Joshua Chin 7:18
That is very cool. And it’s rare. And I think that especially over the years, and in the in the digital space, I think five years is a long time. That alone, yeah. How many years have? Have you been around 1213 13 years now? As a company,
Raúl Galera 7:42
I would say, Wow, that’s all I’m old. Yeah, I started working when I was. Yeah, like, well, in 2013 14, I think was my first job. So yeah,
Joshua Chin 7:54
yeah. ReferralCandy has been around for a bit. And you work with some really cool brands as well. secret lab being one of them. We were just talking about their referral program. Now, for people who don’t know what ReferralCandy does, and what a referral program that is automated. Looks like. Give us a quick rundown, like the 30,000 foot view.
Raúl Galera 7:54
Yeah, so. So our referral program, it’s basically encouraging your customers to talk to their friends and family and co workers are kind of anybody in their circle, about your brand, and your product, and hopefully, incentivize them to kind of sell your product to people around them. And that’s something that happens organically. Honestly, if you have a good product, chances are that you, your customers are already talking to their friends and family about your brand and possibly motivating them to, to buy. Now, referral marketing, it’s something so I guess that would be word of mouth, referral marketing, it’s any sort of marketing action that you put in place to increase the reach of that word of mouth by adding adding rewards some sort of reward system that encourages people to refer by adding kind of like a system to track it, which could be a referral link could be a coupon code. And then ReferralCandy, what it does is that it puts all of that on autopilot. So it makes it easy for brands. It could be secret labs, but it could also be a startup that doesn’t really have the resources or the time to you know, set something like this. Set up something like this in house. We do it for them and not only help them set it up quickly, but also make sure that 99% of the things that they need to deal with the referral program are running on autopilot, so they don’t really have to spend time on them.
Joshua Chin 10:07
Right. Now let’s dive deeper. So the typical, the typical approach is, alright, you’ve bought something now, Mr. Customer, would you like to give your friends 10 bucks, and we’ll give you 10 bucks in value, whether that be in cash in coupon or in some kind of equivalent role, right. And the title of the email is typically going to be something along lines of refer your friends, and then headline, give $10 receive $10. But I think that’s overused. Just personal opinion. I think that everybody does that. But Raúl I think you’ve seen way more than just that that basic stuff. What are some of the most innovative ideas you’ve come across that brands have used to reward their customers to become evangelists?
Raúl Galera 11:02
Absolutely, one of the one of the the ideas that I’ve seen recently that I particularly loved, and I think we’ve probably featured somewhere in some sort of some sort of form of marketing, I don’t know exactly, if we put it in a blog post, or we put it on on social. But we’ve seen a few customers that were it sounds kind of funny, because it’s, it’s, it’s not extremely groundbreaking, but in in in a day, we’re, we’re everything we can think about, it’s digital, you know, it actually stands out. So this company, basically printed a letter and put it in the in the box. So when the customer will unbox the product, they will see a letter explaining how the referral program works. And then I think they added like a QR code, so people could sign up from the referral program right away. And so that’s one of the that’s because again, you know, you can, you can automate pop ups, you can automate emails, but probably unboxing is probably the time where you have default attention from your customer, they are they’re excited that they got the they got the product is a customer is gonna be excited when the order your product, but they’re, they’re going to be more excited when they get home, and they’re opening that box, it kind of feels like Christmas day a little bit. So yeah, seeing that letter, they’re probably going to pay attention to it, and they’re definitely going to take action. So that’s one of the things that I’ve seen that work really well. And then honestly, again, I don’t know if it’s as innovative as that, but I’ve seen a lot of brands that just kind of talk to their customers, you know, in a very honest and natural way about their referral program, we have a client called barren fig, which has on their website, well, I haven’t been on their website for a few weeks, but I hope it’s still there, unless they’ve redesigned it. But if you go to their website, they have on the top navigation bar, if I’m not mistaken, a call to action that says Get get $10. And if you click there, they take you to kind of like their referral program landing page. So a page where you can learn about the referral program that rewards you know, how it works, all that kind of stuff. But they also added something that I thought it was genius. A little kind of like a brief text that says a note from the team. And there they explain basically, the reason why they’re launching a referral program and the impact that that referral program is having on their business. So they’re they’re being they’re being extremely transparent and honest with their customer base. I, I think they say something like, you know, any any, you know, any help, like any any, you know, any friend that you refer, it’s going to have a great impact in our small studio or small company. So I know they’re being kind of like being a little bit even vulnerable, like say, like, Hey, we’re a small company, like honestly, any help that we can get, you know, be great. And they’re making, they’re creating that connection with their customers. Fifth, I thought it was genius. And so that that I’m a fan of that kind of part of honest marketing. So that’s something I particularly like, because it’s a company that’s just, you know, explaining the reason why they’re launching the program and they also say something like, instead of spending money on advertising, we’d rather spend the money or rather get the money to you know, our customer. So yeah, I thought it was genius.
