Don’t you love it when somebody surprises you?
It can come from the unexpected visit from an old friend, or when you find that extra Pringle at the bottom of the tube.
It can also come when your favorite brands go out of their way to delight you.
There are many ways to delight your customers and advocates. A time-tested approach is to reward them for telling their friends about you and your products.
This inspires action and, as you well know, referral marketing is one of the best channels for acquiring new customers.
Like those stats? Check out the whole infographic by ReferralCandy and view the sources.
In fact, according to New York Times, 65% of new business generally comes from referrals.
Furthermore, a Nielsen survey found that 92% of respondents would trust referrals from those that they knew. That same survey reported that people are 4 times more likely to buy when referred by a friend.
The challenge to overcome when growing an ecommerce store is inspiring those referrals in the first place. Indeed, much of it comes down to what the SaaS world calls “Customer Success”.
But many marketers trip-up on creating an effective referral program in the first place. They make their referral programs hidden away and hard to find.
And if the incentive is “insultingly small” (as one consumer put it), your customers won’t feel motivated.
So, how can you create a referral engine that increases reach, boosts trust and generates more sales?
Learning from success stories is an effective way to learn. So in this article, I outline some killer referral marketing lessons from 4 fast-growth ecommerce businesses.
How does a company generate 100,000 email addresses in under a week before they even launch?
By creating a viral referral campaign that utilizes incentive upgrades.
And this is exactly what Harry’s did. To put their shaving subscription on strong footing, they pre-launched with a referral campaign.
This generated over 100,000 emails in a week before they even launched their store. They wrote about the entire process over on Tim Ferriss’ blog, including the source code that made it possible.
What lessons can we learn from the Harry’s launch process?
Before executing anything, they started by looking to other industries for inspiration. As an ecommerce marketer, you can learn a lot from the SaaS world – as did Harry’s.
Dan Kennedy is an advocate of the “swipe & deploy” file. This is simply a collection of marketing materials from companies in different industries to yours. Most of the time, you’ll find that the architecture of other funnels can easily be applied to your own.
They also utilized gamification mechanics. Each subscriber was given a unique URL to share with their friends.
On the technical side, a cookie was stored on the user’s computer. Every time they returned to the page they would see their progress.
Gamification can hook people into your marketing and engage them further. When applied to referral marketing, it creates a win-win for both you and your audience.
Finally, they had some killer incentives. The more people they referred to the pre-launch signup page, the better the prizes.
It started with something as simple as shaving cream and went all the way up to a year’s worth of razor blades.
Notice how they didn’t incentivize with iPad’s and other irrelevant gadgets. They incentivized with their own products, which ensured they were attracting their ideal customers.
These three lessons combined helped create a viral word-of-mouth system for Harry’s. As a result, they had a large audience and huge amounts of buzz on launch day.
2. The Clymb
With the value proposition “Up to 70% Below Retail”, it’s no wonder why The Clymb are doing well. They found a gap in the market and filled it.
What’s even more impressive is how easy they make it for their customers to spread the word.
At every step of the buying experience, they gently remind you of their “invite a friend” program. As you scroll down the page the header goes with you.
As you can see, the call-to-action remains in constant view as the user browses the page. The highlighted text color also helps to draw more attention towards it.
One of the biggest draws to this incentive is their win-win model. Whenever a customer successfully refers a friend, they both get rewarded.
Your customer not only receives a reward, but know that their friend will be rewarded, too. This helps with emotion regulation and makes your customers feel good.
There’s a hit of dopamine that comes from giving something to someone. The fact they’re rewarded too helps to motivate action.
Constant visibility and pulling upon social triggers. These are just two ingredients that help turn The Clymb’s referral system into a viral loop.
Proclaimed as the most comfortable undies in the world (both by their value proposition and by their customers). These guys have narrowed in on a gap within the underwear space and nailed it.
Their entire story is built upon transparency. From why they started the company to the inner workings of the factory they’re made in. You’re invited to take a look around, all wrapped inside a delightful UX.
