Last time, we discussed the scale made available by Airbnb, Dropbox and Uber's referral marketing activities, leading to viral success that -- as it turns out -- can be applied in an online retail and E-Commerce context.
Today, we'll be diving deeper into how online retailers can apply referral marketing "The Uber Way" with seven key principles online retailers should keep in mind as they embark to execute a referral marketing strategy.
E-Commerce Referral Marketing Best Practices
1. Target The Right Customer Segment
When considering a new referral program, your first reflex might well be to leverage your entire customer base. The thought being, "the more volume I can get, the better."
While this may be intuitively true, targeting your entire customer base will cause a major disadvantage, in that unhappy customers, are not very likely to produce positive recommendations. This will hurt your overall referral program efficacy.
Instead, you should hone in on your most active customers. The reasoning is that your most loyal customers are more likely to give positive recommendations to their friends and to do so at a much higher frequency than customers who aren't vocal about you.
Remember, your happy customers are your best salespeople because they see constant value coming from your brand. Consequently, focusing your program on happy customers will elevate the overall messaging and effectiveness of your program.
As we dive deeper into the mathematics of viral acquisition, this reality will become more evident.
2. Offer Double-Sided Benefits
The problem with most referral programs is that they only benefit one side.
This creates an obvious issue in which one side of the equation has little motivation to take immediate action. Double-sided referral programs, on the other hand, encourage existing users to share, while simultaneously mitigating risk for new users.
In the case of Dropbox, referring someone to the product increases the available storage space at your disposal, while at the same time granting the referred user with an equally attractive bonus, mitigating the risk of a new user being onboarded and quickly running out of space.
When a recommendation is made in the context of a double-sided referral, the person who is referred is receiving a recommendation from a trusted source, who transferred their trust in a given product/brand to the referred person.
This referred person might still be on the fence, and the benefit of signing up through the friend in exchange for an additional benefit removes any friction there might be - in other words, it removes any doubt in the mind of the child that there would be risk in doing a given action (like sign up).
What's more, an added bonus of double-sided benefits is that it initiates a virtuous social sharing cycle. It isn't uncommon for an Uber user to share referral links fairly regularly.
They do this because they receive personal value, but also because it pictures the referrer as a source of exclusivity, which in turn increases the propensity of their network to engage with a referral offer. How powerful!
Read The Next 5 Best Practices In Sociable Labs' Free EBook
Next time, we'll explore the cost of waiting to implement a customer referral strategy and how to evaluate that cost for your own business.
Topics: Referral Marketing Ideas, Social Commerce, Referral Program