Joshua Chin 14:41
One so one of the things that make ReferralCandy in particular, pre pre unique is that you charge a low monthly fee with a commission on the revenue that’s generated through the referral program? And these are new revenue, new customers that are previously non customers. What? What? What’s the thought process behind the pricing model? Why does it work? And I have some follow up questions to do that, because it’s really interesting to me. So let’s start there.
Raúl Galera 15:23
I would say, in my opinion, what makes our, our pricing? Interesting. I was gonna say, fair, but I don’t think you know, I don’t think you can do you can call me I mean, I think it is fair, but you know, it sounds something I want to use it in a sales call. But what I particularly like about our pricing, it’s that we put skin in the game. So we make money, when you make money, like you said, we charge a small monthly fee. We don’t live off of that small monthly fee. So, you know, our our best interests as a company is to make sure that you’re making money from your referral program that your referral program is working, and that you make a consistent stream of sales every month from new customers. And then if you if you’re able to get that if you’re able to get those new customers and those that kind of new revenue, then then we’ll take a piece of that, which by the way, it will get our commission will get smaller as the sales grow. So we started at 5%. and ends at point 25%. Right. So, so kind of like the, it’s in our best interest to make sure that you get to that very, very small commission threshold, because it means that your referral program is doing very well. Yeah. So yeah, in a nutshell, putting skin in the game, make money when you make money, I think that it’s kind of a no brainer for for the customer.
Joshua Chin 17:00
Right. That is fantastic. Now, I have a follow up question here. So there is a tear, you mentioned that the the more money that’s that’s being made for for a program, the commission rate becomes smaller and smaller over time. Now, what if we have a really large brand, that’s that, say, doing millions per month, right in revenue, and say, the referral rate of couple of percent, an extra 50 grand a month? That equates to basically 1000 bucks a month in total fees for the product? At what point? Does it not make sense anymore? And do you have the option of, Hey, I am I represent a massive organization. And I’m trying to put a cap on how much we spend in a program on ReferralCandy. Do you have a fixed pricing program that we can work with? Is there an option available? Like
Raúl Galera 18:09
yeah, yeah, so two things actually. So that particular deck, kind of like example of company they that you’re mentioning. So they’re their referral sales. So if they’re making again, we’ll have to see, you know, we’ll have to like see how much money they’re actually making from the referral program. But the way our commission and again, I wasn’t intending on getting into like too specific into pricing, but I’ll just mention real quick. So our pricing structure goes from 5% to point 25%, which means that we only charged 5% On the first $1,000 in referral sales that you’re generating with that. So that’s $50. And then we go down to 3.5. And then I think it’s 1.5. And then again, eventually, point 25%. So it means that if a company is making over, over 10k, over 100k, their effective referral rate is going to be somewhere between three and one and possibly even less than that, if the referral sales are are much higher than that. So so they’re not going to pay 5% In, in, in commissions, they’re going to pay a lot less. So that’s that’s kind of one thing. And then the second thing is that yeah, I think we so we have a under price, kind of slash custom pricing option, which is basically I mean, it the goal is to address the kind of like the concern that you were raising about, well, I don’t know how much I’m going to be paying next month because maybe my sales fluctuate, right? Yeah. So we have the option of setting a kind of like a fixed annual fee with no commission so we just kind of Like, you know, figuring out what’s, you know, what’s the price that makes sense based on what you’ve made previously on referral sales and, and we kind of, you know, kind of set it up on that. So that’s, that’s a spot where customers typically get to after they’ve been with us for a few years, the referral programs are doing very well, they’re they’re making a lot of money in referrals, they’re paying a certain amount to do ReferralCandy. And then we kind of sit down and negotiate what an annual fee would look like. So mostly seller finance team can be, you know, have peace of mind that they know exactly how much they’re spending on referral marketing. And in they don’t have to really like, look, you know, what, how much what’s the difference between one month in and the next one?
