The Top 5 Successful Referral Programs: What You Can Learn For 2021

Generating leads and securing loyal customers can be one heck of a hassle. But nothing is impossible! Today we’re going to discuss how to leverage more consumers for your business using referral marketing.

This marketing tactic, as the best referral programs prove, can accelerate your brand’s revenue by encouraging consumers to do business with you. 

Sounds too good to be true? According to Social Media Today, 60% of marketers believe that referral marketing induces many high-quality leads. But that’s not all.

A case study done by Harvard Business Review confirms that you can generate up to 16% more profit through referral marketing. 

Launching a referral program is an opportunity for you to expand your brand, retain customers, and maximize your earnings. 

Now it’s time to show you the most successful referral programs and what you can learn from each of them. Let’s dive into it!

    What is a Referral Program?

    Let me give you some context on referral programs before we jump into the juicy bits.

    Firstly, referral marketing works hand-in-hand with customer marketing and relies on word-of-mouth and referrals to promote a brand. 

    Secondly, a referral program is when you give customers referral incentives for referring new customers to your brand. And thirdly, a referral incentive is a reward that includes discounts, freebies, gift cards, etc. 

    Using referral marketing is the ideal way to motivate new customers to support your brand and attract past customers back to your brand. 

    Referral marketing works because you are literally giving your customer a reward for generating new customers.


    These are common objectives of referral marketing:

    • Generate more customers at a lower customer acquisition cost (CAC).
    • Encourage customers to spend more, increasing overall profits.
    • Attain customers with higher lifetime values.
    • Raise brand awareness.
    • Gain customer loyalty in new and existing customers .

    Whether or not your referral program will be a success depends on your customers. Therefore, it’s imperative to make sure they’re happy with all aspects of your brand. This includes your customer service and the quality of your products. 

    Gaining happy customers boils down to engaging with them, approaching any concerns they have about your brand, and providing products/services that are valuable to them. 

    A sure-fire way to ensure customers will respond to your referral program is by using top-notch referral program software. This will help you launch a well-performing, professional and responsive referral program. 

    7 Crucial Aspects of A Successful Referral Program

    1. Understand your consumers. Acknowledge the ever-changing trends and preferences amongst your consumers. Doing this will help you choose a reward aligned with what your audience would want.
    2. Customize your referral program. Most referral program software will offer countless styles, templates, fonts, and designs for you to experiment with. Make your referral program appealing to your customers to grab their attention. 
    3. Choose your referral software. Opt for referral program software that is known to create high-quality, attractive referral programs. You also want to make sure the software you choose has everything you need, eliminating the stress of having to settle.
    4. Capitalize on happy moments. When your customers are satisfied with your brand, that’s the perfect moment to hit them with your referral program. For digital companies, promote your program after customers join your platform, sign a contract or provide positive feedback, etc.
    5. Be clear and concise. Confusing your customers with complicated terms and drawn out sentences won’t keep them interested. Use brief sentences, powerful words, and keep it simple.
    6. Make your reward accessible. The best rewards are ones that users can instantly access. You want to avoid making it hard to use the reward or receive it.
    7. Thank your customers. Show gratitude to your customers by thanking them for their referral. Your customers will feel appreciated and acknowledged by your brand. 
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    The Top 5 Successful Referral Programs

    1. Airbnb 

    When it comes to referral programs for small businesses and honestly all kinds of establishments, Airbnb leads a great example.

    This popular web-based lodging platform featured on the list of best referral marketing platforms in 2019 and now, today. Here’s what they did.

    How Airbnb’s Referral Program works

    A user can invite friends to Airbnb using a referral link. The friend must apply that link when signing-up.

    He/she will then receive a credit of up to $45 on their first stay. In addition, they will also receive $17 toward an Airbnb Experience, provided it is $56 or more.

    The exact amount of credit due to the referred for their first stay is expressed below:


    The Results of Airbnb’s Referral Program

    Hold on to your seats, ladies, and gentlemen, because your mind is about to be blown.

    After implementing referral marketing, Airbnb’s bookings and sign-ups increased by an astounding 300%. Now, let’s look at what we can learn from this.


    What to Take Away From Airbnb’s Referral Program

    This referral program has proved that as excellent as two-part incentive programs are (where both the referred and referrer receive rewards) they are not compulsory for lucrative referral marketing. 

    Above all, your incentive needs to be valuable and easily accessible. Airbnb also uses high-quality content on their referral program which comes off friendly and welcoming.

    These factors further persuade users to share the referral link.

    2. Uber

    Unlike Airbnb, Uber has a simple two-part incentive program. This would be considered one of the best referral programs to make money. 