The landing page for their referral program is just as delightful. They put emphasis on the messaging for the referral system itself:
As you scroll down, you see two calls to action. First, there’s a button to login to your dashboard and track invites. This adds a sophisticated level of gamification and allows customers to see how much they’ve earned.
The second thing you notice is the value proposition. Much like The Clymb, MeUndies uses a win-win model to reward both the customer and the friend. You get $20, they get 20% off:
MeUndies then go one step further. They show how your friends are progressing along their journey. This helps their customers invest in the process and contributes to the next observation:
Notice the area on the image below that says, “Nudge ‘Em”?
If a customer sees a friend sign up and add a product to cart, but not complete their purchase, they can send them a reminder.
MeUndies are essentially using the referral incentive to recruit customers to play a part in cart abandonment.
Sure, cart abandonment emails are effective, but imagine one coming from someone you trust? I bet these would have a higher conversion rate than your average trigger email.
One final thing to note is how they’ve taken full advantage of the Facebook Messenger API:
With more and more people using instant messaging, this is an easy way for customers to invite and treat their closest friends.
These guys have built the swiss-army knives of phone cases.
Instead of having to change your phone case for different utilities, Ztylus has a disc mount system. This allows you to switch up different attachments. From different camera lenses to stands.
Their marketing strategy is built up of social media and digital advertising. But the majority of their new customers come from word-of-mouth.
The actual mechanics of the referral system are no different to many we’ve already covered. They have a commission-based incentive to their rewards system. The more your friends spend, the more commission you earn.
Where Ztylus’ referral strategy differs is in their distribution. They engage with influencers, YouTubers and bloggers who share links in their content.
Btekt, a YouTuber who reviews gadgets, described them as “the best looking iPhone accessory that I have ever seen”. With over 36,000 views at time of writing, this has been a great source of referrals for Ztylus.
The entire process was designed to be as easy as possible. As soon as you arrive on the referral program landing page everything is clear:
Where many offer an amount off their products, Ztylus offers a cash incentive. The only limit to this is the number of friends a customer can refer. The bigger the audience, the bigger the cash incentive. Which is why this is so appealing to influencers.
7 Referral Marketing Takeaways
Each of the stores above used several different techniques to make their referral marketing programs successful. Let’s take a look at each of them and see how they can be applied to your own marketing funnel:
- Gamification: We’re quite a competitive species by nature. Gamifying your marketing can inspire your customers to become more invested in referring friends. How can you use UI elements such as progress bars and dashboards to improve retention?
- Look to other industries: Sure, it’s wise to keep an eye on your competitors. Innovative ecommerce marketing ideas can be found from the software and tech industries. You just need to look close and pay attention.
- Go big on incentives: In order to inspire action, you need to offer a generous incentive that people will care about. Many businesses still hold back on this. One way to make a business case is to calculate returns based on CLTV (Customer Lifetime Value). Use this is a guide and you’ll find you have a lot more room for cash and product-based rewards.
- Make it a win-win scenario: The best referral programs reward both the customer and the friend. MeUndies is a great example of making this happen, as it offers different rewards to each party based on where they’re at in their journey.
- Make it easy to find: The Clymb did a great job of gently reminding their customers of their referral program. Make it easy to find and use your website and utilize email marketing to remind them it exists.
- And make it clear: What’s the incentive and how does your program work? Your landing page should illustrate and describe how it works as quickly as possible. Use a powerful value proposition and friendly, descriptive visuals to do this.
- Empower your customers: MeUndies give customers the option to “nudge” their friends. They’re taking the essence of word-of-mouth and applying it to cart abandonment.
Referrals still continue to be the strongest marketing channel for ecommerce companies. An endorsement from a friend or influencer will always have more weight than a message straight from your brand.
We can boost these effects by exciting, encouraging and empowering customers to share. Advocates will always be happy to spread the word, but some may need a little “nudge”.
When it comes to referral marketing, what have you found works best? Share your experiences in the comments below.
About the Author: David Fallarme is Director of Marketing at ReferralCandy, an ecommerce plugin that helps stores get more customers with smart, Dropbox-style referral programs. Get their free email course on referral marketing.