At this stage, everything has been done so that active users become ambassadors within their networks. We're now at the heart of growth hacking: virality, which allows the user base to grow exponentially or geometrically.
Rely on Social Relationships
The referral can take many forms:
Word of mouth: users and customers talk about you to those in their circles.
Social networks: heavily used on cell phones, social networks are very good levers of loyalty as well as user acquisition.
Incentives: your users earn rewards by encouraging others to use the product (e.g., Dropbox offers additional storage).
This study shows you how to use the referral system wisely.
Imagine that a satisfied user recommends your service to three people who themselves recommend it to three people, and so on. It becomes a snowball effect!
To illustrate this, I present Bob. You acquired this character, located on the far left in the image below, through an acquisition channel, such as blog content or a paid campaign on social networks.
In this example, the average acquisition cost, even with a referral, will be higher. You then try to understand the source of dissatisfaction, correct, readjust, and let the magic happen! Your referral will be done by itself.
How do I know if the user experience that I offer is so superb that users want to share it on their networks?
Do your users have an emotional connection with your product or service?
Are they entirely satisfied?
Do you offer to share the product at the right time? Or a tool that allows the service to be shared?
Do you offer a reward or promotion to boost sharing?
To inspire you, here are some examples of effective referral management:
The file storage and sharing service, Dropbox, pulled off a very well-known referral hack: the company offered its customers the opportunity to invite friends and, in return, offered them additional free space. As a result, its user base has grown from 100,000 to 4 million registered users in just 15 months. This represents an increase of 3,900%!
Slack (internal messaging chat) offers a financial incentive of $100 for paying customers.
Notion (note-taking tool) followed the Dropbox principle. But instead of offering available space, the company monetizes this space by giving a $10 credit to use its services.
Also, you must know the acquisition cost before offering referrals an incentive:
What does it cost you to acquire a new user, all channels combined?
What is the lifetime value of your user?
Calculate Your Referral
Your referral system must ensure profitability.
Remember that conversions are much more interesting when they come from someone who makes the recommendation rather than from the brand itself.
Here are a few interesting statistics from the Amplifinity to get an idea:
61% of customers generate one referral.
34% of customers generate 2-10 referrals.
5% of customers generate 11+ referrals.
How to calculate your referral rate?
Your referral rate represents a percentage in sales volume associated with the referral over the total sales:
Usually, ambassadors recommend your service through emails, social networks, or messaging (SMS, internal chat, etc.), using a tracked link that allows your referral and your company to monitor and measure the different shares and registrations/purchases that ensue. In Part 3, we'll see how to properly define your KPIs in more detail.
Rely on Tools
The referral tools are those that allow you to make sharing tools available so that your audience, whether already a customer or not, becomes a brand ambassador.
Landing Page Management Tools
There are several tools to manage landing pages that integrate referrals. There are hundreds of them, but these are my three favorites:
This last one, KickoffLabs, allows you to gamify and trace all referral actions:
Create waiting lists where each referral increases positioning: the more the customer recommends, the more their positioning increases:
Create competitions where only the first three or five customers win a prize or some privileged access to your service:
For the last example, the more your customers recommend, the more they access higher stages and earn additional compensation or gifts:
Thanks to gamification, your customers recommend the service while having fun. These tools provide a real-time display of what's happening, consequently creating a game-like feeling.
Crowdfunding sites are a great way to test your value proposition (especially in the beginning) and create your initial community.
Here are a few:
Referrals are based on social interactions.
The most influential recommendations are those that have the weakest connections to your customers.
The most important takeaways from Part 2 on the AARRR are:
Don't put water into a pierced basket!
Make sure you have a quality product.
Now you understand each stage of the funnel. In the next part, you'll learn how to structure your method while being led by the figures! Remember this mechanism:
Target: Who'd be interested in my offer?
Interaction: Where can I interact with my target?
Engine: How to get my target to my site?