1. The Viral CoEfficient (a.k.a. The K-Factor).
  2. Participant Conversion Rate.
  3. Participant Share Rate.
  4. Invitation Click Through Rate.
  5. Invitation Conversion Rate.

You should always keep in mind that copywriting is your biggest ally when you try to improve the aforementioned metrics of your referral campaign. From there, there are micro-optimizations that can be easily made inside Viral Loops, when you set up your campaign.

In case you have any questions, I’ll be happy to answer everything so shoot it in the comment section

Ask us ANYTHING (except about our personal affairs, of course)!

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

 

January 4, 2018 - No Comments!

How Gilt Bounced Back from Dropping Sales and Positioned for $250M Acquisition

Everyone is buzzing about you...

Sales are rolling in…

Until…

BAM! 💥

Your company hits a wall. The PR shine you once had has worn off. Sales are slowing drastically. And everything you try barely moves the needle.

What do you do? Throw in the towel?

Ecommerce retailer Gilt faced this very problem. And (spoiler alert!) managed to stop the slide and keep the company alive, resulting in a $250 million acquisition in 2015.

We’ll talk about how they did just that (and what your company can do if facing a similar situation).

But first...I want you to understand the Gilt story. We need context.

In 2007, Gilt launched with a bang. Specialising in flash-sales, 💥 💰 🛍️, this cutting-edge online retailer’s first offer was 50%-off Christian Louboutin shoes 👠 👠. The offer excited masses of fashionistas, nearly crashing the popular new site.

And it looked like Gilt’s initial success was no fluke. The company saw continued success, with sales growing from $25 million in 2008 to an impressive $425 million in 2010. 💵 🤑 💵

Like many businesses, though, Gilt was not able to maintain the same trajectory of growth they achieved when they first launched.

Fortunately, they found a solution.

A referral programme.

But not any old referral programme. They built a brand new model, merging refer-a-friend and loyalty incentives under one umbrella.☂️

The Gilt Insider is a dual-purposed loyalty programme that would both grow word of mouth sales and increase basket value (or the cost of items in a typical customer purchase).

If those milestones sound like something your business could use, here’s a step-by-step guide to making a Gilt-style programme work for you.

Start the Problem

Before they could solve the dipping-sales issues, Gilt-ers needed to understand what was actually happening.

There were two primary culprits:

  1. Overextension of the brand
  2. Poor customer retention

Let’s talk about both.

Starting in 2010, Gilt ventured into full-price items in retail, travel and foods, creating new sub-brands for each. They soon discovered that spreading their wings wasn’t such a great idea.

When overall sales started to drop off, Gilt leaders knew something had to change.

First order of business?

Drop the extra dragging them down.

So long, full-price brands.

But waving goodbye to high-dollar extras alone wasn’t enough. Gilt still needed to capture and retain customers.👱🙋👨

Turns out, keeping customers is particularly difficult for retailers using the flash-sale model.

Customers do love 😍 a discount. I mean, really love a discount. In fact, coupons and vouchers, for example, can even cause the increase of oxytocin levels in the brain.

But here’s the rub.

Retention Science reports that while sites may be able to induce a sale with deep discounts, they will struggle more to retain customers, finding that 93.8% of customers who make a flash-sale purchase fail to make another purchase 😟  from the same site within a six month period. 📅

93.8%? That’s pretty much everybody. And no business can survive on the 6.2%.

Enter the loyalty programme.

Your key takeaway: Before starting your referral program, clearly define your problem; know what you’re trying to solve. Even though a referral programme helped Gilt, gaining new customers wouldn’t have gotten them over the sales slump.

If they didn’t also handle how their brand was brought over-extended, they would likely have not been able to stay afloat.

Critically consider the issue (or issues) that may be standing in the way of your success before you proceed with planning your program. A programme is only as successful as its foundation.

Don’t Forget Customer Loyalty

Participants in this dual-purpose programme, called the “Gilt Insider” programme, can earn points by spending money on Gilt or referring fashion-loving friends. 👗

They can also decide how they use their points, making rewards less one-size-fits-all and more tailored—just like the fashion brands they are offering for sale on the site.

gilt referral marketing viral loops

With an ongoing rewards-for-referrals model, Gilt can constantly capture referrals, even from the customers who have recently become aware of the brand. More importantly, Gilt retains their formerly one-and-done customers as they keep coming back to spend their points exclusively at Gilt.

To help customers see how they could use their points, Gilt built a beautiful explainer page.

gilt referral marketing viral loops

This page shows customers how they can spend their points and earn more. Want to save $20? Start referring your friends, and you’ll get there.

