There is a popular belief that all marketing tactics work only for some businesses, and there is no universal solution. Well… that’s not true. Referral marketing is a superpower for any industry and business – big or small, local or international. Why? It’s profitable, effective, and highly customizable. Let’s see how this business in the education industry used referrals to its advantage and got 53% of its leads converted into paying customers!
🏛️ Niche: Educational Services
💵 Business type: B2C
🌎 Location: USA
🧑💼 Size of the company: 100+ employees
This educational services company operates across the USA. They specialize in providing online tutoring services to school-level students of all ages. Their mission is straightforward: to make learning accessible and engaging through innovative teaching methods and personalized support.
They found a genius way to attract new students AND keep existing ones coming back for more. How? They launched a “refer a friend” program where both the student and their friend get rewarded. The reward? A free tutorial for the referred student so they could try the service for free and a free tutorial for the existing student if their friend ended up converting. This clever strategy of rewarding in their own currency helped them in two ways:
- Find new students. They attracted over 1,700 new students in just 10 months through referrals!
- Keep existing students coming back for more. By offering free lessons as a reward for successful referrals, they increased retention by 15%.
And the best part? More than half of the referred students became paying customers! That’s the power of sharing and learning together!
Their Challenges (What Led Them To Referrals?)
The tutoring business explored referrals as a growth strategy mostly because traditional marketing channels were proving ineffective, generating poor-quality leads. At the same time, they seemed to already be getting referrals from their happy customers organically but had no way to manage those referrals due to limited human resources. Despite this constraint, they recognized the potential of referrals as a powerful acquisition channel and sought more strategic and scalable ways to tap into this organic growth.
👉 Challenges:
- Traditional marketing channels were generating poor quality leads
- Limited human resources for managing a referral program even though referrals were already happening organically
How A Referral Program Helped Them Overcome These Challenges
Referral Factory offered this client a straightforward solution for setting up and managing a customer referral program. Since Referral Factory could connect to their HubSpot CRM, the marketing team didn’t have to do the extra work of funneling referred leads to the sales team.
With user-friendly tools and resources to segment data according to their specific needs, the business could quickly launch a referral program without the need for extensive technical expertise or resources.
How Their Referral Program Works
This educational services business wisely chose a double-sided referral program. In other words, they reward both the person referring and the new lead. Statistics show that double-sided referral programs perform especially well when it comes to customer referrals.
Not only do double-sided rewards improve the odds that the referred lead will convert (because they get a special deal), it also makes existing clients more likely to refer their friends (because they get to give them a special deal!)
🎁 What does the person referring (the existing client) get?
For every new, referred student, the person referring receives one free tutorial.
🎁 What does the person invited (the new referred lead) get?
At the same time, the new student enjoys their first tutorial for free.
It’s a classic, give-and-get style of referral program where both parties win!
Even though they offered free lessons to both sides, this was still way cheaper than their other marketing channel, which cost them around $375 per student!
How The Company Promotes Its Referral Program
This business opted to enroll its entire contact database in the referral program, automatically generating a unique referral link for each person. The link was then stored in the contact record in HubSpot. That way, each referrer’s unique link could be distributed directly to them via the marketing channels they already used in HubSpot. All the existing client needed to do to refer their friends was share their link!
👉 The following promotional strategies helped this business reach impressive results:
- Email marketing. Sending targeted emails to different customer segments (A. students aged 16 and above and B. parents) with personalized referral links and a clear, concise description of the referral program incentives.
- Using HubSpot snippets. Inserting personalized contact data into HubSpot snippets. Thus, they could easily prompt people to refer after a good interaction.
- Referral link visibility. Including participants’ unique referral links in all transactional communication including invoices, schedule announcements, and monthly newsletters.
Final Results & Metrics
This educational business, once struggling to find the right students, turned things around with a smart referral program. Within just 10 months, referrals became their top way to attract new students, generating 1,715 leads!
👉 Here’s why it worked so well:
- A win-win approach. Both existing students and new students received a free lesson for successful referrals, which made it a no-brainer to participate.
- Cost-effectiveness. This strategy was much cheaper than their other marketing channels, which averaged around $375 per converted lead.
- High efficacy. They converted over half (53%) of their referred leads, compared to only 8% with paid ads, getting 908 new paying customers.
- A lot brought by a few. While only 22% of the contacts in their total database have participated in their referral program to date, the top 10 referrers generated almost 100 leads together.
Client Testimonial
Referral Factory made everything so much simpler and helped us get more people enrolled who spread the word about what we do. The team gave us great ideas that made a big difference, especially because they were so familiar with HubSpot CRM and Marketing Hub. With their easy-to-use system, we could quickly generate referral links for our customers and store these in HubSpot where we can easily distribute them via our other marketing channels. Our existing clients found it easy to refer others, which helped us grow even more. Thanks to Referral Factory, we got more enrolments.
— Marketing Coordinator
Conclusion
This is a classic example of how any business can hugely benefit from a referral program without spending a fortune. But the benefits went beyond just new students. Even in the face of challenges, this cost-effective strategy can be a game-changer in attracting new students, boosting retention, and driving significant business growth.
