How to Win at Referral Marketing: 9 Tips From the King of Referrals Himself
By: Kevin Yun
Tags: Referrals, Viral, Startup Marketing, Referral Marketing, Growth Hacking

Eric Martin is the king of referrals.

There’s a reason why companies seek his participation or his expert advice on referral marketing. If Eric is involved with your referral program, you can bet that it’ll be a success.

If you’re thinking of running a referral program for your business or if you’re already running one, there are plenty of reasons why you need to listen to Eric.

He was the #1 winner of the Jet.com 100k stock option contest (worth an estimated $10 to $20 million at time of the $3.3 billion acquisition of Jet.com by Wal-Mart). He beat 350,000 other people by making 8,000 referrals.

(worth an estimated $10 to $20 million at time of the $3.3 billion acquisition of Jet.com by Wal-Mart). He beat 350,000 other people by making 8,000 referrals. He was the #1 winner of the Nvstr.com (pronounced “investor”) 50k stock option contest, making 11,000 referrals.

Eric’s incredible story is inspirational for individuals, and empowering for businesses looking to referral marketing as a solution for growth. You can read countless articles written about Eric here, here, here, here, and here.

Having the unique perspective of being a company’s #1 customer advocate brings many golden nuggets of wisdom. Eric was kind enough to sit down with us to give those insider tips — everything from common mistakes he sees in referral contests to how businesses can find success in referral marketing.

9 key takeways are listed at the bottom of this article. Continue reading for the complete interview.

Note: Eric’s advice is from referral contests running leaderboard-style rewards, and may not apply to all referral programs and/or businesses.

Eric Martin and family (photo courtesy of Eric Martin)

GS: To kick things off, can you tell us more about yourself and your story? Why do companies listen to you when it comes to referral marketing?

EM: First of all, I’m just kind of a random person who has a ton of interests, and can’t really nail down what I love other than the most core things in my life, which would be my family and God. People listen to me about referrals because I placed first in two national US-based referral contests.

The first referral contest was by an eCommerce startup, Jet.com, which had over 350,000 entries. The company was founded by Marc Lore, who had sold his previous eCommerce business, Diapers.com, for about $545 million to Amazon in 2010. I won the Jet.com contest by getting about 8,000 referrals.

Marc Lore (image via NYPost)

I entered the contest about one and a half months from when it started, so I had about three weeks left to get referrals really quickly. I ended up with around 8,000 referrals by using swagbucks.com and gifthulk.com, which were rewarded advertising sites where people got paid if they signed up.

The tricky part was that everyone that clicked got paid, and I didn’t have a way to track conversions. Fortunately, 25% of the clickers actually did sign up for me.

Winning first place in the Jet.com contest meant that I had won 100,000 stock options that weren’t worth anything unless the company sold or IPO’d. I became a happy camper once they ended up selling to Walmart 18 months later for $3.3 billion. And so I cashed out my stock options, which was really nice.

Then, in 2017 or 2018, Nvstr.com had a referral contest for 50,000 stock options, and I won that one as well. Nvstr is a social investing startup (think Facebook meets E*Trade). I used the same exact winning method as the Jet.com contest. These methods are public so anyone can use them. I’m currently consulting them on the marketing side.

GS: What makes you decide to participate in a referral program? Can you give us some insights on why you choose certain referral programs versus others?

EM: That’s an amazing question. Jet.com was a no brainer because I saw Marc Lore on the cover of Bloomberg Businessweek. When you’re on the cover of a major national or international magazine, and you’ve sold a previous company for over $500 million, and you’re running a referral contest, it’s a “Yes, please”.

In the Jet.com magazine article, the referral contest was not mentioned at all. All it said was “Oh, this is a new way to shop online”. I didn’t even read the article until later because I went to the website first.

The Jet.com website was super simple. It said something like “Be the first to know about a new way to shop online”. I entered my email, pressed submit, and at that point, I was entered into the contest.

I believe my rank was around 150,000 or 210,000. I had no idea I would be entered into a referral contest and be ranked. So right away, I got my wife to sign up and then I went down to 20,000 or 15,000. I got super excited because it was super gamified. The next referral brought me down another 2,000 or 5,000 ranks. It was super exciting to see your rank go up 100,000+ places. That’s what got me sucked into the referral contest.

GS: And what about Nvstr — what made you decide to enter and go all the way with that referral program?

