One of my three operating theses is: market products that don’t need marketing. This is not due to laziness, at least not entirely, but due to my belief that this way you get to work on more interesting problems.
Relating to the “no need for marketing” idea, I firmly believe early stage technology companies should focus on word-of-mouth and recommendations as part of The Two Hedgehog marketing framework. Here’s an important piece of information to keep in mind when you’re designing your referral program: timing matters.
Pipedrive lesson: user age is the most important factor in referral schemes
And I’m not talking about their time on Earth but time since signing up to your service. Pipedrive’s product analyst Andres looked at usage of our tell-a-friend program in relation to almost any conceivable feature usage or user characteristics. Time since signing up is the most important factor to consider.
The biggest volume of invites, both successful and unsuccessful, are sent out during the first couple of days since signing up. Which makes perfect sense because users are still in the discovery phase and learning about any referral programs in the process.
Which would mean that there will never be a better time to set up some messaging and triggers around the referral program.
There is another peak around day 30 for Pipedrive that coincides with the end of the trial period for must users. I’m 99% confident this is not organic and is caused by us encouraging triallists to visit the billing page where we present information about our tell-a-friend program among other things.
Bonus factoid: the probability that an invite is successfully accepted increases with each new invite the company/user has sent. That is, the more invites someone sends, the higher the probability of success, or vice versa.
What about the rest of the iceberg, or “true” word-of-mouth?
Any referral programs are usually just the tip of the iceberg and there are magnitudes more old-fashioned people-to-people referring going on. The above was data from Pipedrive’s referral program. Is the same true in the true “organic” word of mouth?
Potentially. I ran a study some years back and asked a sample of 291 Pipedrive users when would they be most likely to recommend the software. They claimed that this is not during the first days but during the first couple of months. Which may or not be true. We might study this next, so there may be a sequel to this post.
A hundred years ago products and services spread because they were good, not because they were marketed well. Focusing on referrals is not only efficient and effective, it’s also a step towards these olden golden days where we work on earning recommendations, not “hacks”.