Morgan Brown

7 Ways to Energize Your User Referral Program

December 1, 2014 | GET NEW POSTS IN YOUR INBOX HERE

Ever since PayPal’s legendary double-sided referral program launched their growth into orbit companies have been trying to capture the magic of user-get-user referrals for their business. Every once in a while companies figure it out and capture the magic for themselves. Dropbox, LinkedIn and Mailbox for Mac are a few that immediately come to mind.

But more often than not, companies launch a friend referral program with high hopes, only to see it limp along with little traction, little adoption by existing users and ultimately little to no impact on their growth. How are user-get-user programs that succeed and drive meaningful (often exponential) growth different than every other referral program out there? And what can you do if you’re overseeing a referral program that isn’t performing. 

Here are seven ways you can learn from the most successful user-get-user programs ever invented and apply these principles to improve the performance of your referral program.

Want even more insight on building a referral program from the ground up? Subscribe to Growth Strategies Daily and be the first to get your hands on my referral program case study where I share in-depth notes, stats and more on rebuilding a user-get-user program from start to finish. 

Improve NPS to Drive User-Get-User

If you take away only one thing from this post, make it this: users refer products and services they truly love. Don’t forget this simple yet fundamental reality. If your product doesn’t inspire users to share it, they won’t, no matter how easy you make it. All of the insights that follow are predicated on the fact that you have a product that people love, but just don’t share that often.

Users refer products and services they truly love. If you want your referral program to work, make sure they love your product first.

If you don’t know how to measure whether your users truly love your product, start by calculating your Net Promoter Score or Must-Have score. NPS is a well-regarded (although by no means perfect) metric that helps you understand how likely your users or customers are to refer your product or service to a friend. The higher the score, the more likely the are to refer. 

You can also use the Must-Have Score, created by Sean Ellis, to define products that are must-have’s for their users. When you have a high Must-Have Score you have a product that people can’t live without. When people can’t live without your product, they’re more likely to refer it to others who might also benefit from it. 

Make User-Get-User Part of the Core Product Experience

The most effective user-get-user programs are those that are part of the core product experience. If your referral program is bolted on to your website, or if the benefits aren’t aligned with the reason that people value your service, you won’t ever have an effective user-get-user program.

The most effective user-get-user programs are those that are part of the core product experience.

Take Dropbox as an example. When you get friends to join Dropbox you get additional free storage space. The incentive to share is tied directly to the core product value. If you earned points or some other benefit that wasn’t related to the core benefit of more space you’d be less likely to share the product with friends.

Image via ghacks.net
One of Dropbox’s early invite screens

LinkedIn did the same thing. Inviting friends was the easiest way to build connections from your network. These connections and the growth of your network brings more utility to the product. When you add connections you are improving the value of the LinkedIn product for your own benefit. 

Takeaway: If your referral program isn’t tied to your core product value, look for ways you can realign it or change incentives to better tie the two together. 

Create Benefits for Both Sides

The best user-get-user programs use incentives for both the inviting user and the invited user. These double-sided programs create the best possible incentives for existing users to invite new users and for the new user to take advantage of the invite. If you only give the existing user the benefit they may feel like they’re being paid to spam their friends for your product. If you only give the benefit to the new user, existing users will be less likely to take action because there is little benefit for them. 

Tweet: The best user-get-user programs use incentives for both the inviting user and the invited user. 

By creating value on both sides of the program, you create the best conditions possible to compel each person to take the action you want: invites from existing users and new users from the invites being generated. This is what PayPal did so well. They literally gave away money. Existing users got $10 for every new PayPal user they invited and new users received $10 immediately. This free and instant cash created powerful incentives for everyone to get involved.

One other nuance to the PayPal program was that the cash was immediate. Many referral programs require invited users to make a purchase or take some other action that often isn’t immediately rewarding to either user. When you have a component that creates instant gratification your user-get-user incentives are much more powerful. 

Make the User-Get-User Program Visible

In a referral program that I worked to optimize, one of the first things we did was try to understand why people weren’t using the existing program. What we found was that the program was only marketed on a page that received almost no traffic. The first thing we did was redesign how the user-get-user program was surfaced in the product.

One of the overlooked areas for adding the user-get-user product (for non social-networking type products*) is in the onboarding or user’s first-run experience with the product. It may seem counterintuitive to put the referral program so early in the product experience—you’ll probably hear an argument from team members similar to “Why would anyone invite friends to a product they haven’t even used yet?”

But putting the user-get-user product in the onboarding flow can work for a couple of key reasons:

First, as Josh Elman says, the user’s first experience with your product is the time when they devote the most attention, focus and time to it. They are engaged and are trying to figure out how to use it. You can take advantage of this focus and initial excitement to drive invites. Again, this works best if inviting friends helps the user improve their experience in some meaningful way.

Second, even though users don’t know exactly what the product is about, the initial excitement and discovery can be a powerful motivator to share and invite friends. Gabe Zichermann identifies four main levers to compel user action in a gamified environment: status, access, power and stuff. The motivators of access and power can be a potent combination that get users to invite other users even at the start of their experience. 

In addition to the first user experience, surfacing the program throughout the product keeps user-get-user top of mind as the user uses the product. The best programs make the program stand out in the UI. Again, Dropbox is a great example here. For a long time, the logged-in Dropbox experience featured an icon shaped like a gift with the call to action to “Get Free Space”. In contrast to the minimal UI of the other product elements, the gift stuck out as a highly visible component that tantalized users with more free space as they used the product. 

Get Free Space stands out in the rather sparce Dropbox UI. Image via techpp.com

Takeaway: Don’t bury the user-get-user program deep within the product. The more visible it is the more traffic and engagement it is likely to get from users. Test 

* Products that rely on network effects obviously need to build friend invites directly into the immediate first steps for the user to get value from the product. 

