Fine-Tuning Your Referral Program
Juanfe Rios is a Senior Product Manager at Greenlight.
Juanfe Rios emphasizes teamwork and collaboration in building great products and customer experiences. At the summit, Juanfe will share how Greenlight leverages Extole to maintain effective, evolving referral strategies, discussing the importance of calibrating incentives, timing customer referrals, and tracking key KPIs.
See the key chapters from Juanfe's talk, and dive in where you'd like.
What are best practices for any referral program?
How do Greenlight Leverage Extole?
Why Referral Programs are Table Stakes
Transcript
Referral programs are table stakes for any business like it’ll depend on what the business goal is but you’re trying to get your network to share with others and it will also depend on the context for each of these businesses, like every business will need to find what works for them? I can give some examples in terms of Greenlight. We are a subscription business, so users need to pay 5, 10 or 15, depending on the plan that they sign up for. So there is a bit of that barrier or that friction for our user to join our product. It’s not a free product, therefore our referrals program does a very good job trying to get people to join. When a friend that has tried the product is telling you about it, then you will want to try to see what’s going on and like if it will help get over the fact that you’re buying into a subscription the fact that your friends are telling you about it. So it’s very powerful again, for us as a subscription product but you can also see it in products that are premium, like you can see it with Uber, generally Uber, when they started, I think this was one of their main drivers, trying to get people to take a ride. You would get a ride. You would give a ride and then get a ride. In return, in terms of your reward. The context for Uber, when they were starting, it was great. It was a fast adoption. They were trying to penetrate a market very quickly. So giving free rides to everyone and just having them try the product was something that worked for them. So I think it’s stable stakes for every business. You just need to find what works for you.
How Brand Loyalty Impacts the Value of Referral Leads
Transcript
The reason I brought it up was because actually, before coming into this conversation, I was doing some more reading about how other referral programs were. How other companies have had success with referral programs and then also looking back into the experience that I had at Uber, recalling how that went for us at that point and I ran into something from someone that I used to work with. Where we he was mentioning that the quality of the leads that we have from our referral program at Uber weren’t it wasn’t the channel with the highest quality leads. So when I go back and I go to my Greenlight experience, I do see that this channel brings very high quality leads. So I think again, it’s very contextual at Uber, maybe loyalty from you’re using Uber, you’re using Lyft, you’re using any other right sharing up, like you’ll get the rights you might still try something else. It’s very expensive with one app or the other, you can switch very easily when you’re buying into a subscription, like you’re making a bigger commitment to trying out this product, to making it work for you. So once you’ve done that and again, if a friend is telling you about it, then you could potentially be more likely to be more engaged with the product. So we get very high quality lead from our referrals program but I can see how in other businesses that might not necessarily be the case that said it’s not necessarily wrong, because again, when Uber was was it still growing and still in their in their early years, the goal was to really penetrate markets as fast as they could. So leveraging this made sense for them, even if it came at the cost of a lower quality lead for them in terms of users.
Defining the Right Moment to Make a Customer Ask
Transcript
So, I think we can even also go back to the question on like these programs being table six for every business, you need to find context matters. You need to find what works for you. So how does your competition look? Do you have any barriers of entry to your business. Where are you in your life cycle? Not like you as a business but also your users in terms of getting to know your product. So I think all those things will play a role in how successful your program could be. Again, there was a time where at some point, Uber penetrated so much on the market, so much that, like start investment in that program probably started to wear off. Whereas, for every business where they’re still growing, you’re still there’s a lot of opportunity, continuing to tap into this market, controlling how much you’re spending on it, could really be a very cost efficient channel for you to drive acquisition, so it makes sense for you to have it and you just need to, kind of like, start working and understanding what makes sense for you there and then in terms of the life cycle. I think that’s a little bit like, if you’re in a moment in your life cycle where you’re really very penetrated across the market, like, maybe you can invest less on these programs but getting there probably takes a very long time. So again, they will always be very helpful for getting you there. We see companies like American Express, Capital One, they still have referral programs trying to get people to get someone to open a credit card. So even large companies like these, they still have these programs embedded into their experiences, I guess, from a customer perspective, within their life cycle, within their journey, what are the right moments where you want to target them, to prompt them to refer a friend? I think in general, across FinTech, or across some of the businesses that have referrals, in general, I’d say you’re always hearing or tapping into, like, their happy moments and trying to see, what is their happy past? What are they doing? And like, is it a good opportunity to prompt a referral? Now, you’ll probably be competing with a number of different things that that company wants to share with the user in that moment where they’re having that happy moment, but like trying to figure out what’s the right balance, what to show it’s just things that you’ll need to test your way through to to, I guess, develop your referral program.
Why Referral Programs Need to be Ever - Evolving
Transcript
Referral programs, I think they’re not static. Like, they’ll evolve. You’re going to be playing, if you’re the product manager, in hand managing a referral program or some acquisition channel, like, you’ll be iterating on, like, what’s the right incentive, what’s the right moment to share to prompt people to refer. Who are the right users that you want to get referring? There could be a case that like some users within their lifecycle bring higher quality leads than others, like you’ll need to understand what data you have available to try to tailor your program to be most efficient. So again, that’s where you want to start understanding what works for you and what’s best for your business. At Greenlight, like we’ve tested with different incentives, we’ve tested with different incentive structures and again, different rewards. And again, not just us. I think it’s something that you see commonly across the industry. When you as a customer, I get prompted to refer friends from different businesses and like, I’ve seen how they change what they are because I’m because I work on this. I’m noticing, like, what they are sending me as an incentive or as some referral structure changes, because all the time they’re trying to optimize, right? So, yes, they’re not static. You are. You have to experiment your way to understand what works for you and you have to do it very carefully, also, because, like, depending on what incentives you are using, you don’t want to create a wrong behavior for users and that’s always something that you should be careful, not just with a referral program, but in general, when you’re working with incentives.
