How Airbnb created a referral program to increase sales by 300% per day

Case studies give a great opportunity to learn someone’s experience and try to adapt it for your needs. Today we’ll find out how Airbnb created a referral program to increase sales by 300% per day.

Referral programs are often used to recruit audiences, but in Airbnb the outdated system was not in demand by users and worked poorly. It was difficult to find the program on the site, and on mobile applications it was not at all. Word of mouth is an excellent source of growth in Airbnb, also because the experience of using Airbnb is very personal. People use Airbnb to experience incredible sensations - trips with friends, cultural exchanges and even such unique events as a honeymoon. Airbnb’s referral program encourages for the invitation of friends to get $25 by the person who invites and the person who is invited, when the invited user pays the first booking through Airbnb. The idea was simple - to increase the number of people who tell friends about Airbnb, and to strengthen this effect.

The company decided to restart the referral program on all three platforms: on the site, iOS and Andoird applications. The referral program is a great project, because it is the embodiment of growth. It is easy to measure and scale. It is necessary to recognize the right moment when the user is ready to send an invitation, and to strengthen this desire.

Step 1.

For the referral program, company defined success by choosing several metrics.

The number of users per month who sent invitations,

The number of invitations sent per person,

Conversion to logged-in users,

Conversion to those who rented a house,

Conversion to those who rented out a house.

For each metric, they made three different predictions:

good,

better,

the best.

Company built forecasts by looking at other successful referral programs, like Dropbox and Voxer.

Step 2.

Airbnb developed mechanisms to track the progress and build reports. There is logging platform, called air_events. With it, it is possible to call the same method from any platforms and log events in a centralized repository. Special libraries were created: Ruby, JS, Objective C (for iOS) and Java (for Android). For the referral program company identified more than 20 events that occur during user invitations and subsequent registration. With this tracking, they can track the whole process of the invitation - starting with the number of page opening invitations to the number of users who have booked apartment.

Step 3.

Personal referral codes and links make letters more personal. When the user starts the application after installation, he goes on special lending of the referral program.

One of company’s developers, Jimmy Tang, was co-founder of Yoz.io, where he developed analytical tools for mobile devices. Yoz.io has created a tool that accurately monitors which link the user clicked before installing the application. Thus, it is possible to determine that the user installed the application using a referral link and open a certain page for him. When a user clicks on a link, Yoz.io remembers it. Then, when the user downloads and starts the application, it again determines the user and associates it with the one who clicked on the link. Next, it throws information into the application, so the certain page can be displayed.

Step 4.

It possible to improve some metrics by:

Increasing the number of invitations by offering to import the list of e-mails from the notebook or mail services,

Increasing the number of active users who send invitations, improving the visibility of the referral program in services,

Increasing the conversion rate for new guests by sending a reminder to those to whom the invitation was sent and to those who registered, but did not use the $25 gift.

Step 5.

Company started advertising the referral program at the time when the user is most likely to invite friends, for example, after booking or leaving a positive response.

Company is also in the process of A/B testing of promotional letters. In one letter, they stressed that you can earn $25 for inviting a friend (personal interest). In another letter, they stressed that you will give $25 to your friend (altruism). As a result, altruistic letters worked better.

Also how the program works depends on the culture. For example, a referral program is incredibly popular in South Korea. Company segments the results of A/B tests for different countries to find out which messages in which culture work better.

This case study is a good example of how Airbnb works on projects: set a measurable goal, define metrics, create a product, measure the result and repeat again. Other companies can adopt some mechanism and change it according to its needs.

https://medium.com/airbnb-engineering/hacking-word-of-mouth-making-referrals-work-for-airbnb-46468e7790a6 
  
 More analytics posts you can find here: http://haneenalansari.blogspot.com/2017/05/web-analytics-implementation.html