Dropbox ran an exceptionally well thought and executed referral campaign. Drew Houston, the Dropbox founder and CEO gave a talk about customer development tactics they tried and what worked for them. It’s an enlightening talk and I highly recommend watching it, but here are some selected facts:
- Despite hiring top talent to do it, they couldn’t manage to get a positive ROI from their AdWords campaign
- They created a referral program with 2-sided incentive: anyone who invites a friend would get extra storage space and so would their friend
- It permanently increased signups by 60%
- 35% of daily signups come from the referral program
- Their userbase grew from 100K to 4M in 15 month with zero ad spendings
The most important lesson to be learned here is using 2-sided incentives. They increase both the people’s willingness to invite friends (since by inviting they are giving their friend some clear articulated value) and the clickthrough rates on the messages.
These guys managed to get 10K signups in two days without even telling anyone what their service is about. How? They promised an earlier invite in exchange for inviting 3 other people (or even earlier access if you invite more). Amazingly efficient and yet outrageously simple.
ThreeWords.me doesn’t have a referral program in the classical definition of the term. Instead, sharing with friends is the very way you get value from it. But that’s exactly the point I’m trying to make: the closer you get to blending sharing / invitation / recommendation with the core user experience with your service, the better it’s going to work.