Competitive Exploration: Incentives

Part
01
of two
Part
01

Competitive Exploration: Incentives Part 1

Airbnb and Dropbox use referral programs and social media following as incentive programs to increase their customer base and encourage existing customers to continue use their services.

Research methodology

We commenced the research to establish 2-3 best in class examples of incentive programs of e-commerce companies, specifically those that have a low velocity, high ticket e-commerce experience by identifying the e-commerce companies that have a high level of customer service tickets compared to a low number of overall transactions. We were able to identify two companies including Dropbox and Airbnb. We noted that these two companies had a thriving referral program and more than 10 articles each specifically targeting the referral programs. Next, we scanned through the official websites of the companies and we were able to obtain relevant information regarding incentives programs offered by the companies from their respective websites.

We also searched for additional information through credible business-related and media databases such as Forbes, Business Insider, Market Reports as well the social media pages and profiles of these companies. We were able to obtain additional information that detailed that the referral programs of these companies are among the best based on how the companies are able to successfully expand their customer base within a short period through the implementation of the referral programs, eventually leading to growth in revenue. Additionally, most of the articles that we obtained also detailed about the best strategies to set up the referral programs and refer business owners looking to set up and implement a referral based program to mirror the examples of Airbnb and DropBox. Lastly, we were able to establish that the other element that makes the two companies the best examples of incentive programs of e-commerce companies that have a low velocity, high ticket e-commerce experience stems from the fact that these two companies continually work on improving their incentive programs through analyzing data and making necessary changes according to the preferences of their consumers as well as the behaviors and trends of their online visitors.

INCENTIVE PROGRAMS

Airbnb has a referral program that offers the referrer $25 travel credit for a successful referral of a client who makes a booking to stay at any Airbnb accommodation facility, and $75 credit for any successful referral of a person who signs up to list their home for accommodation services with Airbnb. Airbnb's referral program uses travel credits such as coupons with the referral made using clickable links that are redeemed for coupon codes.

Dropbox has a referral program whereby the referrer and the referee both get to earn free cloud storage space of 500 Mbs on the website's cloud storage platform. Additionally, Dropbox referral program that enables users to subscribe to the company's social media platforms and share their social activities while standing to benefit for free cloud storage services that are limited to specified storage spaces.

1. AIRBNB

The primary objective of Airbnb is to make its clients feel that they could "belong anywhere" by offering accommodation services that are tailored to the specific needs of the clients. In 2017, the company recorded an annual revenue generation of $2.6 billion. Airbnb offers two referral services, one for the host of the accommodation services and another for clients who are referred to purchase accommodation services through Airbnb. Since introducing the "refer-a-friend" program that is meant to get friends to refer potential customers who want accommodation sharing to use Airbnb in 2017, the company was able to exponentially increase its customer base with a growth ratio of 1:1. Additionally, AirBnB's daily bookings raised by three times when they implemented the referral program.

HOW the Companies administer THESE referral PROGRAMS

Airbnb only carried out a closed beta test of the referral program on its existing customers. The details of the referral programs are listed and explained on the company's terms and conditions section of their website. AirBnB details on the company's website on a user can earn redeem and qualify for travel credits, and how to share referral links with friends.

DROPBOX

The primary objective of Dropbox is to "to unleash the world's creative energy by designing a more enlightened way of working." In 2017, the e-commerce company generated annual revenue of $1.1 billion. Dropbox offers various incentive services to its customers that includes providing 125 Mbs free space to customers who follow the brand on Twitter as well as 500 Mbs on customers who refer their friends to use DropBox cloud storage services. Additional, customers who share their experiences of their activities on Dropbox on social networks platforms are eligible for 100 Mbs of free cloud storage space from the brand.

SUCCESS OF INCENTIVE PROGRAMS

The Airbnb program enabled the company to increase its number of registered users by 100,000 bringing the number of registered members to four million in four months. The "refer-a-friend" referral program of Airbnb was responsible for enabling the company to its daily signups by 35% in 2015.

On the other end through its referral program, Dropbox has accounted for at least 9.76% of the company's monthly growth to its referral program. The company has detailed a step by step procedure of how to refer a friend to DropBox on their Help Center.



Part
02
of two
Part
02

Competitive Exploration: Incentives Part 2

In this study, we found that two best in class examples of incentive programs of e-commerce companies include ExcelHelp.com’s funnel strategy and Trek Bicycle Corporation’s website strategy. Below is a detailed explanation of our methodology and findings.

METHODOLOGY

We initially started by searching for successful examples of companies with high conversion rates from AutoGrow, ZoomInfo, Zoovu, Guided Selling, among others, and found several examples. We selected two companies based on how well-known they are in their respective fields and the type of product they sell (one example of a physical product and the other of a non-physical product). Based on our criteria, we selected eSoftware Solutions and Trek Bicycle Corporation. Next, we analyzed the strategies of the two companies and found that eSoftware Solutions gathers customer data through its website’s homepage, provides free consultations as an incentive, and follows the prospective customer through e-mail to make the sales conversions. Trek Bicycle Corporation makes its sales conversions by helping the customer to choose the best bike based on their needs. Through e-mail, they follow those prospective customers that did not purchase a bike and offer to ship the product for free. Lastly, to ensure that the company strategies were effective, we searched for their annual revenue and the conversion rates after applying their strategies.

FUNNEL STRATEGY OF EXCELHELP.COM

With $4 million annual revenue, ExcelHelp.com builds personalized software integrations in Microsoft Office suite programs for Fortune 500 companies including NASA and Revlon. It charges $50,000 to $300,000 on average depending on the project. ExcelHelp.com is one of the products developed by eSoftware Solutions. It provides a free Excel consultation as an incentive if the prospective customer fills in a form that collects their information/data. Those prospective customers then receive white papers and newsletters via e-mail. ExcelHelp.com’s success rate is 30% of revenue growth. According to its CEO, Russell Kommer, it generated an additional $300,000 in revenue through its funnel. The first step in its incentive program is an exit pop-up when the customers are about to leave the site (a free opt-in offer for their white paper). If they are interested in a particular service, the homepage shows a form that collects user information for consultation and provides a free brochure containing its services to prospective customers. Next, the prospective customers who filled in the form receive an e-mail as a follow up. ExcelHelp.com also sends re-targeting ads to bring the users back to the website and make conversions.

WEBSITE STRATEGY OF TREK BICYCLE CORPORATION

With $213.85 million estimated annual revenue, Trek Bicycle Corporation aims to produce the best bicycles globally. It produces mountain, road, town, children’s, tandem, police, and BMX bikes. Trek Bikes sells high quality bicycles (such as bikes with personalized color) amounting to $10,000. It provides over 300 bike models and alternatives. It also offers free shipping for abandoned carts and has an interactive Bike Finder. Its success rate is twice the conversion rate increase for customers who use the Bike Finder. Furthermore, 4% of all site traffic use the digital assistant.
Trek Bikes incorporates an intuitive digital adviser at various entry points on its official website so that new visitors and novice riders do not become overwhelmed by the extensive product range. This guides the customers through products that match their needs. They do not have to spend a lot of time to search for an unfamiliar topic. The Bike Finder asks a series of questions to determine their primary needs before recommending a particular bike model. Next, they are brought to informative and other product-related pages. After choosing the bike, consumers are brought to a comprehensive product overview to fully understand the bike they are about to purchase. Lastly, all customer reviews (positive and negative) are published at the bottom of each product page. After leaving the website, if the customer abandoned the shopping cart, Trek Bikes sends him/her a free shipping offer through e-mail.
Sources
Sources