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May 26, 2010 | Comments

Lately, a few startups have been re-writing the holy grail of marketing: how to get referrals. I wrote about Bonobos’s use of two-sided incentives for referrals–users earn $50 for each friend referred who becomes a customer (friend gets $50 off their purchase at check-out too).

DropBox ran a similar strategy for referrals as well (via Clay Parker Jones):

After a failed attempt to get users via search – and spending upwards of $200 per acquisition – they incentivized digital word-of-mouth by offering two-sided referral bonuses. If a new user shares a link to the Dropbox signup form, and their friends sign up via that form, BOTH players get extra storage. And Dropbox wins because it gets a new customer for the cost of (potentially) a couple gigs of storage space. Win.

DropBox reported staggering results: Users sent 3M invites and drove 35% of sign-ups over the past year. Damn.

In short, word-of-mouth is an acquisition machine. Tools like the two-sided incentive program give customers a reason and means to recommend their purchases.

Both Bonobos and Dropbox relied on e-mail–requiring users to individually enter addresses. So what about streamlining and leveraging social networks to get the word out?

Blippy cleverly automated the referral process; users could broadcast out their purchases directly to Facebook or Twitter. It’s certainly an interesting way to increase reach.

Then I saw this mind-blowing idea from startup Alice:

Get a discount on your purchase if you share on Facebook. Brilliant idea.

What’s going on here? Alice pays a no-nonsense incentive in return for a sizable piece of media (~200 impressions of high engagement, earned media) and a huge referral opportunity.

It’s so much different than the bull-shit of “become a fan, get a free toothbrush” schemes employed by major brands. Alice’s customers are actually exhibiting a buying behavior and broadcasting their purchase to friends–a tacit referral of sorts. And the user experience is much easier to adopt than a two-sided incentive; I’d bet that customers are more receptive to this type of discount/referral and would refer to friends at higher rates.

In short, this is going to the top of my startup marketing best-practices list. Though Alice’s example is for granola bars, it could work wonders for large, emotionally-driven purchases.

And this is the first time that I’ve seen this idea. Is anyone else doing it?

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  1. brilliant strategy. another great post, loving your blog.

  2. thanks man. saw the stocktwits / zecco widget deal–you coding?

  3. Really enjoying your blog. You probably have already seen this, but Swipely seems like a pretty interesting way to broadcast your shopping via social networks etc as well: http://beta.swipely.com/ .

    Would love to hear what you think.

  4. Thanks Danny. I haven't heard of Swipely–but how is it any different than Blippy?

    And they look to have quite the team of tech rock-stars…it's especially disconcerting given that they are still in beta (reminds me of Sean Ellis's story of his first startup experience).

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