While spearheading marketing efforts for a Direct-to-Consumer (D2C) brand in fruits, vegetables, and groceries, we implemented a referral program and amplified using various channels to increase user acquisition. This initiative resulted in a remarkable 50% reduction in customer acquisition costs compared to paid channels with incremental gain in new users. However, after analyzing the referral channel’s retention rates after a few months, we noticed a significant decline, diverging from our typical retention figures. Further investigation revealed that many referred users were family members of existing customers.
In hindsight, this outcome seems predictable, yet the allure of exploring newer acquisition channels to onboard new customers in day-to-day operations can overshadow potential drawbacks. However, this experience underscores the importance of strategic foresight and understanding the nuances of user behavior. This move had future repercussions. To know about it will be a different post in the future.
The referral program is essential. It works well when the product or service caters to individual consumption. However, it can be less effective when targeting users where the product or service is consumed collectively by a household.