How Some Companies Achieved Virality

In one of the previous posts, we briefly touched upon the topic of what a Growth Hacker is and what the requirements are for a person working as a Growth Hacker. Let’s now look at a few examples of where Growth Hacking has helped companies scale exponentially.

Paypal’s friend referral: As a new payment mechanism primarily fighting with large banks, PayPal’s big challenge initially was to get new customers to adopt their product and get them started on using it. Traditional advertising was too expensive and also there was no assurance that people who they reach out to, would use them. Initially, the PayPal team thought of doing business development deals with big banks but that didn’t work out and they understood that they needed a direct to customer approach that would provide a organic, viral growth.

So they started a referral campaign wherein any customer of theirs would get $10 for each friend they refer that joins up and these new customers, upon joining get a $10 amount too. Although this cost PayPal a $20 customer acquisition cost, they were able to witness a 7 to 10% daily growth and acquired 100 million users in a very short span of time. Not only did they acquire these new users, but because the new users already had $10 in their PayPal account, they would end up using PayPal to use the amount.

AirBnB’s Craiglist Hack: This was around the time when AirBnB had just started up and needed to gain an initial traction. Now since AirBnB is essentially a double-sided marketplace, they needed to ensure that they have sufficient listings to make it attractive to customers while at the same time, they need customers staying at these houses to make it attractive for home owners to list them. In order to gain an initial traction, AirBnB latched onto Craiglist’s popularity and allowed it’s users to post their AirBnB listing to Craiglist. The Growth Hackers at AirBnB were able to figure out a hack through which their property owners were able to post their listings on a platform with 10s of millions of users and immediately they were able to provide the initial customers to these property owners. From here on, the word spread and AirBnB got more listings and more customers. 

Dropbox Referral Program: Dropbox also had a similar growth hack to Paypal where they used a referral campaign to get more users to Dropbox. The scheme was extremely simple and yet extremely attractive for its users. When one person who has Dropbox refers another, they both get a 500MB space, provided the person getting refered signs up to Dropbox. Like PayPal, this scheme offered a real incentive to people referring others and since you would get referred by a friend, it instills more trust in the product than an advertisement ever could. Furthermore, the sender has incentive to get the referree to sign up to avail the extra space. The scheme is also brilliant since you would probably be using Dropbox to share content with these very friends. This total costs Dropbox 1GB of space – far less than a Google AdWords buy. The Dropbox referral scheme has been extremely successful with number of users going up from 100,000 in Sept 2008 to over 4,000,000 by Jan 2010. 

Hotmail: One of the earliest companies to use growth hacks and get exponential growth through virality was Hotmail. Hotmail grew its subscriber base from zero to 12 million users in 18 months, more rapidly than any company in any media in the history of the world. And it did so with an almost zero advertising budget of $50,000. What's more amazing was that Hotmail was able to do this while competitors like Juno spent $20 million on traditional marketing in the same time period with less effect.

The marketing "plan" was pretty simple. Whenever you send someone a message, the words in the signature of each email contained “Get your free email at Hotmail”. The word Hotmail was hyperlinked to re-direct anyone clicking to Hotmail’s home page where Hotmail explained what they were and got users to sign up. Hotmail also became the largest email provider in several countries, like Sweden and India, where it had done no marketing whatsoever.

So as we can observe from the above examples, you do not need to necessarily overspend in marketing to get more customers than your competition. The key is to understand customer needs and develop a good value proposition for them while also ensuring that the product you deliver solves their need best in the market. The companies listed above understood this pretty early and hence were able to become market leaders.

Refer a friend!

Word-of-mouth referrals are the ultimate endorsement for a company, its products, services and staff. Referrals are therefore considered the gold standard of customer acquisition in many fields. But what can be done when the excellence of your salesmanship isn’t equating into a steady stream of referrals? When you’re giving it 110% and still not feeling the referral love?

When referrals aren’t being generously doled out by past or current customers, a smart referral program can be just the right form of encouragement they need to extol you and your company’s virtues. According to the SMstudy® Guide, Corporate Sales, referrals may happen on their own, but companies can also influence referrals through appropriate online marketing strategies.

The book states, “The key to a good referral program is not only to drive customer acquisition in the short term, but also to engage new and loyal customers, encouraging them to act on their brand advocacy.”

Incorporating a smart creative program can definitely be a win-win-win situation, benefiting the existing customer, potential customer and sales team.

The pluses of incorporating a referral program are noteworthy:

 A reduction in marketing costs. Satisfied customers are now incentivized to sing your praises and steer potential customers in your direction.

An improvement in customer satisfaction. Existing customers can engage and benefit from a referral program.

An all-around better Return on Investment (ROI).

After deciding to embark on a referral program, it’s time to put on the proverbial “thinking cap” and figure out what can be offered as a worthy token of a customer’s loyalty and how it can best be presented to customers. Every company is different but many find that offering what is within their wheelhouse enhances brand recognition and builds an ongoing conversation with customers.  

For example, the cloud-based file hosting service, Dropbox, ran a very successful referral campaign that offered 500MB of free storage to both the referrer and the referee. Sited by ReferralCandy as their #1 Best Practice Referral example, Dropbox experienced a 60% increase in sign-ups, beginning in September 2008 with 100,000 users to 4,000,000 in January of 2010. In addition, Dropbox noted that 35% of its daily enrollment was via their referral program.

In their article, “How Referrals Built a $10 Billion Dropbox Empire,” ReferralCandy places Dropbox’s program at the pinnacle of all referral programs for a few distinct reasons. Besides the general benefits noted above, smaller details helped set Dropbox apart, including:

A built-in referral process. Step 6 in the Dropbox sign up process… “Invite some friends to join Dropbox.”

