Referral Rocket Blog

If you haven’t heard of Dropbox’s success story already, you are on the right page. Dropbox was started with just two people in 2007, fast-forward to 2024, Dropbox generates annual revenue of $2.465B and has around 3370 employees working from 12 office locations across 8 countries.

Before we hop onto the growth hack Dropbox has executed, let’s dive into the early days of Dropbox.

Dropbox Timeline

Dropbox was founded in 2007 by MIT students Drew Houston and Arash Ferdowsi. This cloud-based file storage & sharing service had earned popularity within a year majorly amongst the tech community in Silicon valley. But they were not able to move beyond the tech club.

On the other hand, big companies like Microsoft and Google were also trying to enter the cloud-storage space. Dropbox had to evolve quickly to stay ahead of the competition. They experimented with paid ads with CAC ranging anywhere between $230-$380, but it was not suitable for their product that costs $99 per year.

Houston took help from Sean Ellis, an extraordinary marketer who coined the term ‘Growth Hacking’.

The Power of Referrals

When Sean explored Dropbox’s user data, he noticed that almost 33% of customers who signed up for Dropbox were referred by current customers. People were talking about the product and referring to their friends. There was buzz around Dropbox but it wasn’t enough to expand customer base or grow exponentially.

They knew they had to create a program to fuel the word-of-mouth Dropbox has got and decided to take inspiration from PayPal’s referral program.

Niche Specific Rewards

PayPal’s referral program was giving away $10 for both referrer and referee, spending nearly $70 million on rewards. The problem was Dropbox couldn’t afford that and rewarding cash price worked well for PayPal because after all it’s a money transfer application and it helped in creating trust and highlighting the value of their service.

Dropbox had to come up with an incentive that falls under their budget, reflects its product’s core value and also provides value to users.

Storage – It was their product’s core value and it was something users wanted.

Dropbox referral program went live with 250MB space as an incentive for both referrer and referee. It was 2009 and 250MB online storage was still a lot of space for users and it encouraged them to invite friends via referrals. And in no time, Dropbox’s sign ups increased by 60%, there were tons of invites sent via social media and emails.

To make the most of the opportunity, the team experimented with messaging, offer, user experience, and every other key element.

They would review the outcomes of each new trial every two weeks to see what was and wasn’t working.

The results of every trial were used to determine the next set of modifications to test. And, after a few revisions, the results got better. Dropbox grew 1300% in just 15 months and They managed to double their customer base every three months during this time, resulting in 2.8M joined through referrals by April 2010.

Note that they did this without spending on paid ads, investing on banner ads or traditional marketing strategies.

A simple yet powerful referral program was what magically worked for them.

Five things that made Dropbox’s Referral Strategy Effective

Onboarding + Referral Program

Onboarding process is a key step that decides the success of a product. The goal of this process is to help people become better at what the product enables them to do.

Dropbox knew that users hate to fill out the unnecessary details and go through a 10-step long onboarding process. So Dropbox completed their onboarding process in a simple six-step process and integrated referral program as a last step.

The aim of Dropbox’s user onboarding process was to make it easy for users to view and share their files from anywhere.

The “Invite some friends to join Dropbox” step made it clear to users how much easier it will be for them to access and share any file they require as more of their friends use Dropbox.

The learning here is no matter how much of a good referral program you have, it will not take off until it gets that visibility. The more visible it is, the more people will participate. Dropbox was smart enough to include the referral program in onboarding itself so people know about it.

Double-sided Referral

The Dropbox program’s concept was simple. Since the product offered cloud storage space, users were rewarded with more free storage for both accepting invitations and referring friends. 500MB of storage was beneficial to both parties. Users referred as many people as they could, and after those referred users signed up, they did the same, as it’s likely that all users needed more storage.

The person being referred has a strong motive to sign up because they can straight away use Dropbox with the free storage, no subscription needed. It was basically a free trial that needed a basic signup.