EM: With Nvstr, the founders reached out to me. I spoke with the CEO, Bernard George, who was just super friendly and very knowledgeable. He had worked at a hedge fund and graduated from Harvard. Once again, because of the team it was a no-brainer to enter their referral program.

GS: What other criteria do you have for joining a referral contest?

EM: The referral programs where the companies have a business model that’s “growth at all costs”, where the business plan doesn’t make sense, are the ones I won’t join. I’ve gotten at least one of those.

I would ask, “What if the contest works, and you get over a million or billion signups, and suddenly you have to pay everyone their $1 or $5 reward?” The math just doesn’t work out. Realistically, I don’t think it would ever happen because you would need so much money to drive all those leads, but you never know. Even if it was fifty million signups, would this small pre-launch startup really have the funding to pay out $200 million?

GS: It sounds like you place a lot of emphasis on the company’s leadership and the business model of the referral program.

EM: First and foremost, it’s about the person or the founder and/or the team. For me, it’s just a personal, gut instinct. Whether that’s looking at their LinkedIn or in the case of Jet.com, seeing Marc Lore on the latest business magazine cover.

GS: Let’s talk about Jet and Nvstr as products. How much weight did you give to them as useful products when you entered their referral programs?

EM: With Jet and Nvstr, they were both pre-launch contests. I don’t even remember what Nvstr.com was, but I remember it was just a splash page.

Nvstr.com splash page (image via archive.org)

Even Jet.com had just a little splash page — there was very little to it. Their website just said something along the lines of “Sign up”. So their product was hazy and unclear to me. At the time that I signed up, I didn’t really know what it was.

Jet.com splash page (image via archive.org)

GS: That’s really interesting to hear how you based your decisions on products that were merely splash pages. What kept you motivated to keep referring? You mentioned the gamification aspect and moving up rankings being a big part. What about conventional dogma such as the promotional methods from the Airbnb referral program, which includes constant reminders everywhere from email footers to buttons on the website?

EM: Jet.com is a great example. They actually didn’t send that many emails. I think upon signup, you would redirect to another page that said “Hey, you’re ranked 210,000”, and you would have to go back and check that page to see your referrals. That was a little bit of a mystery to me, because I had to sign someone up and then check right away how my rank changed. In a way, I saw that as an advantage, because most people probably wouldn’t do that.

I systematically got my first ten signups with me sitting in front of the person signing up, so I could check and plot a graph or chart to try to logarithmically make estimates.

And then I ended up talking to a brother-in-law of one of Jet.com’s higher-up execs (back then, you could pay someone a $1 to talk to them on Facebook), because he was promoting the contest too and was in the top seventeen referrers or so. The scoop I got from him was that people in the top fifty spots of the contest received nightly email updates of the top fifty (just first names or anonymous) and how many referrals each person had.

Having that information was important to know whether I could even win.I did end up getting updates once I was in the top group of fifty referrers, but that took a little while, and took hundreds of referrals to get there, which was a huge commitment.

With Jet.com, part of the advantage was the mystery and a lack of information. This may have also steered a lot of people away because it feels like you’re just running around in the dark, not knowing what to do. But I think it’s a balance. Perhaps Jet.com could have even given us more information, or sent out more emails. Perhaps even a daily, or a weekly email, if you got a certain number of referrals.

Photo courtesy of Eric Martin

GS: What was the threshold that made you go all-in on investing $18,000 with the Jet.com referral program?

EM: It was a semi-gradual process, and very early on I thought “Oh, I could win this”, because I got three or ten referrals and I saw there were only around 10,000 people seriously competing with more than five or ten referrals.

Once I found Swagbucks, which I remembered because my sister-in-law had used it, I thought it was a good idea to use that for getting referrals. So I called them up and the minimum order was $3,000. So I started with that amount, and I got into the top ten or very close to top ten, which the prize was 10,000 stock options. But first place was 100,000 stock options. If I was already getting 10,000 options after spending $3,000, I might as well just go all in and spend a bunch more. And that’s exactly what I did.

GS: Sounds like 100,000 stock options was super motivating. What are your top tips for companies that want to motivate their users or customers to make more referrals?

EM: That’s really complicated. It’s such a balance between a simple reward program that people can wrap their head around versus trying to give a lot of different rewards that’s going to excite different people.

From what I’ve seen, simpler tends to be better. And as far as whether that’s stock options or giving away free products, like the Harry’s referral program, they can both work.

