Getting ahead in life is all about relationships. It’s a careful ratio of 90% listening to 10% questions. What if within that 10% question time, you had a secret weapon that could turn everyone you meet into your personal raving fans?
It’s one of the most powerful drivers of new business, and huge players such as Dropbox, PayPal and Uber have relied on it for early stage usership growth. Referal bounties are are like word of mouth marketing on steroids. It involves an incentivised approach to spreading the word about your business or product, involving a reward offered for each new referred user or customer.
Back in late 2006 when I started StrongmanDigital, the only thing I could rely on to perpetuate growth was to build relationships. Getting to that point was my learning curve. No matter how many businesses I approached, and how much effort I put into proposals, I encountered resistance. So I got desperate and started offering them something they actually wanted: free knowledge.
It wasn’t enough to simply ask for someone’s time (especially if they have a business to run), I had to incentivise them. If they were going to take time out of their day, I had to make it worthwhile for them. I would offer them the answers they needed at that meeting, to instantly start improving their search and social presence to make them more money.
Why would I tell them how to do it? Wouldn’t they do it themselves? People value not having their time wasted, and it’s that very high regard for their own time, which almost guarantees they will not make time to execute what you’ve just told them … and that’s why they’ll hire you.
The interesting correlation between building business relationships and building online business, is that no matter the context, you’re still dealing with humans. It wasn’t long before I was applying my own business growth techniques to my meetings and then reapplying similar tactics to deliver results to the clients I converted.
In the online business world, it’s called Referral Bounties. It’s just incentivising the evangelism of you or your product. I’m going to share with you how to apply this in your business for more rabid growth, and how to apply it in your own professional life to get ahead of your colleagues.
Here’s how Referral Marketing can help you get more customers:
You can spend thousands upon thousands in advertising and other forms of online marketing, but the lowest cost of a converted sale are the customers that are referred by other customers. Referred business generally have a greater chance of conversions than most other types of acquisition. Sometimes, like these businesses below, you can create a viral loop, a process in which the sharing and signups of new users perpetually gets more and more large.
How Dropbox did it:
After an extensive run with traditional online marketing, DropBox’s cost per acquisition was $288 to $388. That meant they were moving backwards considering their product was $99 per year.
Instead, they set up a mutually beneficial referral program where they would offer extra storage space to both the new signup and the person who referred them, to a maximum of 16GB of space.
The method worked, increasing signups by 60%. Now, 35% of each day’s new signups being via the referral program.
How PayPal did it:
PayPal actually did this well before DropBox (and is said to inspire Dropbox’s referral program). After experimenting with advertising and some failed deals with some big banks, they realised they need to put money where the mouth is.
They set up a referral program where they would offer $10 for new signups and $10 for the person referring them. The fact this was real, withdrawable money, made this an expensive endeavour, yet helped them grow between 7 and 10% daily and reach 100 million users.
Eventually, PayPal reduced the referral bonus to $5, and made it harder to get by requiring users to verify their bank accounts, before phasing the referral bounty out completely.
How Uber did it:
Uber’s strategy was very much similar to PayPal’s strategy. Each time someone signed up to the service, they received a special link to share around. If a referred member used that link to sign up, both the newly referred user and the person that referred them received $20 in Uber credits.
Eventually, Uber was able to reduce this to $10 based on the volume of signups it was receiving, but the referral bounty still stands today, and they push it each time Uber launches in a new city.
How you can do it:
1. Offer an incentive for some original users to sign up: Whether it’s a first time discount, freebie, or the opportunity to earn your premium services for free, just by getting on board and spreading the word.
2. Offer an incentive for a referral: People are all very well connected, and generally act if referred by a friend. Offering something mutually beneficial ensures ultimate uptake.
3. Make it easy and free: Make it super simple to sign up and start using your incentive, and better still, allow them to try something for free (or have a significant discount applied to their first use).
Here’s how to apply Referral Marketing to your professional life:
People are busy, and more often than not, the people that can help you progress in your career are even busier. To make things worse, there’s countless other people vying for their time, not to mention their own family life. Here’s how to make yourself a stand-out person to meet that’ll stick in their minds and drive a referral.
1. Offer an incentive for their time: Whether its your boss, someone you admire, or someone that can help you get ahead in your career, incentivise their time. We’re all specialists in one way or another, and information is something we’re all after. Research into their interests, and offer to either refer them to someone they’d find useful, or to give them free coaching in your field of expertise.
2. Be a phenomenal human: It all comes down to listening, asking the right questions, and being genuinely interested in the person you’re meeting. If they’ve come away from your meeting feeling genuinely uplifted, they’re more inclined to help you out.
3. Follow up: Keeping fresh in their mind will help push things along. A friendly follow-up thankyou email, or a phone call a week later can generally help motivate even the busiest people to take action for you.
Have any tips on referral marketing and viral loops for business? How about ideas on applying these tactics to improve your own life? Share these below!