Is a Referral Program Right for Your Startup?

We started our referral program three weeks ago and opened it to the crew of our small startup, and to the larger eco-system of Rokk3r Labs, a company co-builder that we’ve partnered with to help us build the product and bring it to market.

All Startups Have Their Challenges

Like any early-stage startup, we are not without our challenges. Now that we have a working platform and are able to sell emergency insurance policies (also known as supplemental insurance) online the focus now is on growth. We’ve decided to structure all growth initiatives in the form of SMART criteria experiments. To that end we’ve tested several at this point and one of the newest experiments is our referral program. So how’s that going? Good, bad…meh?

Well before I get into the details I want to share the reasoning behind the initiative since this story is not so much about our actual program, nor our particular startup, but about challenges and insights that all startups deal with at any given point when trying to figure out the best way to “growth hack”.

The truth is that we are in the business of selling a somewhat complex product that many have a hard time understanding. Sure people grok health insurance and know that they need it. We don’t sell health insurance. We sell supplemental insurance that pays for what your insurance does not. Specifically for critical injuries (cancer, heart attack stroke, etc.) and physical injuries, in other words “insurance for your insurance”.

Explainer video for

So if you’re like most Americans who are worried about their high deductible health plan and want to safe guard against medical debt for yourself or your family, we pay a lump-sum cash benefit to cover the things that you would typically have to pay out-of-pocket for such as your high deductible, non-medical and out-of-pocket costs like lost wages, travel for care, and out-of-network doctors.

Using a Referral Program as a Growth Hack

We decided to use Referral Rock as the SaaS-based platform to run and manage the program. Its priced pretty lean and has excellent support (the founder Joshua actually got involved hands-on when we hit a technical snag in the very beginning). Once we got it up and running the next step was to make sure that we could accurately track and reward the referrals. In our case we setup a personal page for each of our members where they can see the program overview, easily share via social or email and a nifty little dashboard to track their stats.

The program kicked-off on March 29th and as you can see from the chart below, just before launch there was a bunch of testing. The burgundy line is the Referral Views or the number of times a potential customer clicked on a member’s referral link to see the referral offer page. Since March 29th through today (April 16th) we’ve had 802 visits to our member’s referral links. These links have been shared on LinkedIn, Twitter, Facebook and via email:

So the good news is that many of our members are hustling for us and helping us get out the word. The incentives we’re using is a grand prize weekend vacation resort in Jamaica, with runners up getting Amazon gift cards valued for how many leads they are able to have complete an application for an Emerge insurance policy. Here is what the Member Page looks like for folks in our program:

Our Lessons Learned

The part that we still need to work on for the final two weeks of this program is better conversion rates — currently we have about only half a dozen customers from this program thus far. Not bad but certainly room for improvement.

Has this been a cost-effective growth experiment for us? Well again we are still only halfway through the program but running the numbers so far, the cost of Referral Rock is $150/mo. (we chose the cheapest plan) and half-way through we have already acquired customers. Without going into details on our customer acquisition cost (CAC), which is generally pretty expensive in the insurance industry, we’ve more than broken even on the cost so far.

So is a referral program right for us? So far it has more than paid for itself. Would it be a good fit for your startup? Possibly. Keep in mind the opportunity cost of setting up and running a referral program (perhaps with limited resources) versus other types of customer acquisition channels such as content marketing/SEO, partnerships, affiliate programs, social media, paid media, PR — the goes on perpetually.

Trying Be SMART About It

The best advice is to know your CAC and to be able to compare it across alternative growth experiments that could also help drive new customers. We’ve found it helpful to time-box experiments (so that we can quickly decide on if its working and if not dump it and go to the next on the list). So let’s look at our experiment from a SMART goals approach:


Is it specific? We launched the program to (1) incentivize our extended community to help us acquire new customers, (2) to leverage this extensive network to get out the word on our new startup to strengthen our brand awareness and of course (3) to ultimately help more people avoid medical debt. Check.


Is it measurable? We are tracking not just across program activity and social shares but also via the subsequent traffic to our website whether or not a policy is purchased. Of course the main short-term KPI is the number of customers acquired via our program. Check.


Is is attainable? This is tricky part. Is what attainable? This is our first referral program for a new online insurance virtual broker service so it was hard to compare or benchmark as to how many customers we could expect. We could have set an arbitrary goal (i.e. 50 or 100 new customers) however at the end of the day breaking-even when comparing to our CAC is a good start. Check.


Is it relevant or worthwhile? We certainly think so based on the traffic and sign-ups thus far. Again we have other experiments to get through (some that we are running in parallel) however this has been time well spent and a great learning experience. Check.


Is it timely? We’ve spent the past few months fine-tuning our product and the user experience for our site visitors based on feedback. We’ve shortened the purchasing experience and have refined our messaging. Before spending on higher ticket acquisition channels such as paid media we wanted to use this opportunity to foster more organic growth — in this case through co-workers, friends, family and our startup community members. We also decided to time-box this to a 5-week experiment before moving on to either a larger referral program or affiliate program or deciding to take an entirely different path based on resources and opportunity costs. Check.

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