Incentivized Virality
This is probably what you default to thinking about when you think “referrals.” With incentivized virality, users get a reward when they invite others to join your product.
The goal of incentivized virality is to get quality leads from users who already love your product. It can turn your best customers into a profitable, self-running sales team.
Some well-known examples of incentivized virality are:
- Dropbox: get free storage space for you and the person you invite
- Uber: refer a new user, get free credits
- Outdoor Voices: give $20 to get $20
What incentives should you offer?
The most common way to implement incentivized referrals is through dual-ended rewards: The referrer gets cash back, and the person being referred gets a discount on their first purchase.
This has been modestly successful for many companies. But it's a small channel for user acquisition. Most people don't care about earning a small amount of cash. They didn't start using your app to make a few bucks.
Instead, here's how you should think about incentives...
Focus on value over cash‌
The best referral programs dole out value that's aligned with their product's key value prop. Instead of giving out cash, they give you more access to the product.
For example, when the fitness tracker Whoop sends users new hardware, it offers a great value-based incentive:
- The user gets a month free if they give their old device to a friend, and that friend then becomes a member.
- Their friend gets a free fitness device, plus two months free.
And as a third benefit, Whoop solves the problem of what to do with your old equipment in a way that’s not just friendly—it’s also eco-friendly.
Many ecommerce businesses award points that can be redeemed for exclusive discounts and promotions. Referring a friend to online consignment shop thredUP, for instance, gets you store credit.
If you don't have a product that can be doled out in units (e.g., GBs, videos hosted, postcards sent), and if it wouldn’t make sense for your brand to offer credits/points, your cash bonus needs to be significant to motivate people.
- If you have a subscription service, offer the service for free for months.
- If you're ecommerce, offer the product for free once a customer has referred a certain number of people.
When to push referrals
The best time to ask for an incentivized referral is after the user's magic moment. That’s when they feel the strongest connection to your product and the benefits it gives them.
Two common magic moments are when users:
- Just experienced the value of your product for the first time. They’ve just solved a problem or experienced joy because of your product. Whatever it is your product does for them, they see those benefits clearly. The marketing claims are true.
- Just experienced more value from your product. They’ve just discovered that they can also do X with your product. This pleasant surprise will leave people delighted—and in the mood to refer your product.
Whatever you do, don’t ask for a referral at the end of the sales process, before someone has even tried the product. That’s like asking someone if they’d recommend a movie as they’re waiting in line to go watch it.
How to push referrals
Send an email to someone who’s just hit their magic moment. We usually recommend this as a first step for clients because it’s so quick to set up and test on a small group of customers. Here’s a template you can use.
Also feature your referral program on your website. A lot of companies make the mistake of tucking their referral page into a corner of their app, off a settings page that requires multiple clicks to get to. Instead, use a modal, banner, above-the-fold slider, or thank-you page to highlight your referral program. Provide a clear option to close the modal, banner, etc., so the user experience can continue uninterrupted.
Pop Chart features its referral program in its above-the-fold homepage slider. But it's only visible on one slide, so this approach strikes a good balance between being prominent and not too in your face.
Viral Loops and Kickoff Labs build referral pages and affiliate link programs in seconds.
Tip: Don’t forget about the onboarding experience.
The first-time user experience is critical. That applies to newly referred users too. Don't have them land on a signup page that immediately instructs them to claim their referral incentive. First, they should be pitched on what your product is and why it’s worth getting excited about.
That means you might have to make an intermediate landing page for people who are getting referred. It should look similar to your homepage. Since you know the audience so well, you can handle their exact concerns based on where they’re coming from.
Here are some examples.
Tim Ferriss: Let’s say you listen to a Tim Ferriss podcast episode about a new swimming technique. Here’s the affiliate landing page you’d arrive at before you could enroll in the program.
Stitch Fix: If a friend shares their referral link for Stitch Fix's personal styling service, here's the landing page you'd arrive at.
Besides detailing the referral offer, this page has a section that explains exactly how the service works.
Otter: If a friend shares their referral link for Otter.ai's audio transcription service, you would encounter this landing page.
It says what you'll get from Otter's service ("rich notes for meetings...") and also offers social proof (awards) to convince you to join.
