Growth Strategy: Referral Programs

Referral programs have a track record of being a high performance growth tactic, a notable example of a company that owes its success to a referral program is Dropbox, the popular file hosting platform, they offered their members an extra 250MB space for each person they referred.

Offering users a reward for referring their friends is a way to generate guaranteed success, the success usually aligns with how great the reward you offer is. The primary advantage of running a referral program is the potential for virality, as referral programs rely on the network effect.

An effective way to monitor how well a referral program is performing is to keep track of your viral coefficient or ‘K factor’, which is incredibly easily to calculate:

K = Customers at Start * Number of Referred Users / Conversion Rate

An interesting twist on a referral program is the Referral Waiting List, a waiting list is incredibly important part of a product’s lifecycle, an easy way to manageable introduce users to your product person by person.

A waiting list powered by referrals could offer each person who signs up an opportunity to get access to the product earlier for referring other people to the list.

This is an underused growth strategy, one that could have amazing results if you’re about the launch the right product 🚀

Feel free to get creative and share your inventive marketing in the comments section.