Interview: Planning and promoting a referral campaign (for new products)

The following is a comprehensive summary of our interview with Daniel Johnson from WeScaleStartups—you can listen to the complete discussion here:

Why businesses trust WeScaleStartups

WeScaleStartups (WSS) is a growth agency focusing on App, E-commerce, Fintech, and Crypto startups in B2C markets. They work with established startups that have achieved Product-Market Fit (PMF), that is, companies that know their customers that they solve a real problem.
Their goal is to work with those companies and accelerate their growth to make them ready for large-cap funding from investors like Sequoia and SoftBank or to help them get the most growth out of the capital they have already raised.

Running prelaunch waitlists and Refer-a-Friend campaigns.

Referral programs can become the holy grail for startup success if done correctly. Aligning the right rewarding scheme with the right incentives with the right customer can create repeatable, predictable and scalable growth.
 
When Daniel works with companies with existing customer bases around a product like a Fintech app, they deploy a referral program for that audience by talking to customers and finding out what motivates them to invite friends onboard.
Alternatively, WSS works with companies with products in an early stage. In such cases, they generate initial brand awareness using waitlists and leaderboards to get early adopters, market validation and begin the marketing process.
The rest of the interview focused mostly on the latter case—prelaunch campaigns.

How do you choose what kind of referral campaign fits a company?

A referral campaign can take many forms. For example, one can deploy simple Refer-a-Friend programs where both sides get rewarded after a successful referral or a Milestone-based program where the refer gets progressively better rewards as they invite more folks. Viral Loops offers these and 6 more strategies as templates ready for deployment; you can read about them here
Of course, different companies fit different strategies and depending on the stage of growth of their client, WSS chooses a different approach. Daniel implements referral waitlists for early-stage products as soon as possible to create an initial audience and have a referral program in place after the product is released so growth can continue.

How long does a waitlist take to become successful?

First, we must define a project’s success as concrete and easily interpretable—not vague, “feels good” startup jargon. Daniel and his team make decisions based on statistical significance by approaching growth initiatives as hypotheses. Based on data gathered over the years, they can better hypothesise what would work and turn that into an experiment. 
After deploying those experiments (ex. new channels or whole campaigns), they accept them only if they are 80-90% confident that the hypothesis is working. This way, they can say that if something is to work, they will achieve a specific KPI by a particular time. 
Regarding timeline, success or failure varies widely across different products, markets, funding and countless other variables. However, Daniel argues that wins are often quicker than failures. In some of the latest campaigns with Viral Loops, the WSS team saw referral signups racking from the first couple of weeks. On other occasions, they’ll run a program for 2-3 months, and if they have not validated their hypotheses, they kill it. 
The scientific method is at the heart of excellent marketing. Danial put it nicely:
Marketing isn’t Mad Men sitting in boardrooms coming up with crazy creatives. It’s data and numbers and seeing what people want.”

What is the most effective waitlist incentive for an upcoming product?

Choosing an excellent incentive to get people to signup for a waitlist depends highly on the problem a company solves—also known as customer-problem fit. With referral waitlists and programs in general, you want to accelerate what people would naturally do—spread the word about your brand. The right incentive aligns with that narrative, and the wrong incentive forces people to invite friends, which rarely works and can ruin a company’s unit economics.
Now let’s get specific.
If you have strong engagement and know your customer well, you want to offer a customised incentive unique to your (prospective) customers that nobody else can offer.
For example, if you’re a Fintech, you should consider the following:
  • Exclusive access to certain features
  • A special functionality
  • Beta access
  • Something to show recognition for their support
Daniel argues that money is generally a bad incentive. It might even de-incentivize people, and unless a company is backed by, say, SoftBank, it’s tough to have profitable growth this way.
In deciding what incentives to offer, the team at WSS uses a Pyramid-of-Incentives framework. It’s based on two principles identified by WSS:
  • People appreciate physical products more, even if they are of less value.
  • People love their egos.
At the bottom of the incentive pyramid, Danial places the most fundamental things someone would value and the “Nice-to-have” at the top. From there, the team uses experimentation again and iterates over the rewards to find what makes people tick.
Additionally, creating the incentive list comes down to talking with customers. You can spend an infinite amount of time making educated guesses about it, but jumping on the phone with your audience and asking them something like “If you had a magic wand (referring a friend) and you could get something, what would it be?”.
Very often (future) customers know precisely what that is since people following a product before it even exists passionate about the problem being solved. Their suggestion might be something that you have not considered.

