A couple episodes ago, Lauren Lee told us all about how we can use affiliate marketing to increase our bottom line. So how is referral marketing and word-of-mouth marketing different from that? And how can CloudSponge’s Refer-a-Friend program double word-of-mouth sales?
Jay Gibb is the Founder and CEO of CloudSponge, the most effective way to get people to share e-commerce products with people they know. Since 2010, CloudSponge products have helped thousands of companies (including Stitch Fix, Reebok, JustFab, and American Giant to name a few) to make more sales and reduce customer acquisition costs by optimizing their referral interfaces with contact pickers and email personalization.
As a technical leader with entrepreneurial drive and years of experience as a software developer, he has both the technical knowledge to help ecommerce store owners leverage plugins and SaaS tools for growth and the soft skills needed to communicate this knowledge to your listeners in a way that is both engaging and easy to understand.
This episode of Deal Closers is hosted by Izach Porter, brought to you by WebsiteClosers.com, and is produced by Earfluence.
When you think about marketing strategies, nothing beats the strength of a word-of-mouth approach. It gives potential customers an authentic look into the product or service through a person with first-hand experience. Referral marketing, in a way, is an evolution from this fundamental strategy.
It draws its strength from people’s natural connections to grow companies’ customer bases. In social media like Facebook, LinkedIn, or Twitter, the value of the network increases as more people join. Each referral enhances the network’s overall utility by creating more connections, which in turn boosts the platform’s value. The growth of the network is both the reward and the key driver of success.
CloudSponge, for instance, supports businesses like eCommerce stores or social media by optimizing their ability to amplify word-of-mouth marketing. They enable businesses to enhance their referral systems without being directly involved in the process of sending invitations or referrals. Essentially, they improve the effectiveness of an existing ecommerce referral program, helping businesses grow more efficiently through referrals.
Have you been searching for “referral program ecommerce” to check its advantages? Let’s take a closer look at what it can do for your business.
A referral program for ecommerce enhances a business by making it easier for users to share products or services with others through the company’s existing customer base to drive growth. Instead of relying on customers to manually input email addresses to send coupons, share information, or invite others, businesses streamline the process through integrated virality mechanisms.
These referral marketing programs encourage users to effortlessly refer friends or colleagues, increasing reach and engagement while boosting conversions without additional heavy marketing efforts. Simplifying how referral programs for websites are made will give businesses a chance to create a more seamless and rewarding experience for their customers.
The first integral element of an excellent referral program is the ease of use, which CloudSponge provides. It amplifies a business’s word-of-mouth marketing by automating the process of filling out a web form. The tool optimizes the online business’s ability to acquire customers by integrating a system that pulls information from a user’s address book. This way, people no longer have to type each email address of friends and family they want to refer. It also eliminates the need to switch between tabs just to copy an email and put commas to separate each entry.
Every referred customer might be concerned about security since the tool will be pulling data from address books. The beautiful thing about CloudSponge is that it’s only a data processor according to GDPR standards. It doesn’t save any of the user’s information. It only tracks when an action is executed.
CloudSponge focuses on enhancing an existing referral system rather than creating one from scratch. CloudSponge offers a tool called the “Contact Picker,” which integrates with popular referral software platforms like Friendbuy, used by companies such as Dollar Shave Club. Instead of managing referral codes or fraud prevention, CloudSponge amplifies the effectiveness of referral programs by allowing users to easily access their contacts.
The process works by requesting the CloudSponge Contact Picker be activated through a referral program platform, such as Friendbuy. Once enabled, users can quickly import contacts from their email or media, simplifying and boosting the website referral programs.
CloudSponge integrates with various platforms, including Friendbuy, UpViral, Perkville, and Gather, and their Contact Picker helps businesses potentially achieve up to a 20x performance increase by making referrals more convenient and efficient for users.
In essence, CloudSponge technology helps businesses optimize their existing ecommerce referral programs by making it easy for users to share referral links.
Gibb points out that there are two necessary elements to make a customer referrals system work in ecommerce stores:
In other words, ecommerce businesses need to turn their customers into their fans who would gladly refer their friends because of the referral rewards they’ll be given.
But despite some ecommerce stores delivering this benefit, Gibb estimates that only one out of ten people submit the form with their friends’ email addresses. Why does this happen? Because the ecommerce company didn’t make it easy for these people to input their addresses.
This is where CloudSponge comes in. People can easily access their address book and input the entries without typing or separating each with commas. Making the process easy is the main ingredient of successful referral programs.
CloudSponge doesn’t save the emails pulled from the customer referral process. It is entirely up to the business to secure the data the referrers provide.
One of the common issues faced by businesses is running into operational problems in their form. Companies need to regularly test their campaigns, ensuring they’re free of errors and that security breaches won’t happen. Moreover, customers who encounter bugs should be assisted every step of the way.
Airbnb has become a well-known brand, with most people either using the service or at least being familiar with it. What started as a small idea, with the founders renting out an air mattress in their living room, has since grown into one of the most notable startup success stories.
Although the company paused its primary referral program in April 2021, it continues to operate in countries such as China, Germany, Japan, Italy, and Mexico. Before it was discontinued, the referral system offered referrers $18 for qualifying stays and $10 for experiences, while new users could receive up to $46 in credits.
The referral program had a significant impact, sometimes boosting bookings by more than 25%. Its final version was even more effective, resulting in over 300% growth in referrals. Two major factors contributed to its success: making the sharing and booking process simple and appealing to users’ desire to help others. Through A/B testing, Airbnb discovered that presenting the reward as a gift for a friend was more effective than promoting it as a personal gain.
Harry’s isn’t just another shaving company. With a billion-dollar subscription service and a barbershop in Manhattan, the brand has made a name for itself, and a big part of that can be traced back to its successful referrals.
To generate excitement around their launch, Harry’s created a one-week pre-launch referral campaign aimed at collecting as many email addresses as possible from potential customers. This referral initiative was integrated with a broader digital marketing strategy and offered participants a series of rewards based on how many friends they referred through email, Facebook, or Twitter.
The reward system was straightforward: five referrals earned free shaving cream, ten referrals got a free razor, 25 referrals led to a premium razor, and 50 referrals secured free shaving products for an entire year. On the other hand, new customers were offered a 10% discount on their first purchase.
By the end of the week, the results were remarkable, with Harry’s collecting 100,000 leads in just seven days. This referral strategy played a key role in their rise to a billion-dollar valuation, establishing them as a leading name in the industry. However, as time passed, Harry’s simplified their program, now offering a $5 credit for both referrer and referee, a shift from the larger rewards of their early campaigns.
What worked in their favor was the appeal of non-purchase-based rewards. Many people were willing to share the brand with friends in exchange for free products. As Sujan Patel pointed out, offering physical product rewards can create a stronger connection between the customer and the brand. While their referral program is less aggressive now, it clearly laid a solid foundation for their growth and success.
Two leading trends in referral marketing involve AI, which include:
AI is transforming how businesses engage with customers by tailoring referral strategies based on individual behaviors and preferences. This personalized approach helps customers feel recognized and valued, making them more likely to participate in referral programs.
Additionally, AI enables companies to group customers more effectively by analyzing factors like purchasing habits and online activity. This segmentation allows businesses to offer customized referral incentives that resonate with different customer profiles, boosting the overall success of their marketing efforts.
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