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Mar 29, 2012
Case Study

Referral Program: 18,000 customer participants create more than 60,000 shares, $100,000 in sales

SUMMARY: With a highly engaged customer base, a referral program is a winning way to get those customers to become brand advocates and even help drive sales.

This case study looks at a provider of extended warranties for consumer electronics that knew it had some very engaged customers based on tracking online mentions of its products. To tap into that energy, the marketing team created a multi-channel referral program and sweepstakes incentive that included direct mail, email and social media to get about 18,000 referral program participants over three months.
by David Kirkpatrick

CHALLENGE

SquareTrade, a provider of extended warranties for consumer electronic products, knew within its extensive database it had some devoted customers. Some of these customers purchased multiple warranties for a number of different products.

Will Spencer, Marketing Manager, SquareTrade, said the company noticed the positive word-of-mouth SquareTrade would receive from a subset of its customer base. It also noticed a lot of this "brand evangelizing" was coming from owners of extended warranties for Apple products such as iPhones and iPads.

He stated, "The opportunity for us was to capitalize on the enormous amount of positive word-of-mouth that SquareTrade has."

He added that the marketing team wanted to seize the opportunity around a new product release when the company knew, from previous experience, there would be a large amount of online conversation around the product, and therefore also around SquareTrade’s warranty product.

This case study looks at this multi-channel effort to help build a referral program and drive sales by utilizing the most engaged group of the customer database.

CAMPAIGN

SquareTrade decided to create some kind of effort around the release of the iPhone 4S since the marketing team knew its most engaged brand advocates bought Apple product extended warranties.

The team knew it wanted to create a referral program to allow those highly engaged customers do some of the marketing for SquareTrade, so Marketing began developing a plan.

Step #1. Listen to the customer


In this case, SquareTrade listened to those highly engaged customers from the database.

Spencer said the team dug into the database looking for particular warranty profiles using attributes such as:
  • Warranty ownerships

  • Number of warranties owned

  • Whether the warranties were for Apple devices, such as the iPhone or iPad

He said some customers owned as many as ten warranties.

From there, 15 to 20 of these engaged customers were called by telephone, and interviewed with a list of scripted questions that allowed for an open-ended discussion.

These calls led to the idea of a "golden ticket" promotion that would serve as a sweepstakes incentive for the referral program.

Step #2. Determine the incentive

After getting the idea for the golden ticket promotion from the customer interviews, the marketing team had to work out exactly what the incentive for the sweepstakes promotion would be.

Since the effort was tied to the release of the latest iPhone, the team decided to give away 50 iPad 2s over the course of five weeks. The idea was labeled, "50 iPad 2s in 25 Days."

Customers were given an incentive to share to increase their chances of winning the contest, and each day someone was chosen to win, and both that person and the referrer received the iPad 2.

The effort also included two other incentives for referrers:
  • $10 for every referral

  • $100 for every five referrals and the referees received $5 off their newly purchased warranties

The referrers received their $10 and $100 incentives through PayPal, or with iTunes or Amazon gift cards.

Step #3. Reach out through direct mail

Because the release of a new Apple product involves customers waiting in line at the Apple stores, Spencer said the first channel used to reach out with the "golden ticket" was direct mail.

"The ticket itself was a coupon for people to hand out in line, or when they were talking to their friend," he explained.

The coupon was an offer for a discounted iPhone 4S extended warranty, and anyone who made a purchase was entered into the iPad sweepstakes. Spencer stated there was also a no-purchase option to enter the sweepstakes and some winners did come from that pool.

Step #4. Utilize email to support the effort

Spencer said SquareTrade has a sizable email database, so the team went through that list and looked at individual promoter scores as well as uncovering customers with iPhone warranty purchases in the past for the email send.

"We (uncovered) the ones most likely to participate in the program, and emailed a pretty sizeable chunk of our email database," Spencer said.

The email included a personal URL that when shared would ID the referrer. The team purchased a short domain -- sqtr.co -- to use for the pURLs to make it easy to share beyond the email.

The main reason for obtaining the shorter domain for the pURL was that the link on the direct mail send would have to be physically typed into a browser since it was printed on paper.

The team felt it would be much easier to get people to type in "http://sqtr.co/ABc123" than "http://squaretrade.extole.com/a/clk/ABc123."

Spencer explained, "The strongest case was for functional reasons. But we also thought that it would make it easier to share the URL over the phone, or to write it down for someone. And then when it came to the design, we were able to print the URL larger on the ticket. Finally, we knew that we could own the domain for (use) after the campaign, and use it for other situations, as well."

Step #5. Go to social platforms to spread the word

The direct mail piece put the coupon in referrers' hands, and the email send reached a select portion of the customer database, but social outreach on Facebook and Twitter provided a very easy method for those engaged customers to refer to the sweepstakes program and evangelize for SquareTrade.

Spencer stated, "As much promotion as we did (on the social channels), I think it was the promotion that our fans did, and that our referrers did, that took it to the next level and in a very powerful way."



RESULTS

Spencer felt the entire effort was very successful across a number of tracked metrics.

Here are some of the numbers and key performance indicators:
  • In the first 10 days of the program, around 10,000 people registered and began referring

  • Total participants reached about 18,000 people

  • About 1,000 customers purchased a $100 warranty from referrals

And here are figures on the actual sharing:
  • Advocates (referrers) shared with an average of 5 friends

  • The effort created more than 60,000 shares across Twitter, Facebook and email

  • Some advocates had as many as 40 successful referrals

Spencer said the program created more than 50,000 shares across every channel.

Here are the email metrics for the program:

Email Referrals -- October 2011

  • 21% open rate

  • 18% overall clickthrough rate

Email Referrals -- November 2011

  • 35% open rate

  • 21% overall clickthrough rate

Email Referrals -- December 2011

  • 37% open rate

  • 23% overall clickthrough rate

Another successful aspect of the effort was it created a large number of registrations for SquareTrade’s referral program that are now in place for future promotions.

Spencer said his main takeaway from this campaign was, "Understanding how our customers talk about SquareTrade, (and) understanding very clearly the processes they used, the way that they are successful and the ways that they are most comfortable using (for referrals.)"

He added, "I think with the rise of social media, there are many more conversations going on, and, for us, we realized that those conversations are fantastic for building brand awareness."

Useful links related to this article

CREATIVE SAMPLES:
  1. Golden ticket – front and back

  2. Email

SquareTrade

Extole – SquareTrade’s referral program vendor

Social Sharing: Twitter has highest amplification rate, email has highest conversion rate

Social Media Marketing: Viral sweepstakes targeting moms grows Facebook audience 4,488%

Email, SMS and Twitter Power Trade Show Contest: 4 Steps to 4x ROI from Event Sponsorship

The bacon of marketing tactics

Marketing Psychology: The behavioral triggers behind success at Amazon, Groupon and FarmVille


See Also:

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