Your key takeaway: Getting new referrals is important, but keeping your existing customers is as wise as it is cost effective. With average customer acquisition costs ranging from $7 to $315, depending on the industry, working to maintain your existing bank of customers is costly. By giving your most dedicated customers a programme that rewards...and rewards...and rewards…you can get your customers to stick around (and buy more). 👊

Encourage Customers to Act Now and Again

Gilt’s success depends not only on recruiting new customers but also on doing something that flash-sale retailers are notoriously bad at—getting customers to come back often.

To dissuade customers from going months and months between purchases, Gilt set a relatively short expiration date on their points—six months.

To maintain their points balances, Gilt Insiders must make a purchase from Gilt at least once every six months. 🗓️

If a customer doesn’t make a purchase, his or her entire points balance will expire. The prospect of losing not just some, but all, points is enough to encourage many participants to make a purchase.

And, of course, Gilt doesn’t expire these points without warning. They send several, spaced reminder emails to give customers a heads up and encourage them to make that points-saving purchase.

Though some would consider selecting a relatively short six-month window risky, with clear reminders, Gilt continues to find success with this model.  

Your key takeaway: While most loyalty programme experts agree that having a point expiration is an important motivator to making a purchase, the debate remains regarding the ideal term. Your programme’s mission is to give customers and potential customers a reason to act now.

Whether you use expiring points or limited time referral offers, you can benefit from forcing customers to stop pondering the purchase and just buy already. 

Consider Making it Exclusive

As Gilt Insider customers gather points, they also climb levels within this program.

Developing a tiered program, with enticing benefits on each level, adds an element of exclusivity.

Depending on the number of points they earn, Gilt Insider programme participants can climb to Select 🥉, Premiere 🥈 or Noir 🥇 tiers. Each tier offers its own exclusive benefits, with the most sought-after reserved for Noir members.  

gilt referral marketing viral loops

Noir members enjoy waitlist preference and get a 1-hour preview of new items added to the site—a substantial lead on other competitive flash sale shoppers chomping at the bit.

Because tier status is re-evaluated annually, customers have yet another reason to keep on referring and spending, fuelling the continued success of the programme and, by connection, the continued success of Gilt.

Your key takeaway: By providing exclusive access, Gilt taps into customers fear of missing out (FOMOand creates a sense of urgency. Offering something to an elite group of buyers makes other customers aspire to be one of these high rollers. And, if they have enough aspiration, they may just make the purchases necessary to get there.

So, do you want to create a referral program similar to Gilt? We've got you covered.

This template is inspired by Gilt and it's the best way to let your store visitors refer their friends.

It's that simple!

In case you’re interested to launch a referral program like Gilt, we have your back! Save yourself some time.

Cheers 😉

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

December 15, 2017 - No Comments!

Why word of mouth, not paid ads, is the future of marketing

The first question that emerges when discussing any possible solution to a problem is ‘why?’

Why virality and word of mouth?

I would say because it’s a marketing channel based entirely on your product and it doesn’t rely specifically on any other channel.

Then I would provide extra support to my argument by saying that word of mouth is the primary factor behind 20% to 50% of all purchasing decisions and also it’s 10x more effective than traditional advertising, as people are really sick and tired of being pushed to buy things.

Paid advertising is almost dead.

Relying on ‘rented’ space to acquire loyal customers, is a risky practice.

Plus, by increasing virality,  you decrease your CPA as more people get to use your product by keeping your marketing budget at the same level.

I bet that you hear a lot about the power of word of mouth. But what is it really?

Word of what?

Word of mouth is a phenomenon where people love something so much, they just cannot stop boasting about it, until everyone gets to try it. And if anybody has something bad to say about it, then these passionate fans are able to go full berserk in order to protect it.

Why word of mouth, not paid ads, is the future of marketing

It sounds stupid, but it happens.

Let’s see 4 simple things- at least in theory, you can do to generate word of mouth for your product:

  1. Have a great product, meaning that your product should solve a problem even for a small niche and actually work the way it’s supposed to.
  2. Keep your customer support in high priority. Humans love being treated well!
  3. Build communities! The big bang of the internet happened not because of products but because it offered the ability to people to finally belong somewhere. Building a community is vital, and if you ask me, it’s better to start building one for your niche even before having a product to sell.
  4. Love your customers. Help them in any way that you are able to! If you have a saas product, you can write a case study about them, or just support them by buying something they sell.

Actually, about customer support, I have a funny story.

During a marathon troubleshooting session, a  support engineer of Rackspace heard the customer was hungry, so she ordered them a pizza! How can the customer resist to not talk about this?

Another funny case is Shazam. Its users didn’t even have to talk about it!

