7 Referral Marketing Lessons from Fast-Growth Ecommerce Businesses

Eccommerce marketing comes in all shapes and sizes, with each having varying levels of impact on those exposed. Television commercials and Facebook ads may initially entice a potential customer by showing off what a product or service can do. However, there’s no guarantee the advertisement will work. People have become so accustomed to the continual inundation of marketing material; most ads simply fall flat and don’t make an impact at all. Due to this, the most successful form of marketing doesn’t come from a business at all. It comes from current customers. A customer speaking highly of a product or service and, in return, bringing in a new customer, is known as referral marketing. It’s essentially free advertising for a business, yet it has a greater influence on recipients. There are ways to increase and assist customers with referrals though, and many companies have experienced significant growth because of it. To develop a greater understanding of how referral marketing works and the greater role it plays in business, here are seven referral-marketing lessons a company needs to learn from current, rapidly growing ecommerce businesses. Even these tips will help you grow your paGO Commerce store today!

1. The Clymb

The Clymb is an outdoor equipment outfitter, providing everything from clothing to camping gear and travel accessories. The company has also identified a great way to bring in unknown customers without spending a dime on advertising.

In the header of the company website, alongside the brand name and the search bar, is a call to action. This call to action states “Invite a Friend You Each Get $10.” No matter where a visitor goes on the site, the header remains visible. This form of referral marketing has proven especially beneficial to the company while it also provides both the friend and the person they are inviting with a reward. Throughout all the several referral-marketing lessons, one of the unanimous truths is attempting to increase consumer referrals only works if there is a desirable reward. A customer who enjoys the products offered by The Clymb will likely want to save $10 again on future purchases, and all it takes is to refer a friend.

The second major lesson (with this example alone) business owners looking to boost referrals should take into consideration is a call to action placement. Naturally, the main purpose of the business is to make sales to the consumer already on the page. However, when a consumer visits a product page, purchase expectations are already there, so telling a customer to “buy now” can become redundant. However, the call to action for referring a friend may not occur to a customer, which is why having it in constant, plain sight is a valuable idea.

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2. Harry’s

Harry’s is primarily an ecommerce discount shaving needs provider (although the business has expanded to include retail displays in Target). For years, Harry’s remained an Internet (online) company, marketing to connect with its key demographic using advertisements on popular, male-central entertainment outlets (such as magazines and podcasts). In recent years, Harry’s has grown into a major disposable razor service provider in just a short period of time, thanks almost completely to its ability to generate referrals. In fact, the company obtained over 100,000 emails for an email marketing campaign in less than a week, all before it had even gone public.

So how did Harry’s manage to grow its email list in such a short period of time? With the use of a tactic called “gamification.” Gamification is an incentive-based marketing method that rewards an individual for certain accomplishments. In Harry’s case, it rewarded individuals for referring customers to providing their emails to sign up for information from Harry’s. Referring customers received a unique URL code, which allowed him or her to watch their progress. After referring a certain number of new clients, they would receive free products (since its expansion into Target the company has stopped its referral program).

All of the incentive products come directly from Harry’s. People signing up for email notifications obviously are interested in shaving material, so the best incentives should include shaving related items. The products range from shaving cream and razors all the way to one year of free blades. All of this allows Harry’s to build a strong referral base (without attempting to compete with larger razor companies’ marketing budget) and increase its word of mouth popularity thanks to the solid referral program. The major lesson to take from Harry’s is not only the utilization of gamification but also the quality of the incentive.

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3. Google

Google doesn’t need much in way of advertising. With its wide-reaching ecosystem, ranging from digital voice assistants and smart home technology to Android, Gmail, YouTube, and AdSense, there really isn’t a tech industry Google doesn’t have its hands in. However, with so many services, there are some that do fall through the exposure cracks and don’t necessarily receive as much attention as Google might like, which is why it offers a referral marketing program.

Microsoft Office has long stood as the tent pole program suite for companies around the globe. Few other software designers have attempted to directly compete with Microsoft on this platform due to its popularity. Google Apps for Work is the tech giant’s foray into this competition.

With the referral program, Google provides users of Google Apps for Work with a referral link. Whenever a new customer uses the link to sign up for Apps for Work services, the referring customer receives $15 deposited into their bank account.

Providing customers with unique referral links makes sending out referral email and social media messages far easier. It helps avoid the messy code copying of other referral programs so both the referring customer and recipient can easily use the provided information. To create a successful referral-marketing program, the easier it is for all parties involved, the greater the chances of converting new customers.

