Sam Brown

Empowering Users with Two-Sided Incentives

Drew Houston the co-founder and CEO of Dropbox gave a talk at Startup Lessons Learned in San Francisco on the 23rd of April and he spoke about the Customer Development Case Study for Dropbox. I highly recommend you go and watch the video, it’s interesting and inspiring.

What was particularly fascinating to me was their switch in strategy from using paid-for advertising such as AdWords to a referral system that actually worked. Their referral program rewards not only the person who is sending out the link, but also the person who signed up because of clicking on the link. Both parties receive an extra 250MB of space. It’s proved to be such a success for them that it has permanently increased their signups by 60%!

My Dropbox Referral URL looks like this for example:

So often I see spammy looking referrer URLs just like the one above that people link to and 9 times out of 10 I’ll copy the URL and remove the referrer code. The biggest issue I have is the random unfriendliness of these links, my username or email address instead of the garbled noise at the end would probably work out even better for Dropbox!

I think more companies running referral programs need to start empowering their users and rewarding customers the way Dropbox has. Imagine if for example clicking on an Amazon affiliate link to a product not only earned the referrer a little extra coin, but gave you the customer a slight discount as well. Win win.

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Andy 7 May 2010, 03:32 #1

All sounds good to me – Free Agent do a similar incentive – 10% off your monthly subs for both the referrer and referee, and beyond that they start paying you to refer people – it’s brilliant.
the only downside is, like you said, the referral links can look a bit impersonal –

Cliff 9 May 2010, 13:30 #2

The problem with having an abundance of referral links though – especially for things like amazon is you don’t always know if people are promoting a product or a service for ulterior selfish motives, or if they truly think its great and just want an extra bonus too.

I guess there’s a downside to everything though.

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Sam Brown co-founded Iterate, and was previously VP of Design at Foursquare. Based in NYC.