Talking to customers during the pre-launch phase

Talking to customers and the market might be the most valuable thing a startup could spend time on, but how do you do it? And especially for a startup in the pre-launch phase?
If you’re still developing your product, you don’t have customers yet, but of course, you have some people that know about what you’re building (even friends and family). It would be best if you also had demographics, psychographics, specific personas and, ideally, the Job-to-be-Done. You can create a list of people who match that description and are already part of an existing audience (like a community forum).
This is one of those things you must do that does not scale but has an immeasurable return on investment, after all, your customer is the most critical person in your business. You have to reach out to each of them manually and ask them to jump on a call.
Daniel recommends you read The Mom Test, which covers the fundamentals of talking to your market in about 100 pages if you’re at that phase.
The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you : Fitzpatrick, Rob: Amazon.nl: Boeken

How do you get people on the waitlist (marketing & promotion)

Setting up a waitlist system and choosing the right rewards are the first significant steps, but not the end of the story—you need to get eyeballs on your waitlist and market it.
Daniel starts planning this part by thinking backwards. With his clients, they will create a customer journey map covering Awareness, Acquisition, Retention and Referral, sticking every initiative, channel and campaign into one of those silos. A waitlist falls under the awareness stage, while a referral program belongs to retention and referral.
For startups in the prelaunch phase running waitlists, there is no tangible product yet, which makes a brand easier to forget, despite the founder’s belief that everyone loves their idea. The key here is to keep people engaged while waiting, to avoid forgetfulness and increase referrals.
WSS usually creates a series of emails, resources, events and content to develop a relationship with those people and support them on their journey. The goal is to keep the energy high and keep reminding people of what awesome thing they are waiting for while at the same time motivating them to refer friends—which in turn brings more waitlist participants.
People are faced with 100s of brands daily, so if you do not keep momentum, your waitlist will get lost in their minds. During the waitlist, you must keep fuelling your campaign; it is not plug-and-play. You have to give back to the people who promote your upcoming product, the top referrers on your waitlist. Daniel makes sure to care for and value them and does everything in his power to help them help the brand grow.
To accelerate the growth, even more, WSS clients invest in other channels to bring traffic to their waitlist, including:
  • Facebook Ads
  • Google Ads
  • SEO
  • Niche community engagement (a fancy way of saying identifying groups where people might be relevant and developing relationships with those groups, not spamming)
  • Content marketing
  • Emails and Newsletters
WSS has seen great success with newsletters and Facebook Ads when it comes to viral campaigns.
The marketing campaigns that bring traffic to the waitlist and referral programs constitute the marketing toolbox. The focus is on the customer and the problem being solved. Everything else WSS does is support that customer to achieve the goals they are looking to achieve.

How long does it take to plan and deploy a referral campaign?

One of Daniel’s latest projects used a referral campaign for a Fintech company. In the interview, he described how they slowly built it up over three months; however, the total amount of time working on the campaign directly is relatively insignificant.
The results seem promising, with reasonable engagement rates and low CPAs. All because those three months of planning were interrogating customers and understanding everything about them. Based on those learnings, they developed the proper positioning and copy, the most desirable incentives and the right marketing campaign.
The technical side of the referral program didn’t require as much time, thanks to technology and the Viral Loops API (shameless plug from the writer). The most time was spent on interviews.
Daniel believes that many campaigns do not succeed because founders and marketers need to take the time to plan and understand the customer in the beginning. Taking the time to develop a more concrete strategy can save time and money.

3 first thing to do when deploying a referral campaign.

When planning a campaign, Daniel and the WeScaleStartups team start from three core pillars:
  • Customer persona
  • Messaging
  • Customer Journey Map
Thinking about customer personas is thinking about how the startup solves the problem and who they are solving for. Getting this right allows Daniel to make better decisions about the rest of the strategy by ensuring every part of the plan fits the desires and motivations of the customer. From there, one can make better hypotheses about what rewarding schemes work best and what incentives make more sense.
Messaging is about articulating the value proposition in a way that makes sense for the customer. Here it makes sense to think about the following:
  • Why would they sign up for the waiting list? 
  • Why would they refer friends? 
  • Why would they wait for the launch?
If customers do not understand the value behind every commitment they make, they will never engage with a brand. 
And finally, as we mentioned above, a customer journey map helps put all the pieces together to see how they work together to create the big picture of your growth plan.
Before launching any referral campaign, Daniel has those three documents in place to help him understand what he needs to do at any given point.

3 mistakes businesses making referral waitlists and referral programs

Daniel pointed out three critical mistakes startups make when planning such campaigns.
  1. Founders make the assumptions that everyone loves their product. It hurts, but in this busy world, people do not have the mental capacity to care deeply about every brand they interact with. Founders should accept that and try their best to remind and motivate people about why their brand and product exist.
  2. Lack of planning. Ofter startups would get an idea about deploying a referral program, implement it the next day and get annoyed that it did not get any traction. Good things take time and deep thinking, and referral programs or waitlists are no exception. To increase the chases of viral growth, startups should first define their customer persona, messaging, and customer journey map and build a referral program upon those fundamentals. 
  3. Not looking at data. Companies should understand their unit economics and how their K-factor performs to achieve serious growth. You can learn more about referral marketing metrics here.
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