How to Build Referral Programs Like Robinhood and Peloton
How to Build Referral Programs Like Robinhood and Peloton
Grow referrals like the fastest growing companies in the world
Over the past year I’ve spent a considerable amount of time researching the fastest growing companies. I’m trying to identify what’s making these companies so unique. My focus has been on smaller companies that are succeeding in industry disruption, while also being among the fastest growing companies in the world. One area that I’ve identified that’s not covered very much, is the mastery of their referral programs.
Ask any business or sales person, where they prefer their new business to come from and I think all of them will say referrals. Studies have shown that referred customers have a higher sale conversion ratio, are more loyal and generate higher profit margins.
Two of the fastest growing companies in the world right now, Robinhood and Peloton operate what’s called a two-sided referral program. This means that the referral program rewards both the current customer (person referring the new customer) and the new customer (person being referred).
Robinhood’s Referral Program advertises, “Invite Friends, Get Stock.” When you refer someone to Robinhood you each receive a share of a randomly chosen stock of a company. The value of the share you receive can be anywhere between $3 and $225.
Peloton’s Refer a Friend Referral Program gives their referring customer $100 to use in the Peloton Apparel store and the new customer gets $100 to use towards their new bike or tread accessories.
As you can see what they’re offering as the gift, is something that’s associated with their company. It gives something to both the current and new customer that stays in house with their company. It makes you more loyal and tied to their company. A very smart strategy!
If you conduct a Google search for companies using a two sided referral program, you’ll find some other great examples. The SoFi Referral Program is another popular program from a fast growing company. So far they’ve paid over $10,000,000 to its members in lending product referral bonuses.
What they’re all doing is leveraging customer loyalty to drive more of their products and incentives to not just the new customers, but also to their existing customers. Further deepening the connection to that company’s product or service.
To experiment, I asked people who I knew were users of Robinhood and Peloton about their referral programs. Each person knew all about it and could recite exactly what stock they and the person they referred received and what item or apparel they got from Peloton. Both of these companies’ referral programs are accomplishing exactly what they want.
Think about a product you love. How many times have you raved about it to others? Does that company offer a referral as a way of saying thank you for all the “free advertising” you’re doing for them? Have you checked?
What is your company doing about driving the engagement and love of your product or service? Are you leveraging and letting your customers know about your referral program? Have you emailed, mailed and told them about it?
Maybe your current program isn’t working. Or you may not even have one established yet. Having a consistent referral program is a vital tool in your business’s marketing tool box.
Here are some examples of ways businesses I’ve spoken with drive referrals by offering an item or service connected to their business. These examples are given to both the person referring and the new customer.
Salon’s referral program- One free haircut
Lawn care’s referral program- One free lawn mowing
HVAC company’s referral program- One free annual HVAC check up
Financial business’s referral program- One free hour session or consultation.
Multiple company’s referral program- Gift card to their business. (Many businesses I spoke with currently give gift cards to other businesses. After sharing this concept with them, some are contemplating changing to giving out their gift cards and making the amounts larger.)
When evaluating or building your referral program, here are two questions to ask. What service or product that your business offers would create referral excitement? What would make you refer someone?
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