When scanning for a song using the app, they would hold their phone near to a speaker. That, of course, raised the obvious question around them:

‘Dude what are you doing?’

The power to create curiosity is more powerful than words as curiosity is integrated into our DNA.

Virality Vs. Word of mouth

So, what’s the difference between virality and word of mouth?

Virality is a phenomenon where people spread the word about an offering, in the context of using it, rather than loving it, which is what happens with word of mouth.

In other words, virality has always to do with some sort of reward. Love, on the other hand, is unconditional.

Why word of mouth, not paid ads, is the future of marketing

I have 2 examples for you:

Kickstarter leverages user campaign for virality, as when a campaign creator spreads the word about his project, he helps Kickstarter reach higher user adoption.

The same mindset applies to product hunt. When a hunter submits a  product, both the hunter and maker spread the word about it,  bringing in more people in the platform.

Now, we know that both virality and network effects lead to growth but they are not the same by any means.

Eventbrite, for example, uses virality but not network effect, as in order for the organizer to get more registrants for their event, they have to spread the word in other platforms and external networks.

On the other hand, a platform like LinkedIn is designed to use network effects as you have to be a LinkedIn member in order to connect with other people through it.

As you can understand, virality is a business design problem and not just a marketing strategy. You have to make it part of your business model in order for it to work.

Now, there are 2 types of virality which I will explain and I’ll also give you some examples to get inspired by how you can get them to work for you.

First, we have Pull Product Virality (PPV), product virality where existing users require people in their network to join to gain value out of a feature.

You can see that type of virality on an app like Splitwise where you need friends on the product to input money owing and money lent. Or, with Whatsapp where you should have your friends and family in to communicate.

Snapchat also works the same way because need friends in Snapchat to see snaps and be seen.

Then, we have Distribution Product Virality (DPV), product virality where existing users spread awareness of a product to their network.

Instagram’s cross-posting was a game changer for them; You can share your photos on Facebook and Twitter and even non-users will get in.

The same thing happened in Facebook’s early days.

If a tagged friend wasn’t on Facebook, she would receive an email prompting her to create an account.

Why word of mouth, not paid ads, is the future of marketing

How to measure Virality

The way that someone can measure virality is through the calculation of viral coefficient or the k-factor.

The k-factor is the total number of registrations per unique inviting user.

So, if 1 in 5 of your users will successfully recruit a new user in their first month, your viral factor is 1/5 = 0.2, and our initial 5,000 users will recruit another 5,000 * 0.2 = 1,000 users in month #1.

I will get you out of the trouble to look for industry benchmarks on that by saying that for a consumer internet product, a sustainable viral factor of 0.15 to 0.25 is good, 0.4 is great,  and around 0.7 is outstanding.

But here’s the problem:

When our viral factor is less than 1, we acquire users at a decreasing rate until we grow no more.

That isn't an outcome that anybody wants, so is there something we’re missing?

Yes! We are missing all of the other channels with which you can acquire users like the Press, direct traffic, inbound marketing, paid advertising, SEM, SEO etc.

You see it’s truly rare to attain a viral factor of more than 1.

As I told you, you can measure virality by using the k-factor, but this is just an indicator of how your referral marketing works.

In order to see how virality affects your overall growth, you have to take into consideration your amplification factor.

Why word of mouth, not paid ads, is the future of marketing

The number of users acquired through non-viral channels by our amplification factor will reveal the real growth of your user base.

You can calculate the amplification factor by dividing 1 by the result of subtracting of your viral factor from 1.

In case I messed you up, you can see the equation in the image above.

Apart from your main marketing funnel, you can have multiple sub funnel, and your viral loop is no exception.

You should treat your viral loop as a funnel with several stages that can be optimized, so as to maximize your viral factor.

Here’s a basic anatomy of a viral funnel:

  1. The top of the funnel is the step where the user becomes aware that she can invite someone.
  2. Then the second step is where the users submit the invite form.
  3. The third step includes them sending the actual invitation.
  4. Then the fourth step is where the invitee gets the invitation
  5. The fifth and last step is when the invitee accepts the invitation and registers.

Why word of mouth, not paid ads, is the future of marketing

 

TL;DR

  • Paid advertising is rented space.
  • Word of mouth is the primary factor behind 20% to 50% of all purchasing decisions.
  • Virality and Word of mouth are not the same thing.
  • In order to see how virality affects your overall growth, you have to take into consideration your amplification factor.

I think this article gave you enough arguments, as for why Virality & Word of mouth wins over paid advertising. I'm curious to hear your arguments about the subject, so hit me us up in the comment section

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

December 8, 2017 - No Comments!