Offer a gift, don’t ask a favor. Dropbox offers more free storage space to new members instead of asking them to refer a friend.

Make the referral process painless. Offer convenience with a choice in referral methods. Simple social media and email options are optimal.

Let the customer behind the curtain. Dropbox allows users to check on referrals via their dashboard.

Keep the train running. A confirmation email indicating when a referral has responded includes the option to refer another person. So, instead of being a one-time only affair, Dropbox has created a referral loop and as long as it maintains its appeal, it will continue to draw in referrals.

We’re always hoping well-earned referrals will be forever flowing in, but when they’re not, referral programs such as the one used by Dropbox have the potential to fire up our customers.

And as a final thought, consider this…ReferralCandy suggests that if advertising had been their only means of acquiring customers, Dropbox would have failed.

“Not only did referrals allow Dropbox to escape death, it allowed them to avoid all traditional ad spend. That in turn would have allowed them to focus their resources on making a better product- further cementing their competitive advantage,” they said.

For more articles on sales and marketing, visit smstudy.com.

Image courtesy of JD Hancock, Flickr. https://www.flickr.com/photos/jdhancock/6023780563/

Sources:

SMstudy® Guide, Corporate Sales, pg. 172-173.

“8 Proven Steps to Double Your Referrals from Other Attorneys,” Stephen Fairley http://www.attorneyatlawmagazine.com/phoenix/8-proven-steps-double-referrals-attorneys/

“Referral Program Examples – An Epic List Of 47 Referral Programs,” ReferralCandy, http://www.referralcandy.com/blog/47-referral-programs/#best-practices

“How Referrals Built The $10 Billion Dropbox Empire,” ReferralCandy, http://www.referralcandy.com/blog/referrals-built-dropbox-empire/

Refer a friend!

Word-of-mouth referrals are the ultimate endorsement for a company, its products, services and staff. Referrals are therefore considered the gold standard of customer acquisition in many fields. But what can be done when the excellence of your salesmanship isn’t equating into a steady stream of referrals? When you’re giving it 110% and still not feeling the referral love?

When referrals aren’t being generously doled out by past or current customers, a smart referral program can be just the right form of encouragement they need to extol you and your company’s virtues. According to the SMstudy® Guide, Corporate Sales, referrals may happen on their own, but companies can also influence referrals through appropriate online marketing strategies.

The book states, “The key to a good referral program is not only to drive customer acquisition in the short term, but also to engage new and loyal customers, encouraging them to act on their brand advocacy.”

Incorporating a smart creative program can definitely be a win-win-win situation, benefiting the existing customer, potential customer and sales team.

The pluses of incorporating a referral program are noteworthy:

 A reduction in marketing costs. Satisfied customers are now incentivized to sing your praises and steer potential customers in your direction.

An improvement in customer satisfaction. Existing customers can engage and benefit from a referral program.

An all-around better Return on Investment (ROI).

After deciding to embark on a referral program, it’s time to put on the proverbial “thinking cap” and figure out what can be offered as a worthy token of a customer’s loyalty and how it can best be presented to customers. Every company is different but many find that offering what is within their wheelhouse enhances brand recognition and builds an ongoing conversation with customers.  

For example, the cloud-based file hosting service, Dropbox, ran a very successful referral campaign that offered 500MB of free storage to both the referrer and the referee. Sited by ReferralCandy as their #1 Best Practice Referral example, Dropbox experienced a 60% increase in sign-ups, beginning in September 2008 with 100,000 users to 4,000,000 in January of 2010. In addition, Dropbox noted that 35% of its daily enrollment was via their referral program.

In their article, “How Referrals Built a $10 Billion Dropbox Empire,” ReferralCandy places Dropbox’s program at the pinnacle of all referral programs for a few distinct reasons. Besides the general benefits noted above, smaller details helped set Dropbox apart, including:

A built-in referral process. Step 6 in the Dropbox sign up process… “Invite some friends to join Dropbox.”

Offer a gift, don’t ask a favor. Dropbox offers more free storage space to new members instead of asking them to refer a friend.

Make the referral process painless. Offer convenience with a choice in referral methods. Simple social media and email options are optimal.

Let the customer behind the curtain. Dropbox allows users to check on referrals via their dashboard.

Keep the train running. A confirmation email indicating when a referral has responded includes the option to refer another person. So, instead of being a one-time only affair, Dropbox has created a referral loop and as long as it maintains its appeal, it will continue to draw in referrals.

We’re always hoping well-earned referrals will be forever flowing in, but when they’re not, referral programs such as the one used by Dropbox have the potential to fire up our customers.

And as a final thought, consider this…ReferralCandy suggests that if advertising had been their only means of acquiring customers, Dropbox would have failed.

“Not only did referrals allow Dropbox to escape death, it allowed them to avoid all traditional ad spend. That in turn would have allowed them to focus their resources on making a better product- further cementing their competitive advantage,” they said.

For more articles on sales and marketing, visit smstudy.com.

Image courtesy of JD Hancock, Flickr. https://www.flickr.com/photos/jdhancock/6023780563/

Sources:

SMstudy® Guide, Corporate Sales, pg. 172-173.

“8 Proven Steps to Double Your Referrals from Other Attorneys,” Stephen Fairley http://www.attorneyatlawmagazine.com/phoenix/8-proven-steps-double-referrals-attorneys/

“Referral Program Examples – An Epic List Of 47 Referral Programs,” ReferralCandy, http://www.referralcandy.com/blog/47-referral-programs/#best-practices

“How Referrals Built The $10 Billion Dropbox Empire,” ReferralCandy, http://www.referralcandy.com/blog/referrals-built-dropbox-empire/