The key to mobile app success is the amount of ROI it can generate. To drive ROI, you need to acquire users, convert them into active users, and instill loyalty.
The best way to do this is with a referral program.
Why Should You Love a Referral Program?
Referral Programs Offer Visible Results
A referral program is the most measurable form of marketing activity you can to do to get more active and loyal users for your mobile product. If you are already employing push notifications, ASO, PR, and social marketing best practices to spread awareness about the product — that’s all crucial. A referral program adds to the virality of your application. It provides an incentive for the user to share your app with their friends, who could turn into more potential users.
It’s almost like having each of your app users as your partners who you can reward to spread your message across to similar audiences. You can then easily analyze the results and forecast just how many more users your app can get in the forthcoming period.
Referral Programs Build Trust
A referral program gets your potential customers to trust your app as it has been referred by a friend or a colleague. A program creates a feeling of community among app users. If one prefers to use it, then others also follow suit. Users need a social proof before using a product or a service, and a referral program helps your app achieve more acceptability.
According to a study conducted by Nielsen, 92 percent of the respondents trusted referrals from people they knew. The first step is to get your users to like your product and the next is to get them to recommend it with a reward they can enjoy.
Referral Programs Have a Low Acquisition Cost
Since a referral program itself creates a conversion mechanism that works in the long run, the cost per acquisition of each new user is considerably lower. The users converted through a referral program sign up willingly, and are thus more likely to stay with you as loyal customers. The reward system ensures that there is motivation for each new user to also to refer another or many other potentials.
How Do You Put Together a Referral Program?
Choose Your Audience
Running a referral program with all of your audience may not be the best strategy. Pick those users who are most likely to participate, like those active on social media or the most popular influencers in your niche. You are out there to build a network of users who will stay with you and talk about you. With this objective, you can achieve a level where this group is fetching you regular business, consistently.
Optimize the Incentives
There a host of options that you can choose from while creating the appropriate incentives for your referral program. You can give cash as well as non-cash rewards to your users. Cash back deals help ensure that your users make repeat purchases and stay active on your app. A discount on the next purchase has a similar effect.
Uber offers a free cab ride to each to the existing as well as the new referred user. It works very well as there is a viral loop in the incentive system. The cab service incentivizes users to refer their friends and get free rides in return.
Alternatively, you can also offer a free extended trial of the app or free shipping (in the case of e-commerce products).
Do You Need To Promote the Referral Program?
Yes, once you have a referral program, you need to promote it across channels to get the best of the results. You need to communicate the benefit of the program to your users and make the process user-friendly for them to participate easily. Create in-app messages and push notifications to remind the users of the program. Provide them with custom messages and a sharing link so they can easily refer the app to their friends on social, email, SMS, and chat.
In the following example, Uber has added the various sharing buttons to make it easier for users to participate.
Messages in the application help you reach out to your users in a friendly way. You don’t want to disrupt their app usage in any way and yet have them see your referral promotion. Instead, add a custom message shown as a popup. A simple one-step process to share the app and get additional credits does the trick. The example below shows an interesting way to catch your user’s attention while they are using the app.
Users are not out there to refer your app just because you give them an incentive. It is helpful if you reward them and their referred friend. This one is called a two-sided incentive and helps you to build a relationship with both, the current as well as the new user. It works well because you help your existing user to help someone, and this acts a significant motivating factor. Here is an interesting example from Airbnb.
A push notification enables you to easily and quickly remind users of the referral program, by reaching them outside of the app. You can send push notifications to all users who have opted-in for push notifications. Keep your messages on a well-timed cadence and always personalize them.
Building awareness and interest in your referral program are critical to its success. There will always be users who are hesitant to participate initially. You can send out email reminders communicating the benefits of the program. A polite reminder is helpful in pushing the message and getting better results.
How Do You Analyze a Referral Program?
While running the program, you can analyze the number of installs it generates on a periodic basis. You can track the channel which fetches the maximum number of referred users. This will help in making the necessary tweaks in the program. You can also analyze if the new users are genuine and actively using the application, to compare product and incentive affinities respectively.
Additionally, you can implement an automated referral management system that ensures that the incentives are automatically transferred to user accounts and messages are personalized. It is easy to run periodic reports to help with detailed and instant analysis of the revenue generated from the program.
There are an ever-growing number of mobile app startups in this era, and the trend will continue. A successful app must strike a chord with its users, and then the referral program is the cherry on the cake. It helps your app get more users and more revenue, and you can automate the process to make business simpler.