Joshua Chin 20:46
Now, talk to me about the strategy behind referral marketing? And what are some expectations? I know that that on the site, it assumes a 2% referral rate? Is that still what you see right now, with the clients that the company works with? Or does that vary? There’s a change?
Raúl Galera 21:11
It varies. We typically say that that 2%, because it’s kind of what we’ve seen that is the average, well, not necessarily, from kind of, from what from our customer base, but also from some research that we’ve that we’ve looked at, kind of bigger companies like Nielsen that have done research on referral marketing. And we’ve realized that kind of like the average referral rate across all industries is about 2.5% to 40. Something. And so for these, we also saw that two, sorry, 2.2 point 40 something Oh, okay. Yeah, no, no, 40 No, 40 Right. Now 40? Everything? I know, I know. Yeah. And so yeah, so we, after seeing that average, and also seeing that the majority of our customers after lunch in the referral program, and most importantly, following the steps that we suggest to, for launch and post launch, which can be let your let your old customers know about your referral program, don’t just don’t just expect kind of new customers to get invited to join the program. And then, you know, forget about the 1000s of customers that bought from you in the past year. So, you know, let those people know, we have a we have a feature inside to to do that. So yeah, let your past customers know, said rewards that make sense rewards that are, you know, that incentivize people to refer. And then the last one would be to post them on social media. Yep. You know, kind of like put, you know, or, or doesn’t have to be on social media, like whatever other channel, whatever channel you’re using to communicate with your customers, make sure that you’re kind of pushing that message there. So if you do all those three things, you should be able to see at least a 2% increase a new revenue from referrals. Now, that’s kind of kind of a bottom line, that’s kind of a baseline estimation, so people can see what it will look like to to launch a referral program in terms of new revenue now. 5%, it’s common. anywhere between five, five and 10% is common. We have a lot of other case studies that we have on our site are at 10%. So it’s definitely not impossible. It’s definitely not I mean, it’s not easy. Because a lot of things need to fall into place. You need to have a really good product, you need to have a product that’s somewhat easy to talk about doesn’t have to be, you know, kind of like the coolers or latest gadget. It could be just, you know, it could be a t shirt, that’s just, you know, slightly different from what other people have seen, you know, it’s it doesn’t have to be something super groundbreaking, but it has to be something that people are will be somewhat incentivized to talk about. And again, yeah, so I’ve seen a lot of referral programs with 10%. I’ve also seen some with 30%. Those are kind of outlier rights. That’s closer to that 40 Something we were talking about. I don’t know if I’ve seen 40 something, but I’ve definitely seen 30 Sure, very few. But, but it definitely happens now. 10 It’s not difficult, not extremely difficult to achieve. Is that
Joshua Chin 24:39
a matter of increasing the frequency of communication about the referral program, or is it the positioning of the referral program, the offer the reward? What moves the needle the most that you’ve seen?
