Uber And Airbnb Have The Best Referral Schemes: Or Do They?

by Robin Bresnark Buyapowa

Say the word ‘referrals’ and most people will instinctively think of Uber and Airbnb. After all, those companies just about wrote the digital referral rulebook, with word of mouth playing a key part in supercharging their growth to multi-billion dollar valuations.

Uber’s Co-Founder and former CEO Travis Kalanick famously claimed back in 2011 that, “95 per cent of all our riders have heard about Uber from other Uber riders.” I certainly did. Everyone in the Buyapowa office did. And you probably did, too.

Now, given their success, you’d probably also assume that Uber and Airbnb would represent the best in class when it comes to their referral schemes. But take a closer look and you’ll actually see that the opposite is true.

In fact, as is common with many in-house software projects, their schemes have evolved very little over time and now look desperately neglected and unloved compared with industry-leading programmes from the likes of River Island, Boohoo, Expedia, Vodafone, and Travelex.

In fact, if I asked you: “When was the last time you received an invite from a friend to either Uber or Airbnb’s schemes?”, or “When was the last time you actually sent one out?”, chances are it was several months, maybe even years ago. And there’s good reasons for that. Five of them, in fact. So, let’s tackle them one by one.

1. Customers are not all the same. So why treat them like they are?

Having powered referral programmes for over 100 leading brands, across all kinds of industries, the team here at Buyapowa have learned that each and every programme has to be carefully tailored to suit not just one but multiple different audiences.

In particular, one size definitely doesn’t fit all when it comes to rewards. If, thanks to my referrals, one of my high-rolling pals takes a £100 ride to the airport via Uber, then rents a £7,500-per-night chateau in the Loire Valley via Airbnb, surely I shouldn’t get the same £3 or £15 credit I got for the backpacker I sent both their ways last month?

Flexible rewards and incentives are a key differentiator between the most engaging schemes and the also-rans.

2. Customisable emails

We can keep this one short. No one likes impersonal ‘sales speak’-type messages, so why does Airbnb provide no means for their referrers to customise the messages which get shared with their friends? That’s not referral, it’s advertising through the back door – and it simply doesn’t work.

3. Compliance with the law

Far be it from me to give you legal advice, but you might ask yourself why referral schemes like Airbnb’s continue to offer email address book import features and server-side emailing.

It’s no co-incidence that the best-in-class referral software providers only ever ask your customers to share a link with their friends, as opposed to typing those friends’ details into a form without having their express and provable consent. Cough, GDPR, cough.

4. No more ‘same old, same old’

Perhaps the biggest short-fall in Uber’s referral programme is the comprehensive lack of anything to stimulate multiple referrals per user. The same old reward for each referral just gets boring after a while. Which is why, at Buyapowa, we’ve learned the importance not only of regularly refreshing rewards and incentives to keep schemes interesting, but also of offering different rewards for each subsequent referral, or even offering a spot prize whenever customers get a certain number of friends shopping.

Stretch targets like these can greatly increase the number of referrals per customer. Without them? You’d be lucky to average 1.2 referrals per participant. Which means that, just like Uber’s, your programme’s going to run out of fuel… and fast.

5. The Pareto Principle

When we examined data across our entire client base, we found that roughly 85 per cent of referrals come from just 15 per cent of referrers. That’s why we encourage the brands we work with to use gamification to weed out these super-star advocates, pitting them against each other as they strive to earn exciting top prizes.

The result? Super-energised advocates, with vast social graphs, working for our clients. Which is something Uber and Airbnb simply can’t claim anymore.

So, there you have it. Five simple but serious ways that the likes of Uber and Airbnb have fallen behind the curve. If you’re thinking of starting a referral programme, or updating your existing one, you need to consider these factors carefully to avoid making those mistakes too.

Robin will be further assessing the psychology of referral and what makes a good referral scheme at the Figaro Digital Winter Marketing Conference on 6 December 2018. For more information you can view the full agenda here.