How Dropbox grew 3900% in 15 months with a referral program🚀
Here are the clever strategies used to build the most successful referral program ever
Dropbox is notorious for spending very little on advertising on it’s way to becoming a $10billion company. Their referral program is one of the most famous cases of referral marketing today. It was the catalyst and growth hack that sparked their long term growth. While Dropbox did implement other growth strategies on their way to becoming a major brand, let’s break down what exactly made their program so incredibly successful
Dropbox is a file hosting service founded in 2007 by Drew Houston with initial funding from YC and Sequoia. They burst onto the scene in August 2007 at the YC demo day. However it was only until the spring of 2008 when people started talking about Dropbox being one of the breakout storage players to choose over competition Box.net and Mozy. They gained $6million in series A led by Sequoia in 2008 as memberships were up 25% and growing rapidly.
They use a freemium model, users pay subscriptions for storage. Users were given 2GB of free storage. More storage was always in demand, which they leveraged brilliantly.
Dropbox’s referral boosted their user base from 100k in September 2008 to 4M users in December 2009 (15 months). They managed to double their user base every three months during this time, resulting in 2.8M joined through referrals by April 2010.
Strategy 1: Two-sided referral
The premise of the program was simple. Since the product offered cloud storage space, they rewarded users with more free storage not only for referring a friend, but for accepting an invite. Both sides benefited with 500MB storage. With all users likely needing more storage, users referred as many people as they could, and once those referred users signed up, they did the same.
Because the person being referred could benefit right away, it created a stronger incentive for them to sign up. This was key. They could start using Dropbox with free storage right away, no subscription needed. It was essentially a no commitment trial that still required account creation/setup.
Most referral programs used by other companies lacked this 2 sided element that Dropbox figured out worked extremely effectively. It made the referral system more sticky and better at converting people to free signups while accelerating/continuing the referral system. The more users Dropbox they could get involved in the referral process and the more free storage they started collecting, the more likely they were to become long term users.
Strategy 2: Integrated On-boarding process
Dropbox integrated the referral system as a final step in their setup checklist, leading to users inviting friends as soon as they set up. As well, the subtle nudge to become a Dropbox guru if you completed all the steps (including inviting friends) was also a good push to follow through/complete all steps.
Strategy 3: Increasing rewards
Users wanted more storage, so they offered incentives to receive more if they completed various tasks. This part was framed as “get more space” vs “invite your friends. They had increasing rewards for storage based on the nature of the task.
By positioning it as get more space, it gave people a stronger reason to follow through because of the real (money saving) reward. They could get more out of Dropbox simply by completing a few tasks, which happened to increase brand awareness and virality for the brand
Strategy 3.5: Social media
Many of their tasks involved sharing/following their accounts on social media. This gave Dropbox a variety of platforms to spread their product to new people, build a brand presence, acquire more users, and also learn which channels became most effective. Their own users became the ones testing their channels, allowing them to sit back and monitor/understand which ones worked the best.
Strategy 4: Ease of invitation
Once users were hooked on getting more space, Dropbox made it super easy to get it. It was clear they had to invite friends, so Dropbox made it easy to invite them in many ways. Via social media sharing, sending a referral link, emailing, etc
Strategy 5: Clear status
A key component was that people always knew their referral status. Dropbox made it visible for them to see how close they were to attaining their prizes. They included a panel that was accessible anytime by users to see how their invites performed.
Strategy 6: Email loop
Once the referral signup or task was complete, Dropbox sent an email confirmation to both sides, showing their total increase in storage. Notice how they keep track of your storage. They also encouraged them to get more storage by inviting others
Dropbox created this exciting experience and leveraged it by offering more free storage if they referred someone else. At this moment, people were more likely to continue the loop and invite their friends. They included links to do this right away or upgrade their account
In other emails, they included another subtle message p.s. ‘To get even more space, invite your friends or upgrade your Dropbox’, with two links.
To recap, Dropbox grew 3900% in 15 months by continuously improving their product, getting VC funding, and most notably by building a legendary referral system
Dropbox today:
$10.55bn
14.8 million users
Keys to referral program
Offered an extended version of the same product
Was part of the on-boarding process
People clearly understood the benefits
People new their referral status and storage gained at any time
Built a viral loop through email
I hope you like this deep dive into what made dropbox’s referral strategy so successful.
Referrals weren’t the only growth strategy Dropbox used, so here’s a few more bonus growth strategies Dropbox used that contributed to their success.
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BONUS Dropbox Growth Strategies
Signup Driven Homepage
When users visited the Dropbox site for the first time, they noticed a quick 2 minute explanation video with a big button do download Dropbox. It was very simple but super effective in converting users because of it’s simplicity in what the user was intended to do. This was their first homepage.
Easy Signup Process
Once the users clicked on the button to signup, the process was short and simple. This made sure that once they captured their attention, they wouldn’t lose it with an overly long process to get signup. It was also possible for users to sign up on their desktop, no web browser was even needed.
Once they signed up, Dropbox automatically created a file on the users desktop called “getting started.” This helped them not only get started with ease, but did a great job at transitioning them to start using their product as soon as possible.
Dropquest
This was a contest run by Dropbox, challenging users to take on scavenger hunts and various puzzles. The users who competed and placed in the top 176 received free space as well as Dropbox swag and other items. They announced the contest on their blog and it blew up in terms of engagements and likes. It was shared across social media, getting lots of publicity for the company.