    As it is, Uber has already solved a common problem today by providing reliable, convenient, and affordable transport. But this company took a step further and launched a super-beneficial referral program. Here’s what it looks like. 

    How Uber’s Referral Program works

    When a user joins Uber, they receive a personal referral code. If a user shares that code with a friend, that friend has to sign-up and create an account using that code.

    Once that is done, both the referred and referrer get their next trip free. 

    This is a fantastic example of what a foolproof referral program looks like. New users can try Uber without having to pay a cent, and existing users can enjoy a ride for free.

    It’s a win-win!


    The Results of Uber’s Referral Program

    Uber’s referral program result is a 12x ROI (Return on Investment). Meaning for every $1 Uber spent on their referral program, they received $12 in return.

    Most importantly, it also confirms that using referral marketing software to create a program that benefits the referred and referrer is a strategic idea. 

    What to Take Away From Uber’s Referral Program

    You want to make your reward convenient and useful to your customers. Uber’s incentive is perfect, as people could always do with a free ride.

    Also, the terms are not complicated to understand, and users get their reward instantly. 

    These are essential components to consider for creating an effective referral program. Uber has made itself one of the best apps for referral programs. 

    3. PayPal

    Personally, PayPal’s referral program takes the cake for me.

    The financial web-based platform rewarded its users for referrals by giving them money. 

    Yes, that’s right, cold hard cash. It’s not to say that Paypal is making users rich, but hey, free money is free money! Let’s look at what they did.

    How PayPal’s Referral Program works

    To participate in this referral program, users have to send 1 cent to a friend who doesn’t have Paypal.

    The friend must follow this up by registering to Paypal, linking their card/bank account, and spending $5 within a few months. 

    Once the referred spends the $5, both him/her and the referrer receive $10. Paypal offers a pretty appealing deal if you ask me. Let’s see how it performed. 


    The Results of PayPal’s Referral Program

    After implementing the referral program, Paypal’s daily growth rate increased by 7-10%.

    To put it into more perspective, this company reached 100 million users credited to the referral program.

    Who’s going to decline free money?!

    There’s no question that Paypal’s referral program was one of the best referral programs of 2020 and will most likely continue to be in 2021. 

    What to Take Away From PayPal’s Referral Program

    PayPal’s referral program is so innovative that Dropbox created their referral program using it as inspiration. 

    An essential factor to take away from this referral program is that the reward is suitable for everyone. This incentive makes people feel like they are literally being rewarded, and that’s because they are.

    PayPal requires the referred to spend $5 before either party receives their reward. This tactic positively pressures the referred to use PayPal by spending money. 

    It’s only a smart idea to use money as a reward if you can afford it and if it relates to your business. PayPal is a financial service so money as a referral incentive is relative to their company.

    4. Tesla

    On the topic of Elon Musk’s brainchildren, Tesla has changed their referral program over the years. This is to accommodate the evolving needs and wants of its consumers. 

    This company has not only manufactured the most quintessential selection of electric cars uniquely. But also have a rocking referral program. Here’s what Tesla’s referral program looks like.

    How Tesla’s Referral Program Works

    Before their new referral program, Tesla boasted a very generous referral program. The referred and referrers received six months of free supercharging. For every new refferal, Tesla rewarded the referrer with high-quality wheels, a chance to watch a rocket launch from SpaceX, Powerwall batteries, and much more.

    The more referrals a Tesla owner generated, the better the reward they would receive. After having five referrals, Tesla owners received a discount on the Roadster per referral. Later, they amended the referral program so those who gained enough referrals would receive a Tesla Roadster for free!

    This referral program later shut down. Tesla felt it was unsustainable, and giving away free cars simply costed way too much money.

    Today Tesla’s referral program is not as generous but still effective. Tesla car owners can share a referral link to prospective Tesla buyers. The prospective buyer must purchase either the newest Model S, Model X or Model 3 Tesla. Both the referred and referrer will receive 1000 miles of free Supercharging. 

    The referrer also stands a chance to win a Model Y Tesla every month and quarterly a Roadster supercar. Being a Tesla owner sounds incredibly blissful!


    The Results of Tesla’s Referral Program

    So you can be as shocked as I was after finding out what the results were, I have to tell you that Tesla claims to run off a $0 marketing budget.

    That means no money toward advertising or anything alike AT ALL. But this only makes their results more impressive.

    For their first referral program, Tesla accomplished a healthy 550x ROI. This is quite surprising due to how luxurious Tesla’s referral incentives were

    While Tesla hasn’t disclosed direct results of their second referral program, this referral program did help their company reach the value of $208 billion. No doubt credit is due to various factors that make Tesla a successful company. However, their new referral program has definitely played its part.

