In the AARRR framework, how do you deal with the referal aspect of your business? (Crucial aspect of your business)

Willyfish

Willyfish

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What are your stategies in place in order to have more referrals #freecustomers?

I would like ideas from people who crushed it with referral marketing.

We generally do like that here: Referring one customer allow to them a free product (which is branded with our name)

Thanks
 
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I did some work with an agency that provided legal services to small businesses (services likes audits,certifications, tax filing etc)

They had a referral system where if a client refers a new customer with their referral number, the new customer gets 35% off their first purchase. And there's no other way for a new client to get this discount. The client who gave the referral also gets a free service every month for 1 year.

The free service was usually a "low effort" audit which is mostly the same for every month. Businesses usually do this once at the end of the financial year. But by providing a "monthly repeat", the client who referred thinks they are getting a lot of value for their referral.

I talked with their Lead and he said their referral system brought them 40% more customers in the first year after it launched. I don't know if he's telling the truth but if it is, I wouldn't be surprised. Both the refferer and the new client is getting value so ig that helps.
 
Ashk881 said:
I did some work with an agency that provided legal services to small businesses (services likes audits,certifications, tax filing etc)

They had a referral system where if a client refers a new customer with their referral number, the new customer gets 35% off their first purchase. And there's no other way for a new client to get this discount. The client who gave the referral also gets a free service every month for 1 year.

The free service was usually a "low effort" audit which is mostly the same for every month. Businesses usually do this once at the end of the financial year. But by providing a "monthly repeat", the client who referred thinks they are getting a lot of value for their referral.

I talked with their Lead and he said their referral system brought them 40% more customers in the first year after it launched. I don't know if he's telling the truth but if it is, I wouldn't be surprised. Both the refferer and the new client is getting value so ig that helps.
Click to expand...

In the company I work for, it's 30% of new customers who are coming via referral, and we sell robots in a very competitive niche.

40% does not surprise me, it's possible.
 
Willyfish said:
In the company I work for, it's 30% of new customers who are coming via referral, and we sell robots in a very competitive niche.

40% does not surprise me, it's possible.
Click to expand...
What's the max you have seen for new customers coming via referrals?

I believe high ticket services and products generally have more new customers coming via referrals simply because there aren't many services/manufacturers around that offer what they are offering, and any discount helps.
 
Ashk881 said:
What's the max you have seen for new customers coming via referrals?

I believe high ticket services and products generally have more new customers coming via referrals simply because there aren't many services/manufacturers around that offer what they are offering, and any discount helps.
Click to expand...

In the agency I worked for it was 50% for a business selling piano courses. It was affiliates.

The reason I created this thread was more about strats to acquire new customers via referral to be honest, there is of course affiliate marketing... offering free stuff if one friend register or what else?

What we did, and it's a little secret, was to ask people to share the email to other of their friends, and if they had 3 friends registering, they could win a free robot (which is costing 30 dollars) because we knew the lifetime value of new customers was 563 dollars. So we shot these emails, paid basically 30 dollars and took back 2 customers every 10 leads. So do the math, 100 dollars lost (CAC) and 1126 dollars won... it is crazy powerful.
 
Willyfish said:
What we did, and it's a little secret, was to ask people to share the email to other of their friends, and if they had 3 friends registering, they could win a free robot (which is costing 30 dollars) because we knew the lifetime value of new customers was 563 dollars. So we shot these emails, paid basically 30 dollars and took back 2 customers every 10 leads. So do the math, 100 dollars lost (CAC) and 1
Click to expand...
That seems to be the universal trick. Offer an incentive to the refferer and optionally to new customers that get referred. The product/service should have a lower price compared to the customers lifetime value.
 
I find customer referals are quite a slow way to grow. As you said 2 out of 10.

You should look into jv's with companies that offer complimentary products/services in return for a referral fee.

Depending on who you partner with you can get thousands of customers quite quickly and even reciprocate to diversify your income.

Secret... it is how i sell my saas / subscriptions!
 
GringoMonkey said:
I find customer referals are quite a slow way to grow. As you said 2 out of 10.

You should look into jv's with companies that offer complimentary products/services in return for a referral fee.

Depending on who you partner with you can get thousands of customers quite quickly and even reciprocate to diversify your income.

Secret... it is how i sell my saas / subscriptions!
Click to expand...

The test our agency did was with a list of emails of around 11k subscribers, they had around 900 guys sharing the mail and we offered them a 30 dollars product if 5 of their contacts friends registered, 700 of them had 5 friends registering.

The result was around 3500 new leads. Out of these leads around 600 became paid customers and the lifetime value was around 560 dollars.

So we offered 700 products at 30 dollars which cost us 21'000 dollars and out of the 600 paid customers, these brought us back in total 336'000 dollars after one year.

(Not exactly sure about the numbers but it was pretty much this)

If done well it is extremely powerful, it's viral email marketing, the campaign was an absolute success. I don't work at this agency anymore but saw these types of "refer a friend" email campaigns 3 times there. These are great campaigns and not "slow".

