Referrals are the Ultimate Growth Hack for Crypto Marketers

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What is the best marketing channel to get a new customer?

SEO, maybe? Well, sure, maybe someone found an article on Google that links to your website. But the problem there is that they’re still relying on some random website’s opinion about your brand. Maybe the content is out of date. Maybe the website misrepresents your brand. The issue here, for the user, is trust. To what degree can they trust that source?

You know where that’s not a problem? Personal referrals.

Let me frame it this way -- who are you most likely to take advice from: your friends and family or Google search results? Probably the former.

Over the last few years we’ve seen some highly effective referral campaigns in our industry rely on friend referrals as a marketing channel. One of my favorite examples was from the probable Ponzi scheme, Initiative Q.

In 2018, a mysterious and well-designed brand popped-up on everyone’s social feeds. People were shilling their friends, dads, and grandmas all over the internet. Initiative Q was offering what was basically being marketed as the next bitcoin, even though its creators were adamant Q (their digital currency) is nothing like a cryptocurrency.

Their website still proudly promotes that if you sign up, you can earn as much as $16,000 -- but only if you hand over your email address, your location, and invite five others to the network. ALSO, the earlier you sign up, the more Qs you can earn. AND, when you refer someone, and they refer someone, and they refer someone, you earn more and more Qs.

See where this is going?

Initiative Q brought in over 5 million “users” by November 2018. A more recent Twitter post from September 2020 claims that they’ve brought in over 1 million leads from India alone. The referral wheel appears to still be turning. Offering free money through referral programs is undefeated.

Now, this is just an example of an alleged malicious actor taking advantage of a crypto craze. There are plenty of legitimate companies in our industry offering great referral bonuses to their users. Some examples:

1. eToro US offers a “give and get” $50

2. BlockFi offers a “give and get” $10

3. Lolli offers $10 for every referral who shops

4. Fold offers 20K sats and card waitlist priority

5. And of course, the classic $10 bonus from Coinbase

Aside from learning that that people like free money in exchange for signing up for stuff, why are refer-a-friend (RaF) programs so important to a company’s marketing funnel? Well, a few reasons.

First and foremost, a RaF program is an excellent top-of-funnel channel. Marketers can’t do much if they don’t have fresh leads to market to. The more quality users that come check out your platform, the higher the opportunity is to convert those people into revenue-generating customers. Make sure you have a thoughtful email welcome series for your new customers. And, if you’re feeling fancy, have a dedicated, custom series for leads coming from your RaF program. Remember, these leads are free until they convert.

Second, RaF is an easy channel to manage. Just like working with affiliates, you as the brand do minimal work, while others market your brand on your behalf. The same is true for your users, which is why user experience is so important. Even if your program is operated manually (and plenty are), paying your customers for joining your platform (instead of paying Google or Facebook for ads) is always going to be a win.

Next, RaF should be your most consistent channel. The program’s monetary reward will typically be set at a sustainable level for your business, as in lower than your average cost per acquisition (CPA). This typically translates to RaF being a channel that lowers your business’ overall customer acquisition costs (CAC). As a marketer, this is invaluable to your overall performance.

According to a study in the Journal of Marketing:

• Referred customers are approximately 25% more profitable per year

• Referred customers are 18% less likely to churn than non-referred customers

• Referred customers have approximately 25% higher customer lifetime values (LTV) than non-referred customers

That third bullet is particularly important. If your CPA is higher than your LTV, your business just won’t be profitable. Pay attention to this ratio for all of your channels on a regular cadence.

Lastly, when someone tells their friends about something, the level of trust in that friendship is transferred onto that brand. According to Nielsen:

1. “92% of consumers around the world say they trust earned media, such as word-of-mouth and recommendations from friends and family, above all other forms of advertising.”

2. “Ninety percent or consumers surveyed noted that they trust recommendations from people they know.”

3. “68 percent of social media users go to social networking sites to read product reviews...”

This partly explains the huge growth in affiliate and influencer marketing and why influencers work so hard to build personal relationships with their audiences. There’s a lot of money to be made.

In the crypto and fintech industries, trust indicators are the first thing people look for. We’re talking about peoples’ money here, so that trust needs to be earned. There’s a lot we can say on this topic, so I’m probably going to expand on it in another issue.

In my consulting work, I often get questions about referral programs. What platform should we use? What amount should we pay our users? What’s the best way to evaluate the performance of the campaign? Well, there are a lot of different answers for this. Every campaign and business is different. If you have any questions about yours, feel free to DM me on Twitter or email me through the website at the link above.

Who’s Hiring in Crypto?

• Director, Marketing Operations @ Coinbase [APPLY]

• VP, Growth @ Paxful [APPLY]

• VP of Growth @ Ledn [APPLY]

• Marketing Partner, Crypto @ a16z [APPLY]

• Marketing Manager @ The Giving Block [APPLY]

• Crypto Community Manager @ Crypto.com [APPLY]

• Customer Experience Team Lead @ eToro US [APPLY]

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