Referral Marketing

Referral Marketing

What is Referral Marketing? Referral Marketing Definition

Referral marketing is a marketing initiative which incentivises happy customers to act as brand advocates in order to generate more sales and revenue for a business.

How Does Referral Marketing Work?

The way referral campaigns work is simple. 

Companies offer incentives to existing customers to refer their family and friends.

To make referral campaigns more effective, incentives are not only offered to referrers but also to the referrals. This way, both parties are incentivised to participate. 

Referral incentives can be in the form of discounts, store credits, freebies etc. 

For example, a hotel could run a referral campaign that rewards their existing customers with a 15% discount on bookings for every referral. The people in return also get a 15% discount on their first booking.

In summary, it’s a win win situation for all parties involved. Companies get new customers, existing customers get incentives, and new customers get incentives as well.

The great part is that new customers can also join in the referral campaign which can spark a chain reaction.

Examples of Successful Referral Marketing Campaigns

There are a lot of companies that have achieved wild success with referral campaigns. 

Some companies have used referral campaigns to attract millions of new users. 

One of the first companies to achieve wild success with referral marketing on the internet was PayPal

screenshot paypal - referral marketing

PayPal ran a referral campaign in the early days of their company. For their campaign, the electronic payments company paid new users $10 for joining the platform and existing customers $10 when they invite others.

This was real cash that people could spend right away. At first it seemed like a gamble but it paid off big time. 

PayPal grew to 100 million users with referral playing a major role in this hyper growth.

Another one of the famous referral marketing campaigns is the Dropbox’s Referral Program.

screenshot dropbox - referral marketing

Inspired by PayPal’s campaign, Dropbox gave existing customers 500MB extra space for every new user they referred. New users also got 500MB of bonus spaces.

The results of this program were astronomical. Dropbox grew from 100,000 users to 4,000,000 users in just 15 months.

More than 3 million direct referral invites were sent by users.

There are a lot more successful referral marketing campaign stories you can read about.

Referral Marketing Tools

Just like all marketing campaigns, referral programs can be very overwhelming without the right tools in place to streamline the process. 

With the right tools, you can automate most of your campaign to make it more efficient. 

Here is a list of  tools you can use for your next referral program:

How Can We Help?

Think you could benefit from referral marketing but not sure where to start? Give us a call and we’ll take a look into how we can help.

We could potentially match you with a marketing team that make your goals into a reality!

In the meantime, you could always check out our training courses to work on in your own time that will get you up to speed with all the best and current marketing practises.