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Lesson 5.

Create referral program


Referral programs are used to attract new, real people to use the booking app. Another important aspect is that referral programs allow to introduce the booking app to a specifically targeted group of people by creating a specific referral program for them.

In this lesson, you will find out:

  • Why using referral programs is so effective
  • How to create a referral program
  • How to analyze referral programs performance

Why referral programs

Referral program is a handy marketing engine that helps you attract real new customers for your services. The engine is fully automated, which makes it a way more cost-effective than advertising or any regular marketing tool.

The new user acquisition is done through the most user-friendly channel: references (also known as “the word of mouth method”. Referral holders invite their friends, who can invite friends too, which leads to a very loyal usage of your services.

You launch a referral campaign with initial coupons. Those have to be given to a group of people, just like that: Why would this happen, you may ask. Well, first of all because people who use your service love your service. But also because there are rewards meant for the referral and the referee.

Basically, this scheme has three working variants:

  • Referral gets a coupon when invited. When a referral takes a first ride, a referee gets a coupon as well.
  • Referral gets a coupon when invited. Referee doesn’t get any reward.
  • Referral doesn’t get any reward. When a referral takes a first ride, a referee gets a coupon.

You can assign the values of the coupons according to your wishes and possibilities.

The scheme where both the referee and the referral get a reward is the standard way to lead a referral program, because it is extra-motivating for both parties, just like this: Yet another important thing about using the referral programs is that within our system you can create as many referral campaigns as you want. Your targeting of these campaigns (on a specific group of people, events, corporates, etc.) is also absolutely unlimited.

Now you may ask yourself: what about the price of this unlimited joy? Good news: within a referral campaign, you only pay for an actual user of your service, since a user has to take a ride to redeem the coupon. Compare that to potential advertising spendings, when you are billed for the app install already, while still not guaranteed that user will use the service at all.

How to create a referral program

To start a new referral campaign, first go to your “Company management” tab, and then proceed to “Applications & Services” tab. Press “Subscribe”. Now your referral program service is activated and you can proceed to setting it up.

To do so, go to the new tab you’ve just activated: after you subscribe for a service, you will discover a new button on the left side of your panel: “Promotions”. Press the “Referral programs” button.

Then press “Add referral program” button and proceed to the new window where you will be asked to set the rules of the program. After you’ve set all the data, proceed to the next page. There you will be able to specify data about the initial coupons: how many of them will be issued, what discount they will provide, and what their expiry date (if any) will be.

The term “initial coupons” describes the very first coupons you will distribute to launch your referral company.

After you press the “Add” button, your new referral program is created. You’re almost all set. To enjoy the fruits of your program, you will only have to share the codes of the initial coupons, which can be done via your social media channels, via the SMS-service, or whatever other way you prefer. You can add more initial coupons if you need more (the “Add initial coupons” button).

You can also always terminate the whole program:

Be careful with this tool: terminating the program means only that no more coupons will be generated within this referral program. However, the coupons which have been already issued will not be terminated, so your actual liability can still grow if people will redeem the issued coupons. Which brings us to the next point: how to analyze your liability and the general performance of the referral program?

How to analyze referral programs performance

To be able to launch a well-working referral program, you have to be able to analyze its impact on your business. Let’s start from how your liability works within the frame of a referral program.

Have a close look at the following scheme:

This scheme means that if you grant a certain Bob an initial coupon with a $10 value, and Bob will invite two friends, both of whom will actually use a coupon, your theoretical liability will be $30 ($10+$5+$5+$5+$5).

Because issuing an initial coupon and giving it to Bob you do not know whether he is going to use it, and whether his friends will redeem their coupons too, the liability stays theoretical - it is what the referral program budget accounts for.

The virtual money of the budget will only turn into real liabilities when they will be redeemed. Normally, about 25% of all issued coupons are redeemed. It is handy to keep in mind that the theoretical budget of the program will be 10-20 times higher than the real financial obligations of your company in front of your drivers.

Next to the budget, you need to operate with the following important variables:

  • Number of customers. This bar shows you the total number of users of the referral program, both new ones and those who have ever participated in other programs. Remember that a new user is a person who have never participated in any company’s referral campaign before.
  • Number of new customers. This variable shows you the exact number of new users attracted by the campaign. In other words, a very important number for your business growth.
  • Number of coupons issued. A total number of coupons issued at a certain moment. The number does not include returned coupons or invites left.
  • Issued coupons cost. The variable demonstrating the total cost of all issued coupons at the moment. Unlike budget, it doesn’t count in the coupons which are not yet actually issued.
  • Used coupons cost. The total value of all used coupons. This bar shows your actual liability in front of your drivers at the point.
  • Cost per new customer. This metric is simply the most important of all. It shows how much you do spend on every new user acquisition. Cost per new customer = (Used coupons cost) / (Number of new customers). This number is essential to analyze whether your referral campaign is effective as compared to other marketing tools you use.

Your task for today: create a sample referral program and have a close look on how the things are functioning.


Next lesson:

Add funds to your account

  • How to add funds to your account