Today the thought of renting a stranger’s apartment or house seems completely normal, but rewind back to 2008, when AirBNB was founded, and couchsurfing-for-cash would have felt like a strange concept. The company has gone through incredible growth since then, and whilst it’s a smart idea with a good product, a substantial amount of the growth can be put down to one thing - the brand’s members.

If you have used Airbnb it’s highly likely your first use of the product, whether it be a download a browse, or a booking came because of a recommendation from a friend or family member. Airbnb as a brand has been built upon recommendation. In many ways it had to be, it’s a tough concept to buy into unless someone you know has told you that it is worthwhile. Many people considered it a risky way to book accommodation and so word of mouth became one of the most powerful recruitment tools to the brand. In 2014, Airbnb went through a big transformation; Jason Bosinoff – who was part of the team that rebuilt the referral program – explains how they redeveloped it in 2014.

“Word of mouth is a huge growth source for Airbnb, in part because Airbnb experiences are so personal. People use Airbnb to unlock incredible experiences — anything from weekend getaways with friends, cultural exchanges, and once in a lifetime events like honeymoons. The referrals program encourages inviting friends by giving both the sender and recipient $25 of travel credit at Airbnb when the invited user completes their first trip. The idea is to leverage our community’s inherent tendency to tell their friends about Airbnb and amplify the effect.”

“The idea is to leverage our community’s inherent tendency to tell their friends about Airbnb and amplify the effect.” — Jason Bosinoff, Airbnb Director of Engineering

The overhaul of its referral program led to a 300% increase in the programs sign-ups and bookings per day. It’s an incredible example of the power of using your members to drive growth, an oft-overlooked channel but really one that should be a priority for any business.

Here’s five key lessons for any small business from Airbnb’s approach.

1. Define goals

The first thing the Airbnb team did before building out any program was to define what success looked like. This would then drive the type of program they developed. For Airbnb they were looking to drive the following:

Monthly Active Users Sending Invites
And so, the KPIs to measure became:

• Invitees per Inviter

• Conversion Rate to New User

• Conversion Rate to New Guest

• Conversion Rate to New Host

With this defined they could then go about developing a program that would deliver on their KPIs.

TAKEAWAY

Define what referral success looks like for you business. These metrics will change the way you develop a program so be clear on what’s important to drive your business goals.

2. Make it easy

The Airbnb referral program is a simple and easy, the flow is intuitive for users and easily onboards new members who are referred to the brand. The simplicity reduces friction and increases the chance of sign up as a result.

TAKEAWAY

Make your referral and sign up flow as easy as possible, think through how it works and reduce points of friction where possible.

3. Keep it personal

Airbnb ensured their referral program was as personal as possible, connecting the two users involved with a personal message. This was key to the success as it capitalized on the existing relationship of trust between two users.

TAKEAWAY

Remember: your users already know each other well, so consider how you tailor a referral message that would feel natural between friends.

4. Piggyback on behaviors

People were already telling each other about Airbnb when they implemented a referral program. The brand took advantage of a pre-existing behavior to supercharge it. This is the key to driving referrals, as it makes it easy for the user to add a brand referral message to what they are doing.

TAKEAWAY

Take advantage of an already existing behavior to drive referrals. For instance, if you’re an fitness instructor and people are bringing a friend to work out use that to your advantage and create a referral program that enables them to bring a friend to a session.

5. Measure success

With defined goals, Airbnb could easily measure success of its program against each. This enabled them to check how the program was working and refine it where needed. They also A/B tested certain aspects to it to ensure the right approach.

TAKEAWAY

Make sure you can easily measure whether your referral program is working and adapt it where possible to drive your business goals.

GO DEEPER

• For a great read on growth loops and building two-sided networks, we recommend ‘The Cold Start Problem’ by Andrew Chen. Packed with real-world examples and tips.