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Driving user retention and acquisition through app referrals
Written by
Mariam Hazrat
mariam.hazrat
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Driving user retention and acquisition through app referrals

Think about the last time you downloaded an app. How did you discover it? Possibility, a referral from a friend/colleague/family member. The reality today is that the rising number of apps launched every month is making it difficult for B2C companies to attract and retain users. There is, however, one strategy that has stood the test of time: referral marketing. It is, in fact, one of the most critical ways of lowering customer acquisition costs and getting existing users back to the app. When done rightly, it becomes an effective way to scale app growth.

Referral programs are the unsung strategies that potentially make the brand a household name. Take, for instance, Uber. The ridesharing company’s referral program became a massive hit for two main reasons. 

  • First, the app is an excellent product with a high-value delta between Uber and its alternatives. Uber created a seamless onboarding experience for its users to reduce the drop-down rate during the process. 
  • Second, it incentivized the users to be their salespersons. The retention rate of existing users and users acquired through referrals was remarkably higher. Again, this ties back to a great product experience.

Remember receiving money in your wallet every time you helped Uber acquire a new rider using your code? Well, that well-oiled strategy had a significant networking effect, which in return exploded Uber’s revenue and overall growth.

For all B2C app providers trying to increase user acquisition and retention exponentially, Uber is an excellent example of how a referral program can reduce acquisition costs and churn rate, alleviate user retention, and scale-up growth.

This blog will look at the top three customer-centric strategies to acquire and retain mobile app users and explain how to ace the referral game.

Winning strategies for acing the referral game

1. Create exceptional user experience

The stepping stone to any successful referral program is to engage customers where they spend most of their time – mobile apps. Creating a sticky mobile app experience should never be an afterthought; it must be part of the product roadmap from the start. Users should be able to understand the value add your product brings. It also becomes essential for new users to realize this value.

When you look at all the customers engaging with your app, the view is highly multi-dimensional. It is not just about the UX or how navigable your app is. Your customers demand a holistic experience in terms of the value your product offers. It’s essential to make the products intuitive, offer smooth onboarding, and invite free signups. This strategy increases virality amongst potential users and impacts how you align your customers, product, and, most importantly, the interaction between the two. It helps you discover the best way of solving your users’ problems in their preferred way. 

A great product experience will ensure higher user retention and speed up the whole referral loop. Nothing can stop customers from referring your app if it delights them by offering relevant features, customizations, and unmatched experience. 

2. Incentivize users

A Nielsen study claims that 92% of people trust referrals above all other types of advertising. However, referrals work when you offer incentives that encourage users to refer the app. For instance, Dropbox offers free space to its users for every invite accepted by their friends – a clever tactic to get users back to the app. Cashback rewards, discounts, access to premium features are some of the time-honored ways to encourage referrals.

It takes a little more effort is needed to get users to participate in the referral programs. Here are a few quick tips on that: 

  • Create referral codes that are easy to share and nudge users to refer friends and family members. An eye-catchy nudge can remind customers of the value behind referring people to your app. If they intend to complete the desired action, then a subtle nudge can help them do so. 
  • Include social sharing buttons to let people share their referral code in their social networks.
  • Give bragging rights by allowing customers to share their achievements, photos, badges, and check-ins along with their referral code.

Regardless of how you’ve structured your referral program, the aim should be to reward users based on the thing most critical to your brand’s success. But remember, people will only refer if they see value in your product and the benefits of sending the invite to their family and friends.

3. Time it right

Nothing can go right if you are at the wrong place at the wrong time. Let’s face it: if you nudge new users to send an invite to their friends just as they are beginning to explore the app, then they are likely to decline the offer. That is because they don’t even know the value your product offers! In other words, if you become too pushy at the start, then you risk being intrusive. So, what is the right time to request a referral? The best time to request a referral is when your customers are engaged with your brand or have completed an important action like placing an order.

Time it Right

Pro-tip: Take cues from gaming apps like Candy Crush – Their referral program is highlighted to users when no lives are left. Given a choice between paying and referring the app for an extra life, almost all users choose the latter.

Keep in mind these three strategies:    

  • Focus on engagement: Keep your active users engaged and increase your chances of getting a referral. Use in-app gamification to help users understand the value and nudge them to come back and keep them involved for longer. 
  • Straightforward onboarding: Your app users may not discover the referral program quickly. Create onboarding tutorials that include referrals for faster adoption. 
  • Nudging the right users to refer your app: Net Promoter Score (NPS) is THE tool that can tell you a lot about your product in terms of customer experience management. It helps enhance customer satisfaction, improve retention, lower churn, and, most importantly, leverage customer loyalty for targeted referrals. Customers who have a higher NPS are most likely to become your brand advocates. Therefore, nudge them at the ‘right’ moment, including when you receive a high NPS.

Read more about nudges.

Lessons from airbnb’s referral programs

Any referral marketing discussion is incomplete without discussing Airbnb – an online marketplace that connects property owners to travelers for lodging needs. 

So far, every strategy we talked about is reflected in Airbnb’s ‘Invite Your Friend’ referral program. 

Here are a few notable points: 

  • The program’s ‘how-to’ and benefits are clearly communicated to every user, making it easy to refer the app to their network in just a click. 
  • Both the referred and referrer receive travel credit which can be utilized in the next Airbnb stay. The mutual benefits fuels user retention by encouraging users to redeem the credits earned. 
  • Customer experience and engagement backed by the power of AI allows the brand to send targeted, contextual and personalized communication across multiple channels. This results in an enhanced user experience, repeat business with lower than ever CACs, and skyrocketing retention rates.

Conclusion 

Referral marketing is still one of the touchstone tools that can get hundreds of app installs without investing a fortune in other costly user acquisition strategies. However, merely having a referral strategy is not enough for user retention and acquisition. Companies need to have a well-crafted program that provides a great product experience, is easily discoverable, and is timed to perfection. Empower your loyal customers and give them the center stage to become your brand advocates. And it starts now! Chat with us to discover some exciting ways of nudging users to participate in your referral programs.

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