It’s easy to forget how they started winning:
• Felt a deep user acquisition pain
• Innovated new social sharing mechanisms
• Applied sharing mechanism across the fold
This strategy is not exclusive to
their business model!
Referral Marketing works just as well
for online retailers.
eCommerce brands have the same
opportunity to take advantage of
referral marketing and its benefits.
It’s true that…
Some brands aren’t winning with referral marketing
for a few reasons…
A few reasons why referral
marketing wouldn’t work…
1. The product might not be a good fit (though most are)
2. Poor attention to referral user experience design
3. Using sub-optimal technology to power program
4. Suffering from a lack of viral acquisition knowledge
MOST BRANDS SEE
…even from In-House efforts
Basically, Refer-A-Friend is a CMO’s
The truth is that everybody is aware of what
referral marketing can do, but few fully grasp the
impact referral marketing can have on a
Example: Beyond The Rack
BTR initially built and launched an in-
house referral program to enable it to
compete from a customer acquisition
point of view.
Though it gained early traction, BTR’s
program quickly plateaued and its
initial overall impact stayed minimal.
After more tightly integrating their
referral program into the user
experience, overall Marketing ROI
shot up to 12X and registrations
increased by 8%.
FULL CASE STUDY >>
What is the point of a referral program if cannot
scale across your marketing mix?
Lesson #1: More than a nice-to-have.
Did they think Referral Marketing was a “nice-to-have?”
Referral Marketing is one of the
largest and most eﬀective channels
Most companies in B2C verticals
with successful referral programs
see as much as 15% to 40% of their
new user acquisition coming from
Referred customers’ lifetimes values
are many times greater than that
acquired via traditional paid media.
Paid LTV SEM LTV Social LTV Referral LTV
Leverage Referral to Amplify the rest of
your marketing mix on a continuous basis.
A referral program will:
• Allow customers acquired via SEO/SEM campaigns to invite
friends, decreasing SEM-related CAC
• Help users acquired via social campaigns to drive greater
social sharing, boosting your social traffic
• Incentivize your brand’s promoters to be vocal about your
brand in greater frequency and volume
Dropbox’s referral program was born out of necessity, not interest.
• PPC Ads were getting more expensive, threatening business model
• Had to find a way to reduce Cost of Customer Acquisition (CAC)
Dropbox launched a double-sided reward program.
It incentivized both the referrer (parent) and the
referred (child) to take immediate action.
Airbnb is worth over $25Billion today — that’s DOUBLE last year’s valuation.
Their offer was compelling but was very smart because Airbnb only paid for
referrals after new users had made a purchase (this still works today).
Most importantly, Airbnb’s
marketing mix is continuously
ampliﬁed by its referral program
Anyone who lands on Airbnb -
regardless of the traﬃc source - is
a viable source of referrals.
• Referral marketing is far more than a nice-to-have and
is one of the largest and most effective marketing
channels available to marketing executives
• It can be applied in any context, and E-Commerce is
an excellent candidate
• Dropbox’s CAC savings raised the tide for all of its
other marketing activities
• To be successful, E-Commerce brands must weave
social sharing mechanisms deep into the core
Thinking of Implementing a Referral Program?
Download the Best Practices
for Successful E-Commerce
Referral Marketing eBook.
Learn the essential principles
marketing executives should
utilize for online retail referral
GET THIS FREE EBOOK >>