    Not to mention this referral program is a lot more established than the first, and today Tesla stocks are what made Elon Musk the world’s wealthiest man.

    What to Take Away From Tesla’s Referral Program

    This is amongst the customer referral program ideas, large businesses with enough capital can only execute (giving cars away can’t be cheap!).

    However, there are many aspects of this referral program that you can replicate on a smaller scale.

    If your brand offers products/services that are large payments, design your reward to make that purchase more economical down the line. Tesla’s incentive is free supercharging, cutting the cost of buyers charging their car for some time.

    If you sell gas stoves, your reward can be free gas. Or if your brand sells high-end computers, your reward could be a free computer bag and so forth. 

    Identify what your customers need and determine how you can incentivize them with that. It is also important to make sure that while your referral incentives are valuable for your consumers, they are still economical for your brand.

    Always make sure you create your referral program around your customers.

    So, like Tesla, you don’t have to spend a fortune on marketing because your referral program will speak for itself. 

    5. DropBox

    Like Airbnb, Dropbox has time and time again featured on the list of best referral programs in 2020 and back in 2019.

    This famous referral program takes “rewarding customers with what they need” to the next level. Let me explain.

    How Dropbox’s Referral Program Works

    This file hosting service rewards both the referred and referrer with additional storage space. For basic accounts, users receive 500MB for every referral, which cut’s off at 16G.

    Users on the Dropbox plus and professional accounts receive 1G of extra space for every referral, capped at 32G. 


    The Results of Dropbox’s Referral Program

    When a user runs out of storage space, they have to upgrade their account. But Dropbox offers users more space without them having to upgrade by simply inviting a friend instead. 

    Credited to Dropbox’s ingenious referral marketing techniques, the company permanently increased sign-ups by a shocking 60%! Today, 35% of Dropbox sign-ups stem from the referral program.

    These are very motivating statistics that prove how effective referral programs are for any business in any industry.  

    What to Take Away From Dropbox’s Referral Program

    If your customers have to upgrade to access certain features of your product, offer any of those features as an incentive.

    9 times out of 10, there is something your customers want from those upgraded options. They just can’t afford it. This will be the perfect way to generate more consumers while giving them what they need. 

    Make sure the incentive would help users easily achieve a common aim they rely on your brand for. 

    7 Main Key Takeaways For Referral Marketing

    No doubt designing your referral program will demand a lot of time, effort, and creativity. But these examples of the best referral programs prove that it’s well worth your effort. 

    Stimulating consumer engagement, multiplying your conversions, and gaining loyal customers are all benefits of referral marketing.

    After reading this article, I hope you see referral marketing for the gold mine that it is. If you do, here are some fundamentals to keep in mind:

    1. Keep your customers happy. Happy customers become advocates, and advocates refer more people to your brand. Constantly provide your customers with positively unforgettable service.

    You also have to make sure they recieve the quality of products they expect. Engage with your customers as much as possible and acknowledge their feedback.

    2. Optimize your reward. Your reward will be the persuading factor of your referral program. Offering a valuable, easily accessible reward will encourage more customers to take part in your referral program.

    Ensure your reward is relative to your brand. And don’t make your reward hard to access or use.

    3. Be original. There is nothing wrong with using other referral programs as inspiration, but be sure to add your own unique twist to it. Make it personal to your brand and to your audience.

    4. Don’t be afraid of change. Like Tesla proves, sometimes you need to change your referral program for the better of your business. Listen to your audience to keep up with what challenges they face that your reward could solve.

    5. Use your resources. Use what you already have to incentivize your customers. Whether you sell physical products or online courses, look at what you have and determine what you can offer as a reward.

    6. Market your referral program. Let as many people know as possible about your referral program. Advertise it on social media, in conversation, or using techniques like email marketing.

    7. Do your math. Don’t launch a referral program and just expect it to make money. Do proper calculations to outline what your objectives are for you to make a profit and measure your progress. 

    Source: Neil Patel

    References and Sources

    1. Social Media Today: 5 Powerful Reasons You Need a Referral Program
    2. Harvard Business Review: Why Customer Referrals Can Drive Stunning Profits
    3. Airbnb
    4. Cloudsponge: How Airbnb Built One Of The Most Successful Referral Programs Ever
    5. Uber
    6. Viral-loops: Uber referral program: UNLOCKED
    7. PayPal
    8. Tesla
    9. Forbes: Tesla Is Now The World’s Most Valuable Car Company With A $208 Billion Valuation
    10. Dropbox
    11. Entrepreneur: How Airbnb and Dropbox Achieved Tremendous Growth With Referral Marketing