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4. MeUndies

MeUndies, like many of the other growing businesses listed in this post, advertises a great deal using less traditional routes, including popular podcasts. This illustrates the financial potential of the market outside of the box. MeUndies as a company does not go out of its way on massive marketing campaigns. In fact, it advertises very little. Instead, the company has found a way to generate positive, word-of-mouth advertising, through its strong referral service.

MeUndies’ business model sits in line with many other monthly subscription services. Every month, the company sends out underwear to subscribing customers. When signing up, a customer provides general information (such as the kind of underwear they like, size and so on), and MeUndies provides new underwear, every month. The styles are often based on events taking place during the month (such as Halloween or Valentine’s Day).

The referral program works in a very similar way to The Clymb, in that it provides shoppers with the ability to save money every time they bring a new shopper/subscriber in. When someone is referred to MeUndies, they receive 20% off their order. For the individual who refers the new customer, they receive $20. The ability to pull in $20 in cash makes bringing subscribers in a valuable referral option, which is why the business does so well with its referral marketing.

Beyond the desirable referral prize, the referral system is easy. Removing any shred of confusion helps make it easier for consumers to share and refer the product. That is why MeUndies uses an extremely simple landing page for this exact process. The page clearly indicates “Give 20%, Get $20.” It then has a simple call to action of “Invite” and from there, a customer creates a unique referral code new customers can type in. The company even goes as far as creating a message block for the customer interested in referring friends. The pre-generated message allows it to be sent via email and even Facebook Messenger, making it possible to directly refer hundreds of new customers, all with a simple click.

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5. Tesla

Referral marketing doesn’t just work for smaller companies where purchases cost a few dollars at a time. When executed properly, referral programs work for any industry and any company, which is why Tesla takes full advantage of this marketing tactic.

Realistically, Tesla does very little marketing on its own. The company does not use a dealership system, where the vehicles are sold to dealerships, which then sell the vehicles to consumers. The products are instead bought directly from Tesla. Some states have laws prohibiting this automotive sales process (the state of Michigan, home of General Motors, Ford, and Chrysler, for example, requires a new vehicle to be sold through a dealership). Despite some current shortcomings with the direct-sales process, the company doesn’t market much due to its continued exposure to the national media and excellent word of mouth reviews. On top of this, the referral program stands out in the industry.

The Tesla referral program has evolved over the years, but the current setup is designed to entice Tesla enthusiasts. Clients who refer new customers to purchasing a vehicle receive everything from an upgraded vehicle battery and invites to private parties and access to special edition makes not offered to the general public. Tesla even uses the gamification marketing model to boost potential referrals. Currently, the company offers customers who refer 20 new customers a brand new Model S or Model X (this has not yet occurred). By providing desired products, the Tesla referral program remains one of the top referral marketing setups around.

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6. Uber

The battle between drive-share services Uber and Lyft continues to rage on, with Lyft growing thanks in part to a series of public relations nightmares on Uber’s account. To help bring previous clients back and generate new customers, Uber offers a referral program in the form of a dual reward system. This reward is good for both the current customers and the newly referred user.

Within the Uber application, as soon as a customer signs up and activates their account they receive a referral code. As the application runs through a user’s phone, the code is easily shared with other users by attaching the unique code and sending it to the desired user. When the new user takes the code and inputs it into the application upon creating their own account, both the current and new user receives their new ride in the house. This keeps in line with providing incentives within the service itself. Customers of a particular product may not want a gift card or electronic device from another service, but they have clearly indicated they like the product or service, so receiving rewards within the product helps improve referral rates. These win-win scenarios help empower the customer and give them the ability to earn valuable rewards without needing to put in much work to do so.

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7. Dropbox

The need for cloud storage increases almost on a monthly basis. With phone cameras taking higher quality, larger images and videos and professionals needing access to their work data wherever they travel, both individuals and businesses alike require additional cloud storage. Dropbox is a cloud-based storage and transfer service that, unlike most other service provides within the industry, also provides a referral program in order to bring in additional customers.

Most consumers have access to basic cloud services. Whether through Google, Microsoft or Apple, the purchase of electronic devices and the subsequent creation of connected accounts come with some cloud storage, but eventually these service providers begin to charge for increased cloud storage. As most services offer similar storage options, consumers are more likely to remain with the providers they already use. In order to increase its client base and take customers away from these other providers, Dropbox saw a way to provide customers with what they want without charging them for it.

When Dropbox first rolled out its referral program, it saw a boost in membership and new accounts by almost 60 percent in the first year (2010). Referral programs always work best when there is an incentive not only for the referring customer but also for the potentially referred new client.

With the Dropbox referral program, users who bring in new customers receive an additional 500 MB of storage. The new customer also receives the additional 500 MB of storage.