2 customers out of 10 leads, based on 3500 new leads for a single campaign... is definitely not something I spit on :)
 
Willyfish said:
The test our agency did was with a list of emails of around 11k subscribers, they had around 900 guys sharing the mail and we offered them a 30 dollars product if 5 of their contacts friends registered, 700 of them had 5 friends registering.

The result was around 3500 new leads. Out of these leads around 600 became paid customers and the lifetime value was around 560 dollars.

So we offered 700 products at 30 dollars which cost us 21'000 dollars and out of the 600 paid customers, these brought us back in total 336'000 dollars after one year.

(Not exactly sure about the numbers but it was pretty much this)

If done well it is extremely powerful, it's viral email marketing, the campaign was an absolute success. I don't work at this agency anymore but saw these types of "refer a friend" email campaigns 3 times there. These are great campaigns and not "slow".

2 customers out of 10 leads, based on 3500 new leads for a single campaign... is definitely not something I spit on :)
Click to expand...
I agree it works, and a x10+ roi is great. But it is slow and a depreciative strategy because it is based on using your existing customer database. If you run it again to the same database the results will be a lot lower and ultimately end up at 0.

So, it is more like a nice trick you can perform 1x to increase sales, but then you need to keep coming up with new tricks to keep increasing sales. That is really hard work and in my experience you just burn out trying to constantly come up with new ideas, plus I am far too lazy to do that :)

I am more have 1 good idea and learn how to absolutely flog it to death! That is why I like to use another companies customer database and JV. Then it is infinitely scalable and I can flog it to death.

I don't need to contact anywhere near 11,000 people and typically have the same 20% success rate. But mine is cold outreach to CEO's of companies that offer complimentary products. Or sometimes some greyhat stuff.

The last time I did it (a month or two back) I spoke to 5, agreed with 1 and they did all the work and added about 5000 new subscribers to my $30 per month subscription service. That is an additional $150,000 per month or $1.8 million per year in revenue for me. Cost = $0 and I am paying 45% referral fee for 1 year.

When I wish to grow the business some more / build a new product I will continue to flog my 1 idea again and again, with another jv partner and repeat.

Basically I find a broad market with lots of suppliers, find a space they don't cater for, develop a complimentary product that fills the space and then look to JV with as many of the existing suppliers as possible. I usually end up selling it to one of the suppliers that I JV with. In essence that is my business model with everything from books to saas.

First time I kind of did that by accident, but since then I have been doing it on and off for 20 years now, when I want some more money.

So I can now build new businesses for the cost of product development and almost $0 in marketing. But it starts at the end, by first figuring out who and how I can sell it, before bothering with product development.

I actually ran a JV on here to help others in return for a %, but was flabbergasted at the complicated and mostly unsuccessful approach to product development the people I spoke to took, to the extent I have never ended up working on a single JV in this area on BHW. So there is certainly a gap about this on BHW, which is why your thread took my interest and I replied.

I might create a separate thread to continue the discussion, instead of possibly hijacking yours :)
 
Last edited:
This thread and replies here are too open minded. I see my future bright and good.
 
GringoMonkey said:
I agree it works, and a x10+ roi is great. But it is slow and a depreciative strategy because it is based on using your existing customer database. If you run it again to the same database the results will be a lot lower and ultimately end up at 0.

So, it is more like a nice trick you can perform 1x to increase sales, but then you need to keep coming up with new tricks to keep increasing sales. That is really hard work and in my experience you just burn out trying to constantly come up with new ideas, plus I am far too lazy to do that :)

I am more have 1 good idea and learn how to absolutely flog it to death! That is why I like to use another companies customer database and JV. Then it is infinitely scalable and I can flog it to death.

I don't need to contact anywhere near 11,000 people and typically have the same 20% success rate. But mine is cold outreach to CEO's of companies that offer complimentary products. Or sometimes some greyhat stuff.

The last time I did it (a month or two back) I spoke to 5, agreed with 1 and they did all the work and added about 5000 new subscribers to my $30 per month subscription service. That is an additional $150,000 per month or $1.8 million per year in revenue for me. Cost = $0 and I am paying 45% referral fee for 1 year.

When I wish to grow the business some more / build a new product I will continue to flog my 1 idea again and again, with another jv partner and repeat.

Basically I find a broad market with lots of suppliers, find a space they don't cater for, develop a complimentary product that fills the space and then look to JV with as many of the existing suppliers as possible. I usually end up selling it to one of the suppliers that I JV with. In essence that is my business model with everything from books to saas.

First time I kind of did that by accident, but since then I have been doing it on and off for 20 years now, when I want some more money.

So I can now build new businesses for the cost of product development and almost $0 in marketing. But it starts at the end, by first figuring out who and how I can sell it, before bothering with product development.

I actually ran a JV on here to help others in return for a %, but was flabbergasted at the complicated and mostly unsuccessful approach to product development the people I spoke to took, to the extent I have never ended up working on a single JV in this area on BHW. So there is certainly a gap about this on BHW, which is why your thread took my interest and I replied.

I might create a separate thread to continue the discussion, instead of possibly hijacking yours :)
Click to expand...

This was a very good post, no hijacking :)
 
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