EVALUATING AN INVESTMENT

Examples of Successful B2C Referral Programs & Best Practices

Examples of referral successful and/or well-known referral programs have been provided below. Success metrics have been provided when case studies existed.

 1. Mindbody & Booker  

Mindbody & Bookers

 2. Seedrs  

  • Seedrs’ referral system “brings all the crowd funders to the yard, giving advocates a cut of Seedr’s earnings from referred friends.”
  • For investors who have been active since prior to October 2018, Seedrs will “pay 50% of the fees charged to the (referred) business on any investments the investor makes over the next two years.”
  • “To start earning referral fees your unique referral code or follow link must be associated with the referred investor’s account when they join Seedrs. You can find your referral code or follow link under your profile when signed in to Seedrs.”
  • Details for the referral program for investors who signed up after October 2018 are available only within the account portal and therefore are not available within the public domain.
  • Referrers have the ability to control where their earned rewards are applied. Fees can be paid to the new investor rather than the advocate if preferred.
  • Of note, other than the description above, no additional data was located on the level of information collected within the referral.

 3. 99Designs  

99Designs

  • A referring customer must share a referral ‘pop-up’ and the new customer must be a new customer who purchases within ninety days of the referral pop-up to qualify for earned rewards.
  • Referral rewards are paid via PayPal within the 30 days.
  • Their referral program is maintained through ReferralCandy.
  • As referrals can only be completed via a specific link, the exact requested information at collection cannot be determined.

 4. Storyblocks  

  • StoryBlocks (formerly known as VideoBlocks) is a “giant library of stock footage and media, operates in a highly competitive market, facing heavyweight public companies like Getty and Shutterstock.”
  • Having had little success with display advertising, the implementation of a referral program has resulted in over $100,000 in sales for the company.
  • As seen below, with only an email provided in the referral, the advocate receives $20, and the new customer receives $50 worth of downloadable content.

Storyblocks

 5. A Box of Stories  

  • A Box of Stories is the UK’s top subscription box offer for books.
  • Using referral program management via Referral Candy, the company has seen a “3.38% of all purchases” from advocates and referrals.
  • Within the first four months of the program, the company saw growth of over 5,000 new customers from referrals.
  • It is estimated that the “referral program generated a 3000%” return on investment.
  • A Box of Stories offers their customers the ability to provide a coupon code to friends which gives them “£4 off their first purchase (about 25% off), while receiving a £4 off their next purchase.”
  • “The introduction of a referral program also reduced their reliance on paid channels for new customer acquisition. Before, 90% of their customers were coming from paid acquisition channels, with 10% coming from organic channels like social media or content. Using ReferralCandy, they were able to reduce the Paid:Organic split to 40:60, increasing the proportion of organic acquisitions.”

6.  Christy Dawn

  • “Christy Dawn is a fashion designer of dresses and accessories inspired by vintage clothing, and uses only sustainably sourced deadstock fabric.”
  • The company’s referral program offers their customers the ability to provide a link which friends can use to “$30 off their first purchase of $150 or more.” In return the advocate receives a $30 credit in their Christy Dawn account to be applied to their next purchase.

Christy Dawn

  • Since the inception of the referral program in 2016, the clothier has seen a 26-fold return on investment.
  • Christy Dawn sees the majority of its referrals come from micro-content influencers like style bloggers and YouTube Content Creators.
  • Overall, “referral sales contributed to 2.81% of all their transactions.”

7.  Ledger  

  • “Ledger offers hardware wallets for cryptocurrency. The flagship Ledger Nano S is the world’s bestselling hardware wallet, with 1.4 million units sold in over 156 countries.”
  • After launching a referral program in December 2019, the company saw the following results in just six months:
    • Generation of additional 4% of transactions each month from referrals.
    • “On average, each advocate referred 8 friends to make a purchase.”
    • “Ledger’s referral emails have a high open rate of 24%, with over 100,000 referral emails sent.”
    • A 55x ROI after implementation of the automated referral program.

Ledger Wallet

  • Tracking of referrals is automated via a shared link and the company has taken measures to guard against fraud with a “14-day limit on the referral link” and the capability to “invalidate links posted on coupon code websites.”

8.  Love Yourself  

Love Yourself

  • LoveYourself began the referral program in 2018 and has realized a switch to “5.85% of all revenue from referred purchases or referred customers.”
  • The company has seen “over £100,000 in referral sales.”
  • All tracking is automated and there are over “4,000 customers (who) have joined the referral program. 6% were new customers who joined through the referral program.”

 9. Leesa 

  • “Leesa is an online mattress retailer and a pioneer of the burgeoning bed-in-a-box industry.”
  • Knowing the value of a recommendation by friends for a premium product, the company embarked on a referral program which pays its customers $75 for every successful referral. (A previous iteration of the referral compensation offered $50 cash back to the referrer along with the new customer discount).