How to Calibrate Incentives Effectively
Transcript
I think you need to strike the right balance in terms of your incentives that you’re using people. If you have money to burn in your offering people a whole bunch of money to take certain actions that are not really meaningful for your business. Then, like, at some point that people are going to come cash then leave and that doesn’t help anyone. I mean, great for the person that was able to cash that money but that’s not what you want. Like you really want to try to bring the right people to your business that will get more people and again, start creating more viral ID and awareness about your business. So if you don’t calibrate the incentives that you’re using correctly, you might just have people that are going to churn very quickly. They’re not as engaged and even the quality of leads that they’ll start bringing to the platform might not be the best either. Again, I’m not sure there’s too much more to say there. It’s more that like is you don’t calibrate your incentives correctly, not just for referrals but just because you’re working with incentives, you have a risk of just bringing the wrong users to your platform, experimenting, being mindful like again, I think also, actually, on that point, 10 years ago, maybe you a lot of businesses, especially in tech and technology, had a lot more money to spend and burn just to drive acquisition. That’s not the case right now. Right now you really, really need to focus on low cost acquisition.
Customer-Led Growth = Low-Cost Growth
Transcript
So where I was going with that is 10 years ago, again, there was more cash and for businesses to really just spend and drive acquisition. And I would say that investors were okay giving these companies time to just focus on growth. Right now that’s not the case. Right now you really need to make sure that you’re growing and showing that there’s then you’re reaching your breakeven, that you’re being profitable. So lower cost growth is probably what businesses are trying to do and trying to be every time more efficient with how much they’re spending. So again, the referrals channel, like any other acquisition channel, like you can dial up or dial down how much money you’re spending. Now, if you’re spending too much money as an incentive to get people into your platform, like that might bring the wrong type of users to your platform. So ultimately, it’s not going to get you to be more profitable in the end, because you want these users to be engaged with your product in this era where we have where we need to be more attentive on how much we’re spending and how we’re spending the money that we have to drive acquisition. Again, referral programs are a great alternative to continue developing and baking into your strategy but always being very careful on like, how? How do you calibrate your incentive to make sure that it works for your business?
What are the Referral KPIs that Really Matter
Transcript
So, I’m not sure how specific I can be about some of these answers in general but I’d still that if you’re starting your referral program. The first things that you’ll start looking into from a KPI standpoint, are your customers sharing or if they’re sharing that link and then just you can start building your funnel from there people that are sharing. Then are people clicking on this link, those people that are clicking? How many of them are signing up? And that’s your first very simple funnel for referrals and all of this, actually, like, is data that we get from Extole as well. So, like, we can very easily, with Extole tools, build this funnel and have visibility and monitor how it’s working. And then from there, depending on how much you’re spending, you’ll be able to have a your cost of acquisition for these users, later, you can start understanding how, down the line in how they’re retaining or but I think like retention, some of these things are things that you need to keep an eye on. They should be on your radar for, like any acquisition channel but the first thing that you would probably want to see is, Are people sharing? Are they clicking? Are those people that they’re sharing with? Are they clicking? And then how much, how many of them are signing up? And how much is the cost of the signups? Everything else like you’ll start, I’d say they’re more deep dives into, I guess, the quality of your channel but you would probably have that for any acquisition channel in general and then why? I think it’s low cost, because, again, you control how much you’re spending. You control how much you’re spending when you’re actually spending. I know ads on any other platform like that’s going to be more expensive. So again, this is just a channel that it’s very easy to have. It’s product led. Users that are on the platform. They’re going to be exposed to it. They’re going to be sharing like you just want to make it more exciting for them.
Advice for Starting a Referral Program
Transcript
If you’re starting your referrals program or your business or if you’re starting to manage a referrals program. Actually having a platform like Extole that where does a lot of the customization for you and like you don’t have to, you don’t require so much engineering power to be able to stand up a solution for your business is very helpful because it will definitely get your you’ll be able to start testing and learning about it quicker than maybe if you had to stand anything up on your own. Leveraging a partner like Extole, to be able to start your program is, I’d say, a great way of doing it. You don’t have to hit yourself against the wall like they’ll also be able to provide you with different advice from the experience that they’ve had in referral programs in general. So I think that’s always very helpful just finding the right partner and then, besides finding the right partner in terms of advice, you can look at what other companies have been doing but you need to find what works for you. Test different things. Try to also go with the data that you have available. Also have these conversations with your data team, with your cross functional team, understand what could work for your customers and then try that out if it doesn’t work. Try something else, like because if it didn’t work, it doesn’t mean that it doesn’t work at all. It just means that didn’t work and maybe there’s another angle to things and you can, you’re going to be in the job of trying to find that angle, to unlock this growth via referrals programs, because I do think they definitely work, like we see how many, many businesses have them. It works for us. We’ve seen it for Uber. We’ve seen how Amex Capital One likes clubhouse, even though clubhouse is not a thing right now, they were very successful when they tried their invite only approach. So you just need to find what works for you.
How Treasury Wine Estates Uses Extole
The Value of Unearthing and Rewarding Brand Ambassadors
The Importance of Leveraging Happy customers
The Value of Rewarding Loyal Customers
How to Keep Customers Engaged with New Offers
How Extole Offers a Hands-On Partnership to Treasury Wine Estates
The Importance of Programs that are Truly Sustainable
Getting a referral off the ground is table stakes for any B2C business. But keeping that referral program effective is an ongoing process of learning and evolving.
Juanfe Rios
