AirBNB provides a compelling case study of entrepreneurial fortitude. In the early days of the company, founders Brian Chesky and Joe Gebbia created unique US Presidential Election-themed boxes of cereal in order to raise capital for AirBNB.
While a diligent founding team and a notoriously positive workplace culture contributed to the growth of the company, AirBNB’s outrageously successful referral campaign is often noted as the key facet of the company’s success.
Through trial and innovation, the team at AirBNB improved their underwhelming referral program to a point where user sign ups and bookings increased by over 300% per day! Even if your niche has nothing to do with travel or hospitality, there are still immense lessons to be taken from AirBNB’s referral marketing strategy.
It’s no secret that is infinitely more difficult in 2017 than it was 15 years ago – primarily because people are highly accustomed to receiving low value, spammy marketing emails on a daily basis.
Receiving a generic marketing email is unappealing, as it immediately becomes associated with spam mail (even if the product or service is actually valuable). AirBNB improved its open rate by making its referral emails highly personalized.
Each recipient would receive a personal email from their friend, with a picture of them included. This created the impression that a friend was giving them a unique gift, where most referral messages appeared as cold marketing emails from faceless corporations.
If a new user clicks through to the AirBNB website from a referral email, they will arrive at a personalized landing page instead of a generic one, which also helps to solidify conversions.
In the information age, relationships with brands can feel shallow and disingenuous. Adopting a P2P (People to People) approach to business will make your brand stand out from the rest.
2. Mobile Integration
In a study performed by Extole, it was found that 18% of referrals are sent using mobile devices, while 39% of referrals are accepted on one. From early stages, the team at AirBNB designed their referral program to be used on Android, iOS and desktop.
The referral program was featured prominently on the company’s website, where people wouldn’t have to search in order to click through to the referral page. Because AirBNB made it so easy to make referrals by phone, the company benefitted from friends sending referrals on impulse.
If you want to encourage referrals, achieving accessibility for all devices is crucial.
One of the most effective ways of encouraging referrals is by providing a benefit to both the referrer and the recipient. AirBNB’s double-sided referral program gave a bonus $25 in travel credit to both parties.
Since AirBNB found that referred customers tended to be more lucrative in the long-run than those who had arrived at the site independently, the cost of this small incentive was negligible when compared to excellent customer retention rates.
The first promotional email emphasized the personal benefit of receiving $25 for inviting a friend, whereas the second email took an altruistic approach and emphasized giving $25 to a friend. The altruistic email performed better globally!
4. Track Everything
A popular business adage states: “What gets measured gets managed”. For a company so obsessed with the qualitative experience of the user, it’s amazing to see the extent to which AirBNB’s referral strategy is informed by quantitative data.
When updating the referral program, AirBNB used these 5 key metrics to assess the program’s effectiveness:
- Monthly Active Users sending Invites
- Invitees per Inviter
- Conversion Rate to New User
- Conversion Rate to New Guest
- Conversion Rate to New Host
A rich logging taxonomy was defined, containing over 20 events which take place as a new user moves through AirBNB’s marketing funnel to becoming a customer. This allowed AirBNB to pinpoint exactly where problems were happening as new users navigated the website on their way to becoming hosts and guests.
5. Have a Product or Service Worth Referring To
Incentives aside, one of the reasons that AirBNB’s referral program is so powerful is that people genuinely love the service. When growing the company, founder Brian Chesky aimed to find 100 people who loved AirBNB, as opposed to thousands who merely liked it.
From a strategic standpoint, a small but emotionally invested fanbase can quickly spread a brand’s message.
Brian Chesky uses the service himself – it actually originated as a way to provide accommodation for people attending a design conference when the local hotels were all booked. Because of the overwhelmingly positive experience he had, he believed in the power of the service which allowed him to continue growing the company even in the face of financial ruin.
Where “no tricks” is part of the company culture and its employees are also its customers, AirBNB’s marketing comes from a place of authenticity.
AirBNB doesn’t sell temporary accommodation, it sells (sometimes transformative) human experiences. If your service delivers immense value to people’s lives, it’s much easier to encourage them to refer their friends!