Raúl Galera 24:52
I’d say it’s all of it. The product has to be good. And the product has to be again some thing that could be interesting to talk about and again, doesn’t have to be gadget doesn’t have to be, you know, a super cool pair of sneakers, we have one of my favorite customers honestly, branch basics, and we have a case study on our site, they sell cleaning products, and they have a really good referral program. And but it’s not just the cleaning product, it’s everything behind that cleaning product, it’s the reason why they started the company is the reason why they created those products, it’s their, kind of, like, their explanation of why, like, after you read their explanation of, of kinda like all their product, which summarize in real quick, so branch basics, they create their innovative in my opinion, because of two things. The first one is that they have created cleaning products that are not toxic. For humans, basically, you’re not going to get sick from inhaling vapors or whatever, you’re not gonna get, you know, it’s not gonna irritate your skin or anything like that. So it’s fine for us like human, yeah, but it also cleans very well. And then the other one is that they, they sell them to you on a subscription basis. And so the first package that you get, you get a bunch of different bottles and spray bottles. And then every month, they’ll send you kind of like, different concentrate, so you can dilute them in water. And in my opinion, that’s, that’s honestly the genius point, in my opinion. Because after you realize all of this, you realize that most of what you’re paying for when you go to the supermarket and buy cleaning products from any other brand, you’re paying for plastic and water, that the process of that cleaning product, you’re that you’re buying at the grocery store from from traditional corporation. It’s basically something that’s diluted in water, and they’re selling you single use plastics, which after you’re done, you say you’re going to toss it, you might recycle it, but you know, we we all kind of know how that ends. At least with branch basics, you know that? Well, first of all, it’s also it’s a little bit better for for the environment in the sense that you’re utilizing those bottles for a long time. And they’re just sending you what you need, because you have water at home. So you don’t need to get you know, two liters of water every single month, when you buy your you know, your you know, any sort of any sort of cleaning cleaning product, honestly. And that referral program did very well. And it’s doing very well, I think it’s at over 10% monthly. So think about what it would mean to have a 10% of new customers coming to your store. And you’re also only paying for those customers once they make a purchase. And the way you’re paying for those customers is by giving them a discount, and giving also some sort of reward to the person that made a recommendation, you’re not paying for clicks you’re not paying for, you know, Facebook ads, you know, anything along those lines to acquire that new 10% of customers every month. It’s it’s, I mean, it can definitely change the bottom line of your business. So
Joshua Chin 28:16
when it’s for sure when ya know why my one thing that really sticks out in my, in my mind is that the two types of referral programs that I’ve seen, there’s the landing page, Hey, give, give, give 10% and on on branch basics, it just says give a little get a little and email and name and get invite link. Right. That’s the CTA. For some other brands like secret lab, it requires you to be a customer first. So it says you will get a custom personal personal referral code and exclusive referral code when you make a secret lab purchase. So a little bit of a different approach there. What is the thought process? Do you think behind the two approaches? And is one better than the other? Like obviously I have my personal opinions and I’m inclining towards just let everyone be a part of the program even if they’re not a customer if they want to be a an evangelist with Ambien embeddedness.