Build a Double Viral Loop

LinkedIn, Dropbox and other leading user-get-user programs don’t stop at one viral loop. They use the mechanics of the invite program to kick off secondary loops that re-engage existing users and drive more invites. This second loop acts like rocket fuel to the primary user-get-user product. 

Take LinkedIn’s double viral loop. The first loop is straight forward: LinkedIn users invite friends to join LinkedIn. This is done through email invites, email address book imports, etc. The magic to LinkedIn’s second viral loop is that when a new user joins it kicks off a series of email notifications that re-engage existing users bringing them back to the site. When those users come back, they’re asked to invite more people—amplifying the original friend invite. For more on the program read the virality section of the LinkedIn growth study.  

LinkedIn's invite screen
LinkedIn’s invite screen

Dropbox does this slightly differently. When an invited user joins Dropbox, the service sends an email notification to the referring user. That email lets the user know they received more free space, but more importantly it encourages the user to get even more free space by inviting even more friends. 

Takeaway: Don’t stop at one viral loop. Find ways for the initial loop to kick off other engagement and invite loops to get the most out of the friend invite. 

Avoid the One Experience Fits All Approach

Your users engage and use your product in different ways. Asking them to refer users in the same way each time doesn’t always make sense. Make the inviting step relevant to the existing user experience for maximum engagement and use. 

Lyft, the ride sharing app, ran a user-get-user promotion that encouraged friends to get new users to download the app while in the car with their friends. The “Free with your friends” program rewarded existing Lyft users with a free ride if the referred user got the ap downloaded and setup while still on the ride. 

This unique in car program augments their standard referral program which gives $25 to Lyft users who refer a friend.  Lyft realizes that the in car experience creates a different dynamic that can generate referrals with a program that’s tailored to the unique dynamics of a ride. It’s more powerful, with an opportunity for instant gratification, than the standard invite, and creates more real-time invites and new users for the company. 

Use Psychological Triggers to Encourage Invites

We’re all familiar with Cialdini’s six Principles of Persuasion such as likability, authority, reciprocity and consistency. These powerful psychological triggers can be used to get users to send invites and take part in your user-get-user program. 

In Airbnb’s rebuilt referral program, the team worked hard to ensure that the inviting user’s face and name were included in the invite to the new user. This leverages the principles of both likability and social proof. When you see your friend’s face on the invite and their name in the email, you associate the credibility and likability of that person to the invite. And the fact that they’re using the service serves as strong social proof that the invite is worth your time. 

Airbnb's user-get-user program
Image via Airbnb

Instrument and Test Everything

One of the main things that is often missing from underperforming user-get-user programs is the instrumentation and testing plan. The best viral masters optimize programs in real time to drive the best performance. To get the most out of your user-get-user program you must ruthlessly test and optimize each element of the program. 

Most referral programs don’t work like magic out of the box. They require fine tuning to get the messaging, calls to action and flows just right to provide the maximum return and growth rates.

You’ll likely find that getting users to send invites is harder than getting new users to accept the invitation. It’s important to build your user-get-user program in such a way that you can test the outbound messages, offer, calls to action and creative to find the highest-converting mix. 

Understand Which Channels Work Best for Your Invites

One of the things we learned when I built and managed a user-get-user program was that not all invite channels are equal. When we first relaunched the referral program we put equal weight on email invites, Facebook and Twitter sharing. In fact, our early hypothesis was that social shares would result in more users because each share could reach more people. 

It turned out that wasn’t the case. Not only did email invites convert better than social shares, the users who joined from email invites were materially better users than those who joined from Facebook and Twitter. Users acquired via email had a lifetime value of more than double those that joined from Facebook. With that information we were able to redesign the invite page again and emphasize email invites over social  sharing, driving the value of the customers acquired via user-get-user. 

Taking Your User-Get-User Program Further

Ivan Kirgin, one of the architect’s of Dropbox’s viral growth gave a great talk on 27 tactics you can use to optimize your referral program. He’s one of the leading experts on referral programs, so if there’s a person to listen to, it’s him. If you’ve made it this far, commit to spending 20 more minutes to go deep on ways to optimize your referral program now. 

  • http://www.referralcandy.com/ Dinesh @ ReferralCandy

    Morgan, great article! Cialdini’s book about influence is a great reference on the psychological triggers for referrals.

    If you’re interested in the latest research in the field, I would recommend Jonah Berger’s recent paper on what drives people to share: http://www.sciencedirect.com/science/article/pii/S1057740814000369

    • http://twitter.com/morganb Morgan Brown

      Thanks Dinesh, great recommendation for Berger’s stuff!

  • http://appvirality.com/ Lax @ AppVirality.com

    Morgan, Awesome article! Double sided Rewards, Personalization like Airbnb and measuring each an devery data point. These 3 points are key to referral success.

    Thanks a lot for video.

    • http://twitter.com/morganb Morgan Brown

      Thanks Lax, yep, the measurement and optimization can not be over-emphasized. Without being able to see precisely what is and isn’t working you’ll never be able to fully optimize the program.

  • jamesoliverjr

    The timing of this article couldn’t be better. I desperately need to find this type of solution for my business. Thanks for sharing. Ive already shared on twitter and in a Facebook group.

    • http://twitter.com/morganb Morgan Brown

      Glad it was helpful and thanks for the share James!

      • jamesoliverjr

        Hey Morgan, did you get my email? I built a referral program for Facebook based on this article and Ivan’s comments. I’d love your feedback.

        My email is james at wemontage dot com.

  • Jeremy Hall

    Great article Morgan! I am working on creating a referral program right now. So, these strategies and case studies are really helpful! Awesome, awesome blog.