My Referral Marketing Lesson From Dropbox
As a marketing major student, I feel pretty ashamed that I have never heard of the marketing strategy of Referral Marketing before I started researching Dropbox’s business strategy(although I often get referral marketing emails from shopping websites). It is Dropbox’s referral program that demonstrates how referral marketing strategy can contribute to a company’s growth engine and shows me the power of it.
Let’s take a quick look at the history of Dropbox’s user growth:
From April 2011 to March 2016, Dropbox’s user base has realized a 1900% increase and was still increasing. Till November 2019, it has reached 600 million user bases.
So how did they achieve it by effectively taking advantage of Referral Marketing?
What is Dropbox’s referral program?
The concept of Dropbox’s referral program is simple and straightforward. As Dropbox provides cloud storage space, they decided to reward people with more free space, not only for recommending their friends but also for accepting invitations. It is a two-sided referral program that rewards both sides for completing the desired task and registering for Dropbox.
The Referral Program simplifies the user registration process
I rarely take the initiative to try a new digital product, because the registration process often makes me feel too cumbersome to try until everyone around me is on board. For example, Clubhouse, which is very popular recently, has to be registered with the invitation code of a friend, so I gave it up.
Dropbox understands this and makes the whole registration process a piece of a cake for the friends been invited. When the friends receive the invitations, they just need a few steps before getting in Dropbox. It removes the barrier in front of those people, makes them more willing to try new products, and lowers the entry barrier, thus attracting more and more people.
People can have a clear view of the referral benefits
Drew Houston, founder and CEO of Dropbox, said that Dropbox’s referral program was inspired by PayPal’s friend referral program. PayPal uses cash rewards for recommendations, which is related to their key business, so Dropbox has to use the main value of their products in their reward system.
When someone decides to use a product, they know exactly what they want from it. As far as Dropbox is concerned, people want cloud storage. So that is why Dropbox names the referral “Earn space by inviting friends to Dropbox!”
The invitation process is also very easy
After users fall into the “trap” of wanting more space, the next more important step is to make this process easier. Obviously, they must successfully send the invitation letter to their friends. They can share via social media or send their unique referral link in any way they want, such as messenger app, email, text message, etc. Once users choose other ways to invite their friends, Dropbox gets more information from them and has the opportunity to sync their contacts from Gmail, Facebook, Twitter, etc. These are all valuable customer data for Dropbox.
Learned from Dropbox, if any business plans to increase their user base using referral marketing strategy, they must pay attention to the following two key factors:
- Offer valuable referral rewards to both the inviter and the invitee, let them clearly understand what they will get.
- Make the onboarding process and invitation process easy.
If you have any thoughts on the Referral Marketing strategy or you want to share any other cases, please leave them in the comments! Thank you～