Raúl Galera 29:37
I agree with you. But the reality is that both of them work. That’s what it called the difference between a private referral program an app and a public referral program. So a lot of our brands only one customers to promote their products which I understand I guess the reasoning behind that is that if you’re a customer if you’ve used the product, you know exactly what makes Product good, and what makes a product useful? And you can pitch our product perfectly? Because you know, what’s better than your personal experience? I mean, that’s, that’s kind of like the baseline idea of referral programs, you’re turning your customer base into your sales team because they know exactly why their friends are going to like it, they can they can show it to their friends, they have the physical problem, they can tell their friends, look, take a look at it and like or use it and tell me tell me what you think. So I totally understand that I personally prefer the open referral programs for one simple reason, and is that it can allow you to convert website traffic that otherwise would not turn into customers. Let’s say I, if I, I, I like to play basketball, but I don’t necessarily play soccer. But I have a lot of friends. I live in Spain, all my friends play soccer. Yeah, I’m the weird one. So if I land on a website that is selling soccer gear, and I think it’s cool, or I think it’s interesting, or maybe it’s a brand and but maybe my friends don’t know about and I see that they have a referral program. And not because I can get something for myself, because if they’re offering a discount, you know, I’m definitely not going to buy anything from from from there. But But if they’re given my friends a discount, why not? I could, I could sign up as an advocate, I can get my referral link, and then again, give it to my friends, Hey, say hey, like, I found this brand. I know you guys play soccer. I don’t know if you guys have heard of it. But if you buy through this link, you’re gonna get 15 20% off. And that way you’re converting traffic that otherwise, otherwise, if I if I didn’t find that, that referral program, I would have just left the website thinking that well, you know, this Instagram ad wasn’t made for me, right? So that’s why I think it’s, it’s, it’s useful. And then also, you never know who’s going to join your, your referral program, you might have an influencer, you know, coming across your brand and signing up and then doing doing some sort of video or like posting something about it or writing a blog post about it. You never know. So. So that’s kind of like that convexity. That I think I mean, I’m always kind of chasing that. So I that’s why that’s probably the reason why I think that it’s interesting, because you never know what’s what’s going to happen. And there’s there’s an upside that you’re not really tapping into.
Joshua Chin 32:33
Here’s a fun little tidbit that I learned from Josh from snow teeth whitening. He found celebrity influencers, who are you who are using his products without him knowing, by scouring through the list of customers that he’s had that he’s had matching their addresses to the the respective prices of those properties on zillow.com. And he would kind of rank those house property values by which is the most expensive, and so on so forth. And he he would reach out to people on the on the higher end. And you realize that the names are, and you Google the names of those people and you realize that, Oh, holy crap, Kim Kardashian is using my product, and it is so and so forth. And he creates this, this opportunity to reach out to their agents, if they do have an agent or directly to the influencer and say, Hey, we noticed that you use our products. I’m the founder of of snow teeth whitening. And that opens up a conversation so much more effectively versus you know, yeah. And I suspect that that could be done as well with a referral program and looking at who’s in the list of your referrals. So pretty cool,
Raúl Galera 34:02
we actually have a feature on our dashboard that it says top referrers and it basically allows you to see who are the customers that have referred the most friends in the past month. And so sometimes you’re gonna see that you have somebody that has refer 10 times more friends than than the next one on the list. And so if you start digging into that, like oh, okay, yeah, this person has 100,000 followers or a million followers on Instagram, that’s probably why and then that that gives you kind of an idea of who you should be reaching out to, to kind of like you know, increase that that relationship or improve that relationship with that customer.
Joshua Chin 34:42
That makes sense. Raúl, what’s your message for DTC brands, all around the world?
Raúl Galera 34:52
Diversify your customer acquisition channels. I saw recently, Cameroon are aware So, sorry for not not quoting not not giving the source but I think was a Barker actually, I read that face. So ecommerce brands are paying more to Facebook in terms of Facebook ads than what they’re making themselves in net profit. So which means that yeah, I believe that Facebook is making Facebook is making more money from ecommerce stores and ecommerce stores are making themselves which is absolutely mind blowing. Yeah. So diversify your customer acquisition channels. referral marketing is definitely one of them. And and if you can look for channels that can that you can kind of afford in terms of paying based on revenue us or performance. Yeah, go ahead with
Joshua Chin 35:48
us for sure. Well, thank you so much for your time. I have a lot of fun talking to you. And for people listening, interested to learn more about what you do and ReferralCandy where should they go to?
Raúl Galera 36:05
referralcandy.com Or if they want to email me directly. My email is Raulg@referrelcandy.com
Joshua Chin 36:15
Fantastic. Thank you for being on the show.
Raúl Galera 36:18
Thanks for having me.
Outro 36:23
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