• When you incentivize existing customers to bring new customers, it’s a referral marketing strategy. 
• Brands can successfully use referral marketing strategies to scale. 

Whenever a business incorporates a “Bring a Friend” or referral marketing strategy, it capitalizes on word-of-mouth recommendations to boost sales. Although this is a standard marketing tactic, persuading people to sell something to their friends can be problematic. If a brand solves this issue, it can generate substantial revenue. 

In 1950, two American academics named Leon Festinger and James M. Carlsmith conducted a study about the “Bring a Friend” marketing strategy. They highlighted that when people are offered big rewards for persuading a friend to do something, they are less likely to succeed when offered a small reward. 

When people were offered smaller rewards, they could persuade friends better because they were convinced. However, when people are offered a larger reward, they are more focused on reward. Brands also need to solve the dilemma of a friend recommending something they sometimes feel is betraying the friendship. So what’s the way out? How could you use this strategy to boost your sales? 

How Dropbox Successfully Used the “Bring a Friend” Strategy

Dropbox is a cloud storage service known to incorporate the referral marketing strategy successfully. The company’s main challenge was attracting new customers to its cloud storage services and motivating existing users to utilize more storage space. To solve this problem, they opted for the “Bring a Friend” marketing strategy. 

The cloud storage company implemented a referral program with a simple yet compelling reward structure. They tried to strategically tap both the referrer, i.e., existing customers, and the referred friend, i.e., new users, where both the referrer and referred friend received bonus storage space upon successful signup through a simple referral link. 

How did they implement the strategy? 

Dropbox successfully integrated the referral program seamlessly into the existing user interface. They allowed existing and new users to quickly generate referral links to share with friends. Moreover, signing up through these referral links was made to ensure that both the involved parties received the bonus storage. 

This referral program incorporated the social sharing mechanism, allowing referral link sharing through multiple social media platforms and emails. A strategic approach aimed at maximizing the reach of the “Bring a Friend” marketing strategy. Interestingly, Dropbox already had a system to track referrals, allowing them to automatically credit the bonus storage to the referrer and referred friend. 

How did the strategy impact Dropbox sales? 

When Dropbox came up with this referral marketing strategy, it increased signups and engaged existing customers, and in turn, storage utilization went up significantly. The promise of free storage triggered increased signup, enticing new users to sign up for Dropbox and considerably expanding the customer base. 

Interestingly, this “Bring a Friend” marketing campaign allowed existing users to incentivize the bonus storage and become Dropbox’s brand advocates. This persuaded them to actively refer their friends to increase the reach of the storage platform. With additional free storage, existing customers were more likely to upload and store more files, directly expanding Dropbox usage. 

What Other Brands Can Learn from Dropbox’s Marketing Strategy? 

When Dropbox offered free storage, they directly hit the pain point of limited storage. This relevant incentive aligned perfectly with the core service. The simplicity of this referral program is believed to be straightforward, and it encourages participation. Interestingly, both the existing and new customers received the program’s value. It was a solid motivational pull for the program. 

Suppose a brand wishes to incorporate a “Bring a Friend” marketing strategy. In that case, they must focus on providing relevant incentives, portray simplicity, and manage to facilitate a win-win situation for both existing and potential customers. Dropbox’s case study can serve as a blueprint for other businesses looking for ways to leverage the power of referral marketing strategy. 

What is the “Bring Friend” Marketing Strategy?

It should be understood that people trust the recommendations of the people they know. They might not take recommendations seriously if they come from a brand ambassador or influencer. If a brand encourages existing customers to refer friends, they automatically tap new customers through this trust factor. 

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Businesses can use this referral marketing strategy if they focus on these core concepts. Companies must incentivize existing happy users to be comfortable recommending the product or service to their friends and family. They must focus on leveraging people’s trust in their peers’ recommendations. This leads to relatively higher conversion rates. 

How do you create a thriving “Bring a Friend” marketing campaign? 

Suppose a business wishes to incorporate this referral marketing. In that case, they must first focus on defining the goals, choosing enticing rewards, ensuring the reward is easy to share, and strategically promoting the program. They should be able to track and analyze the program. 

The brand must be able to define the goals; it must be clear that it is done to increase signups, boost sales, and scale brand recognition and awareness. The next step is to choose the reward; a great deal goes into deciding the reward. It could be free products, exclusive membership, or something else. Brands can even offer tiered rewards for multiple referrals. 

Businesses should ensure that the sharing must be accessible. Existing users should be provided with simple and unique referral links, as these links would be shared on social media. They could also be supplied with pre-written social media messages or email templates, which could provide an ease of sharing. 

Even a good referral program can only succeed if they are correctly promoted. Brands must announce this program on their social media platforms, websites, in-storage signages, email blasts, etc. Ultimately, brands must be able to monitor the program performance and adjust the rewards or messaging whenever required. 

Retail stores can offer discounts to the referrer and the friend on their first purchase. Subscription services like Dropbox could give existing customers a free month for every friend who signs up. Fitness studios could provide a free class pass or extension to both parties. 

Pros & Cons of “Bring a Friend” Marketing Strategy

Similar to every marketing strategy, this strategy has pros and cons. Businesses should consider them carefully before implementing them into their marketing strategy. 

Pros

This “Bring a Friend” is cost-effective compared to traditional marketing and advertising strategies. It could significantly minimize the marketing spend mainly because it relies on existing customers to spread the word. Moreover, referred customers are pre-sold to a certain degree, mainly due to positive recommendations. 

In this way, brands are often likely to convert and have a higher customer retention. Rewarding the referrals could strengthen the relationship with existing customers. This made them feel valued and essential due to positive word-of-mouth. A successful program could snowball, or a chain reaction where this referral program could expand the customer base. 

Cons

Although this strategy sounds exciting and promising, it heavily relies on existing customers. Brands could miss out on new customers and demographics not part of the existing customer network. It entirely hinges on having a solid base of loyal customers willing to recommend you, which could be an issue. 

Some customers might exploit the system for rewards, which could lead to relatively less qualified leads. Sometimes, offering discounts and incentives could temporarily affect the bottom line. Plus, tracking the referrals, managing rewards and facilitating a smooth experience adds to the complexity of the “Bring a Market” strategy. 

When Should a Business use this marketing strategy? 

Any business could use this marketing strategy, but if they fulfill the following criteria, they could leverage the power of the “Bring a Friend” marketing strategy. If you have a satisfied customer base, these existing customers could act as vocal advocates for the brand. 

If the referral program is easy to understand, existing customers are more likely to refer to it as it’s easy to explain. If the business is ready to handle the potential influx of new customers, they could generate the program; they should incorporate this marketing strategy. 
In the end, businesses should focus on offering different incentives that could be based on the referrer’s demographics. This marketing strategy has the potential to boost sales and generate revenue significantly. A well-designed “Bring a Friend” marketing strategy could be a very effective and powerful tool for customer acquisition.