6 Ways To Grab More Participants For Your Referral Campaign

Whether you want to increase your sales or push your brand’s awareness on a new high, a referral campaign is always a wise choice in order to broaden the top of your marketing channel.

So, let’s say you build your referral campaign; now what?

People flood your page and you get millions of participants. Yeah, right.

In almost all occasions, it doesn’t work like that.

There are thousands of referral campaigns that might interest you, but you’ve never heard of them.

So, how do you make sure that your referral campaign lands on as many eyeballs as possible;

And how do you make sure that you’ll turn the simple visitor to a participant?

I got your back fam. 💪

Here are 6 ways to grab more participants for your referral campaign.

1.Give your existing customers an extra push

The best way to ensure that your campaign will get the number of participants it deserves is if people are sharing it.

Your customer base is far more likely to become your early ambassadors, so why not give them a boosted incentive to do so? If they truly enjoy your product/ service, they are more likely to recommend it to their friends.

In case you’re running a milestone referral campaign, you can instantly reward them for getting in your program by giving them a headstart in comparison with non-customers.

2.Make it really easy to share

Less is more, they say.

Obviously, if you’re about to spam users with a bunch of nonsense before they are allowed to share your campaign, most probably they won’t.

2 steps are enough:

  1. Sign up step
  2. Sharing step

You can allow users to signup by email or social media account, but in the sharing step, you must be really cautious.

People actually like to have a limited amount of choices; that way they don’t have to think.

So, apart from a clean an understandable UX design, try to keep the sharing options to the minimum.

Email is a to-go choice and you should also add 1 or 2 choices for social media; mostly the ones where your game is stronger. That way you ensure that people will share your campaign in places where you can support your level of awesomeness.

Pro tip:

Dropbox used the best invitation hack I’ve ever witnessed.They offered the option to sync your contacts from Gmail, AOL, Yahoo!, etc.

BOOM!

3.A 2-side reward always wins

If you are running a referral campaign for an eCommerce, a great tactic to follow is to offer 2-sided rewards- that way both the referrer and the referred have something to gain.

This is exactly what Airbnb did by offering $25 discount for accommodation booking to both sides. This referral program became known as the ‘altruistic referral’.

Actually, Airbnb tested 2 variations for their referral campaign:

  1. Variation A was based on single-side reward offering 50$ to the referrer.
  2. Variation B offered 25$ to both the referrer and the referral.

The results of their experiment showed that Variation B brought 25% more referrals than Variation A.

4.Put it everywhere.

This is pretty obvious, right? You should demonstrate your amazing referral campaign on any of your digital properties.

You can start by putting banners on your website and blog. If you’re running an app, send your users a notification. In case you have the budget, you can also run a sponsored post on Facebook.

Note, that in Facebook ads, it’s better to go with videos.

Try to capture in a few beautiful seconds all things that your referral campaign has to offer- and please, show your face; it’s important!

In case your wallet doesn’t allow you to spend on ads, you should probably prepare your Facebook audience for your campaign.

A great way to do so is by gathering messenger subscribers using a bot from a service as Manychat.

Recently, I created a bot for my new venture, Growth Hacking University that subscribed people on our pages messenger when they commented on a certain post by using a given keyword.

I've also made a video explaining how I did it:

5.Up your follow-up game

When I started working as a marketing consultant, I was doing nearly anything for our newly founded company.

I was writing articles to attract leads, I was a sales guy and a consultant.

Sales were always hard for me because I felt like I was pushing people to finally buy. I hated follow-ups. The sad truth is that following up is the only way to close a sale.

The same mindset applies to your referrals.

The only way to make people refer to their friends and colleagues is to communicate to them a sense of urgency to them. No one wants inactive users.

Just email them to show them how close they are to achieve a goal, or consult them on how to get closer if they need to.

6.Sneaky remarketing

This is another brilliant way to follow up, without spamming their inbox. You can set a retargeting pixel on the page after the user signs up.

After that, you can create some beautiful ads to run only to users that are not so active.

A good tactic is to incentivize them by giving them a boost like the one that I described in the first section of this article.

TL;DR

Just by launching a referral campaign for your business doesn’t ensure that people will fight each other to get on-board. The good news is that there are 6 things you can do, to get the maximum number of participants possible:

  1. ‘Boost’ your existing customers.
  2. Make it easy to share.
  3. Use 2-side rewards.
  4. Announce your campaign on all your digital assets.
  5. Follow up inactive referrers.
  6. Retarget users to incentivize them to refer more friends.

Now it’s your turn to rock.

Cheers 😎

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

 

December 1, 2017 - No Comments!

How Airbnb 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 programme.

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

Travellers 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-break 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.

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 programme 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 customised 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.