GenM has seen some serious growth over the past few months. We’re a startup with a vision and it’s one that our customers love. It comes as no surprise to us that people like to share GenM with their network and we thought that was great — but it could be better. We wanted to create a set of incentives to make sharing the platform just that much more enticing. With that, the idea for our referral program was born, but coming up with the idea was the easy part, making a plan, putting that plan into action, and maintaining a healthy funnel — not so easy.
But we did it and lived to tell you about it. Here’s how we managed to create a referral program that has grown to the point that it accounts for 60% of our lead gen efforts from the planning to execution.
Determine the value of a referral
Before we got started planning out our strategy for the referral program, we first had to determine exactly how valuable a referral was to us. It would be impossible to figure out what incentives we are able to offer, what a realistic goal is, and the types of resources we need to provide without understanding the value of a referral. Although we can’t divulge too many specifics here, the formula for determining referral value is:
Lifetime Value (LTV) + Customer Acquisition Cost (CAC) = Referral Value
Once we figured out exactly how valuable a referral was to us, we could start laying out the incentives we were able to offer. The incentives you offer will differ depending on your business. If you’re a SaaS company, you might want to offer a discount on your product, a free upgrade to a higher tiered plan, or free access to the platform. If you’re an e-commerce store, you could offer things like discounts on your products, early access to new releases, free shipping, or even free products or a cash bounty.
Because of our subscription-based model, it made sense for us to provide discounts on upcoming payments. Referrers would get $25 off their upcoming payment for each referral, with a free labor contract to hire an apprentice every 3 referrals. This was good, but we wanted to offer something great as a stretch goal. Something that our referrers will really want to strive for as a long term goal. We decided that after 9 referrals, the referrer would be rewarded with free lifetime access onto the GenM platform. This made our incentive tier looks like this:
- Referral 1: $25 discount towards your next payment
- Referral 2: Additional $25 discount towards your next payment
- Referral 3: Free labor contract
- Referral 4: $25 discount towards your next payment.
- Referral 9: Free lifetime access to the platform
With your incentives out of the way, we had to start thinking about where and when we were going to reach our potential referrers and convert them into active referrers. There is no single answer for this one. Ideally, you want to be reaching your potential referrers in as many places as possible (but at the same time not being too overwhelming). For us, we decided that adding a referral button directly into the product dashboard that would take you to the landing page. We also set up a series of automated emails that get sent out at specific trigger points, which are outlined later in this article.
Put resources into resources
Now that we had a plan in place for getting our users aware of the program, we needed to reduce friction for sharing their URL. For us, this came in the form of pre-written templates that people can use to share on Facebook, Twitter, and LinkedIn. This is just one option. If you have the time and knowhow, you can go as far as creating visual content that users can drop their branding into or precoded email templates that can be added into their preferred email marketing platform.
Set a goal
Like every good marketing plan, we needed to set a goal. Maybe your goal is to get X number of users successfully referring someone. Maybe it’s to get X number of users to get to a certain tier of your incentive list. Maybe it’s a combination of both. There’s no way of knowing exactly what your goal will be without knowing the specific details of your business, but take a look at how many customers you currently have on your platform or make a purchase from your store every month and base hypothesis off of that.
With a strategy in place, it was time to start mapping out and building our funnel. Here’s what it looked like for us.
GenM’s 4-point referral success funnel, from top to bottom:
- Invite. Arguably the most essential aspect of launching a referral program: asking referrers to join. In addition to adding a referral landing page directly into the product, we created a set of automated emails that would invite users to the referral program when they trigger actions that we associated with a positive interaction with our product — e.g. leaving a positive rating on their apprentice, or successfully completing an apprenticeship.
- Onboard. Once an affiliate joins, your onboarding sequence should be inviting, informative, and encouraging. For us, that came in the form of a dynamic referral landing page that linked to a resource with information on the referral program and tools and templates they could use to share their referral link as well as a series of emails to get them familiar with the program.
- Nurture. To keep users engaged and actively participating in the program we needed to keep them engaged. This came partially through gamification of the landing page and email sequence where referrers could see their progress towards the next incentive tier in real-time. We also re-engage past referrers who have been inactive for a period of time with emails reminding them of the incentives that await.
- Sale. The best part! Now that you have a new partner who’s excited to be advocating for your product, there’s nothing like that first sale. The beauty of the referral sale is that it’s a true win-win — they receive a discount on a product they love and you gain a new, valued customer.
If you have a killer product your customers will share it with the world — but why not make it that much easier? Leveraging networks is one of the best ways to create new customers that have a high LTV. A good referral program can turn your evangelists into your advocates and create a scenario where everyone involved is winning. To create a referral program that converts, start by determining the value of a referral and picking your incentives. Then you can determine when and how you are going to reach and support your customers to become part of the program. After that, pick a goal and create a kick-ass funnel that will help you hit that goal.
Feel free to 👏 and help others to find this article + learn about how we’re helping entrepreneurs get their marketing done over at genm.co