Are You StartUp? You Must Have Referral Program

You consult your best friend for advice when you want to purchase a car. You ask your mother for recommendations when you want to buy baby products. You decide to invest in real estate and ask your family broker to evaluate the neighborhood. Overall, they will give you a recommendation. Additionally, it will frequently be a product or service. All of this is referral marketing, also known as conventional “word-of-mouth” marketing. It occurs when someone recommends a brand to an acquaintance because they had a better experience using the brand’s goods or services.

Referral marketing is everywhere, and it is considered one of the fastest ways to grow a brand. Apparently, it is one thing you simply can’t overlook while creating your startup’s referral strategy.

A Startup Referral Program Is Required in 2019

Read the stunning passage from Seth Godin that follows first.

“Yes, we know that referrals are the very best way to grow your business. And we know that asking for a referral is both scary but apparently the most effective technique.”

Let’s look at some statistics:

  • Friends’ recommendations are a major factor in 74% of consumers’ purchasing decisions.
  • Consumers trust referrals from people they know 92% of the time.
  • When a friend recommends something, people are 4 times more likely to buy it.
  • The social media posts of their friends have a greater impact on 81% of American online shoppers’ purchases than
  • 78% of people who use social media to follow brands are influenced by their posts.
  • If their friends don’t like a product, according to 28% of millennials, they won’t try it.
  • Referred customers experience an 18% lower rate of churn than those acquired in other ways.

Numbers are reliable. Which will you favor? A friend tweeting about a product or a display advertisement of a product on a website? Making an impact in a world of intrusive advertisements is impossible, especially given that the majority of users are accustomed to ignoring them.

Referral programs can help with that.

I use actual examples whenever startups consult with me. For instance, I look for three basic qualities in a pair of shoes: comfort, elegance, and style. I love recommending a company to my friends who are looking to buy shoes if it checks all three of these boxes.

Nearly always, the referral goes smoothly, and a chain of referrals begins to link one to the next.

It was well said by Brian Solis:

“Now’s the time for an investment in something more than price, performance, or value. The future of business is about creating experiences, products, programs, and processes that evoke splendor and rekindle meaningful and sincere interaction and growth. At the center of this evolution—or (r)evolution—is the experience. And, the experience is everything now.”

I think marketing gives people a chance to share their experiences.
I always try to convince startups that a thorough referral marketing program is the best way to grow the business exponentially because shared experiences are the future of commerce. I consider “referrals” to be one of the best marketing strategies for reaching a target audience that is most likely to be interested in a given good or service.

Here are some justifications for implementing a referral program in your company.

Early Traction

Referral programs for new businesses give your company a new growth path. This doubles revenue and gives your startup the early traction it desperately needs to continue growing. The best strategy for launching a referral program is to find out what your rivals are already doing and copy them.

Lower Cost Per Lead

Referral marketing has a lower cost per lead, say 54% of marketers, according to Social Media Today. Referral marketing charges a commission only after the lead has actually converted, unlike paid channels that charge a dozen dollars for a single lead. This boosts ROI and broadens the audience for your startup.

Higher Lead Quality

Referral marketing also produces higher-quality leads than any other form of marketing, which makes it superior. Nearly 78% of B2B marketers share this opinion.

Startup Referral Program Examples

The example that follows can serve as a powerful motivator. These tales may encourage us to take chances and determine for ourselves whether we are right or wrong. I’ve chosen the top candidates in the startup sector. These effectively illustrate how referral marketing can support your business’s short- and long-term branding goals.


One of the best examples of clever referral marketing campaigns is Dropbox.

For each successful referral, they provided their users with 500 megabytes (MB) of free space. Who wouldn’t want a little extra cloud space? The company saw a 60% increase in sign-ups as a result of this strategy, and the trend persisted for months. Until now, a sizable portion of sign-ups—roughly 35%—comes from referrals.

Isn’t that a significant amount? It is, indeed. This demonstrates how referral traffic aids in creating a solid base for your startup’s recognition. In the case of Dropbox, a strong start has led to a position where they are now considered to be the definition of cloud storage.


I’d like to use Uber as another significant illustration of referral marketing for startups in this passage. Uber was the first ride-sharing app to enter the market. However, since growth is a challenge for any startup, Uber was also having issues. The idea of a free ride was introduced at that point. It started awarding $5 in credit for each referral a user brought.

The concept was amazing. Uber experienced rapid growth as a result within days. Later, in order to expand their businesses, Lyft and Careem also adopted the same referral marketing strategy.

The model, when carefully examined, is not a novel one. In actuality, referral marketing has already helped Dropbox, Facebook, and other businesses grow the majority of their customer bases. Uber is the first IoT startup to experience significant growth, which distinguishes its business model. Uber dispelled the earlier doubts of experts who questioned whether internet models could function in a real-world setting.


Evernote is another startup that expanded through referral marketing. The note-taking app Evernote was initially developed for Apple smartphones. But because of its straightforward UI, it was subsequently released on Android as well. For notes, Evernote provides a full range of features including images, videos, lists, buttons, and much more. But in order to spread awareness of the software, it had to market all these features. As a result, the referral marketing program was launched.

You receive five points for each person you refer to the Evernote app. These points can be redeemed for a variety of rewards, including premium Evernote services.

The Best Startup Referral Programs Teach Us Important Lessons

Here are some salient lessons learned from the most successful Startup Referral program cases.

  1. Before entering a market, conduct thorough market research. Make a thorough buyer persona. Know their preferred online escapades. Know what users enjoy or find annoying. Learn what kinds of content they enjoy. You can evaluate the performance of your referral marketing campaign using this process.
  2. Begin assembling email lists immediately. Avoid waiting until the final launch! Showing people your product and the kind of change it can make in their lives will encourage participation.
  3. For the first conversion, make use of paid marketing channels. You can find the right customers who are genuinely interested in using your product or service by using Google Adwords, Facebook Ads, media buying on pertinent blogs, etc. However, you must approach it shrewdly. Startups frequently lack funding. Use highly specialized metrics and lists when creating advertising campaigns.
  4. The second conversion follows the first. Give your clients a benefit, a discount, or an incentive to thank them for recommending you. People adore discounts and extras with value.
  5. Use social media to interact with people and your early adopters. Allow them to connect with you on all social media platforms. Identify them in the open on all social media. Recognition and appreciation are highly valued. They will be inspired to spread your message among their networks as a result.
  6. Utilize content marketing to find solutions to your buyer persona’s problems. At each appropriate step that you deem necessary, use CTAs to encourage conversions. Give them a reward for referring a friend.
  7. IoT startups can also benefit from internet-based referral marketing strategies because they closely adhere to the digital model and foster connections through digital personas.


Not only must startups grow, but they must also grow quickly. As a result, they require a strong referral marketing strategy to manage the CAC.

What advantages do startups stand to gain from a referral marketing program?

Whether or not the friend has heard of the business, if a happy customer recommends it to a close friend, the friend’s trust is immediately given to the recommendation.

Customers who have been referred tend to be less price sensitive. Because they have already been pre-sold on your client’s credibility and trust, the majority of referrals can be sold at full price.

You can separate out your true customers using referral marketing. It offers you high-quality information that you can use to improve your product.

Referrals can help you spend less on sales-related activities.

Building a relationship of trust with your customers through referral marketing. As a result, there is a snowball effect whereby positive influence increases with each recommendation.

Finally, it would be wonderful if you, my dear friends, would share your best advice in the comments section below and use this post as inspiration for startups who are thinking about the referral route. Everyone is welcome to take part in this discussion!

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