Most of the companies lacked this two-sided referral program which Dropbox implemented that worked extremely well for them. It made the referral program more efficient, and better at converting people through free signups.

Ease of Invitation

Dropbox made it super easy to send invitations. Since the users loved the idea of getting more space, they knew they had to share invites and ask their friends and family to join the program.

Dropbox offered users with multiple sharing options via social media sharing, a referral link, emailing etc. It also had predefined messages that encouraged users to share invites with just a click without having to write the message.

View the Status Option

Referral Dashboard is an important aspect in Referral programs. It also helps in creating trust and motivation among users. The best way to push users to make adequate referrals is to make it visible to the users. Show the referral status to the users, how the invited friends are performing and how close they are to reach the goal (final reward).

Dropbox referral dashboard gives you information about all the necessary details such as list of friends that completed the referral process-helps in building trust, status of pending referrals-encourages users to contact the referees and remind them to complete the signup process.

Thank You Email

Dropbox took referral program visibility seriously and it made sure that ‘Get more space’ CTA is included in every step of the user’s journey.

After a user referred the friend, Dropbox sends Thankyou email with a link to invite more friends so that they can avail more free storage. This means that they intended to create a referral loop that drives users to refer more and more people.

This email also triggers actions from inactive users to start inviting their friends again to get more storage.

Steal these Tactics from Dropbox Referral Program

Pick a Reward that Suits your Business

Dropbox’s incentive program had two goals in mind: It had to provide the participant with something they were in need of and show the product efficiency for a larger market. It is a win-win for Dropbox, referral partners and their friends. You need to determine what your business can provide to participants that will both add value and foster brand loyalty.

Make it Easy to Refer Others.

Referrers found Dropbox to be easy to use at many key phases. First off, the sign-up procedure included their call to action. When a user was already excited about the product and prepared to tell others about it, it asked that they sign up as a referral participant. 

Second, Dropbox made it possible to join up with as many friends and family members as possible with just a few clicks. Email, social media, SMS, messenger applications, and other channels can all be used to send referral links. It even gave customers an option to exchange links without having to copy and paste each contact manually by syncing contacts from Gmail, AOL, Yahoo!, and other mail providers. Here’s where using a software application for referral marketing can help you.

Provide Updates to your Participants

An invite status dashboard is an important component of Dropbox’s campaign that played a significant role in its success. From their Dropbox account, participants could see the number of friends and family members they had invited who had completed the sign-up procedure, which granted them additional storage. In order to receive even more storage space, it encouraged users to reply to invitations or share the link more frequently.

Use Tools for Referral Marketing

Software for referral marketing can come in handy for you. With the use of software for referral programs such as Referral Rocket, your business may view a timeline of a participant’s activity, including when they signed up, who they referred, and the number of referrals that turned into customers. 

You can also update participants about the success of each month’s activity or pick a platform that allows automated prizes. 

Run Contests

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 are awarded with free space as well as Dropbox merchandise and other prizes. They announced the contest on their blog and it blew up in terms of engagements and likes. The company received a great deal of publicity after it was posted on social media.

Dropbox Referral Program in a Nutshell

Dropbox setup “both side gratifications” which rewards both the referrer and the referee. Dropbox anticipated that its new offering would gain traction. Getting customers to sign up for cloud storage space was necessary.  Therefore, its goal was to give participants more space as reward for accepting an invitation as well as for suggesting a friend.

In other words, participants were encouraged to give the product a try, see that it worked well, fall in love with it, and then tell others about it. The program boosted signups by 60% over time, resulting in over 2.8 million direct referrals in the initial 18 months.

Conclusion

Everyone can agree that the Dropbox referral program was an outstanding idea, and its strategy can be applicable to all sorts of businesses. It was evident that every aspect of the referral program contributed towards its mega success and viral growth that turned Dropbox into a billion dollar company. But remember that the same formula cannot work for everyone.

You have to focus on tailoring this viral referral program strategy according to your product. Continuous Data analysis and regular testing can help you discover a perfect referral program that aligns with your brand.