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.