Leesa

  • After the implementing of the program, Leesa has realized a “steady stream of leads.”
  • Payment of the referral fee is made via PayPal after the new customer completes their trial period.

10.  Okabashi  

  • Okabashi is a US company who makes “the most comfortable flip-flops and sandals on the principles of foot wellness and reflexology.”
  • The company’s referral program is scalable for customers via multiple channels:
  • The company saw that average sales from referred customers were 13.2% higher than average.
  • Referrals are completed via a customized coupon code, so no information is collected at the time of referral.
  • No current examples of the metrics of the discount for referral were located via multiple sources. This is likely due to the fact that the discounts vary, especially in current pandemic and holiday conditions.

 11. Ztylus 

  • “Ztylus sells versatile smartphone cases that perform many different functions at once.”
  • Using mostly influencers, the company gives a “25% discount to referred friends, and 10% of the purchase as a cash reward to the advocates who refer them.”
  • Both existing customers and affiliates can take advantage of the program.

Ztylus

  • The program requires the advocate to sign up in order to track and receive compensation.

 12. Riff Raff & Co 

  • “Riff Raff & Co’s sleep toys are widely beloved by young parents, a close-knit community that tends to be particularly vocal and effective in sharing word-of-mouth.”
  • According to company CEO, Emma Kruger, she knew that “ a referral program was going to form a major part of our marketing. With much of our target market being mums, and me being a mum myself, I knew that the best people to promote our product were other mums – they are the ones they really trust.”
  • “Customers do not need to set up an account and can just focus on sharing their referral code. Intrepid parents who wanted to claim the referral reward could do so with just their email, too.”
  • The referral program offers free shipping for the referred customer and a free toy (worth $65) for the advocate when 5 purchases are made from the shared link.

Riff Raff & Co

  • “Riff Raff & Co were able to generate incredible value from the effectiveness of their referral program, with 35% of sales coming from referrals.”
  • “In the first 6 months of the program, the referral program generated 16x ROI.”
  • “As Riff Raff & Co’s customer base kept growing, the ROI skyrocketed to over 100%.”
  • “The amount of referral sales broke five digits, and the program generated 104x ROI.”

BEST PRACTICES

1. Set a Goal

2. Worth to the Advocate

  • According to McKinsey, 20-50% of all purchasing decisions can be a result of word of mouth but to make a referral program successful, it must provide value to the advocate.
  • “A formal referral program can only work if a company trusts their satisfied and loyal customers to refer qualified new business their way in the first place. That’s why it’s important to identify which customers (or even vendors and employees) can participate in the program—and make it profitable.”
  • When advocates see that “their effort is appreciated, they will be motivated to work harder.”

3. Make the Reward Sensible

  • As mentioned in the early findings, a reward program has to make sense for advocates. “Arriving at a formula that works requires taking the time to understand your customers and what will motivate them to keep referring business. To figure out what to offer, ask your customers directly. You can also do some research to see what your competitors are doing—and put your own spin on it.”
  • “Free products and gift cards are part of highly successful customer referral programs but rewards are perceived differently by everyone—and you need to figure out what your customers will value most.”

4. Ease

  • It is essential that the details surrounding a referral program are easily found.
  • Place a link with program specifics in an easy-to-find place on your website or social media channel.
  • “Provide multiple options to share on the platforms they use most, like Facebook, Instagram, SMS, and email.”
  • “Create easy-to-share referral links that customers can immediately copy and paste.”
  • Optimize your program for mobile so people can quickly share on-the-go.”

5. Transparency

  • Consumers are cautious about sharing personal information on the web.
  • “Make your customer referral program more attractive by being upfront and honest about the entire process. Let program members know how their information will be used, how they can keep track of the process and exactly what they’ll get in return.”

6. Timing

  • Knowing when to ask for a referral is important.
  • “Studies have shown that the moments following a shopping transaction – commonly referred to as a ‘shopper’s high’ — are a highly effective time to ask for a referral, since the rush of the purchase is still lingering.
  • “In addition to giving referral rewards, it’s important to let your customers know you appreciate them. If someone sends you a new referral, be sure to say thank you.”

7. Management

  • “The program should be strategically planned out, regularly measured, and managed on an ongoing basis.”
  • Use an established referral program management platform to “track and account for every referral.”
  • “Referral marketing software allows you to track the number of referrals coming in, track who these referrals are coming from, and help you distribute rewards. Plus, software can also automatically generate referral links that make it easier for customers to share your program across email and social media. All this automation makes sharing just a click away, while tracking allows you to refine your referral program.”
About author

Articles

Glenn is the Lead Operations Research Analyst at Research for Finance with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.
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