Having your branded product as the prize makes more sense from a business perspective, because you’re getting people that are interested in [Harry’s] razors. But from a virality standpoint, an amazing contest where someone could stand to win a million dollars has even more opportunity to blow up than a free lifetime supply of razors.

When you look at the numbers, Jet.com is the only one that has done something as big as the stock options, and there have been many others that have done sort of the Harry’s-style razor blades contest. They both seem to do well as far as the numbers go and getting getting email signups, so I think the jury’s out unless we get a few more Jet.com attempts, which I want.

GS: When you were participating in those referral programs, was there anything that stuck out you as lacking? In other words, if you were those companies running these referral contests, is there anything you would have done differently?

EM: Yes, there is a huge problem that I see in pre-launch startup referral programs. This happened with both Nvstr and Jet. The goal of the referral program was to have it last a couple months and just as it’s ending, the company launches the product. And that makes perfect sense.

But there was a six-month delay in the case of Jet. The value of their 350,000+ email list becomes greatly diminished six months later. I would recommend launching your product, even if it’s a soft launch, and once you think enough kinks are out of it, that’s when you launch the referral program. Once you have a little bit of traction just from your own paid advertising or your own organic growth, that’s when you launch the program. Launch your pre-launch campaign once you’re confident that you’re going to be able to launch the product the same day or the day after the contest ends. But in my experience, that never, ever, ever happens.

GS: That makes sense, so as not to lose all that steam in the hype-up preceding the business launch. Any other tips on how a referral program can become successful?

EM: Make the grand prize amazing. Tear it down so that there are rewards for the top ten or fifty.

Businesses hate the idea of offering a cash prize. Nobody wants to do it. But if a referrer puts in all that effort to win first place, give them $1,000. Give them $5,000.

Another thing to look out for is advertising. Jet.com didn’t advertise [their referral contest] much at all. Now I think Marc Lore was actually talking to all his friends and people he knew saying, “Hey, there’s an amazing contest going on, and I can’t give you any tips or insight to help, but I’m just letting you know it’s going on”. I think it was him personally going out, and talking to friends and people he knew that were influential. I don’t think they paid for advertising, but they should have right out the gate, because if you’re going to run a contest of this nature, you’re spending tons of equity on prizes. I would put at least half of that amount towards paid advertising to front load the contest at the very beginning.

GS: Interesting. So you’re saying that if you were Jet.com, you would have advertised the referral program more with paid ads?

EM: Their brand was so strong out the gate because of Marc Lore. They could have used Facebook to target entrepreneur-like types and Internet-business types of people. If you study the people who won the Jet contest, you’ll see they are much like me. I have a background in internet marketing. Most of these people had internet sales or internet marketing experience, or owned internet businesses.

GS: It sounds like people who had experience in digital marketing understood what it took to get to the top.

EM: Absolutely. There were probably hundreds of people with that experience, competing, and that’s what made it so competitive.

GS: This has been an awesome interview, Eric. Thanks so much for taking the time. Lastly, let’s talk about what you’re up to.

EM: I’m currently helping Nvstr.com market — mostly with Facebook ads right now, but we’ve got other things in the works. Just by signing up, you can get $8 to $1,000 (randomly chosen, with lower odds of getting higher amounts). No deposit is required. Nvstr is Facebook meets E*Trade. Along with the social aspect, you can see stock ideas from titan investors, use a one-click Nobel-prize inspired portfolio optimizer, and use basket trade execution so that you can trade multiple stocks at once.

Good referral programs are far and few. I’ve gotten pitched quite a few, but I’ve only participated in two, and those were the ones I wanted. (See the last key takeaway for a special offer!)

GS: Anything else you’re working on?

EM: Recently, I’ve been excited about helping people find ways to earn money online. These Jet-style contests are too few and far between! I found an amazing community, Wealthy Affiliate, that helps you learn how to find something you’re passionate about and earn money through affiliate marketing.

I’m impressed by them because the community is huge, friendly, and helpful; they give you two free websites; and they help you stay motivated in order to meet your online money-making goals.

You know how I love contests, and this site has an amazing gamification system including badges and a leaderboard for how much progress you’ve made overall. Everyone gets a rank.

P.S. They have a contest going on right now… use my referral link to sign up. 100 referrals by the end of this year gets you a free, all-expenses-paid trip to Vegas, airfare included. Don’t worry, you can win, too, as long as you hit the 100 Premium referrals. Hopefully, I’ll see a bunch of you in Vegas!