Each one of us can trace a major change in our lives to an introduction or referral from a friend. It might be a referral to a new job, a future spouse, or even a new tennis coach. These referrals are always highly valuable and in some instances can be life-changing.
From a marketer’s perspective, a referral from a current user is the golden ticket to another customer – one who is likely to convert quicker and to be a high spending customer. The referral from a friend adds trust to the whole process of a buyer’s decision-making, thereby reducing the time to get to the critical ‘yes’.
Referrals are the BEST way to get new customers and employees
In these days of media saturation, with ads bomboarding consumers to the point of exasperation, a referral from a friend can cut through all the noise. You can quickly find that trusted dentist, or tenant, or job candidate. A recent Nielsen study found that 84 percent of global respondents trust word-of-mouth recommendations from friends and family—making it the most highly trusted method of receiving recommendations.
Most Used Referral Methods
However, referrals are not easy to make or find. The most popular route to making a referral is to simply post through social media, which is highly untargeted. Most companies don’t have an incentivized referral program and rely on people naturally telling others about their offering. Even if a business has their own referral program where a customer gets paid to refer, it’s not easy for that customer to find other customers. Similarly a business might reward its employees for referring job candidates. But unless an employee already knows which of their friends are looking for such jobs, it’s hard to make the connection.
In all incentivized programs, referrals go through 2 stages: 1) the setting up of a company’s own referral program and 2) the referrer doing some ‘work’ to make the referral. These stimy the amount of referrals that are made, and therefore limit the total benefit to the economy overall.
So how can the Blockchain help?
Recommendations are all about trust, and the blockchain’s ability to generate trust among a group can be utilized to improve the referral-making process. Ponder is a new platform that uses the blockchain and gamification techniques to both generate trust among the participants and to make the process more enjoyable. By taking a mobile-first and a ‘referrer-first’ approach, we help attract more people to make referrals.
One of the first sectors we are tackling is the $200bn recruitment industry. Users play the game of matchmaker, matching up companies and prospective candidates from the users’ social network. Each time the company and the candidate both ‘like’ the recommendation, a match is made and the referrer is paid. If the candidate goes on to work for the firm, then a much larger bonus is paid to the referrer. The referrer’s skill as a matchmaker is tracked through their match rate. Higher match rates can lead to higher bonuses and access to the best referral opportunities.
Companies or individuals can create their own referral community – with the specifics of their referral program such as success fees all encoded using smart contracts. The company or group owner then manages that decentralized community, with little involvement from any central authority.
This approach has already been test-driven for dating recommendations, where users play matchmaker for singles. Users earn $10 if the couple that they recommend to each other become a match. If the couple marry, the matchmaker earns $1000. The beta app already has 80k users in the USA, and has far higher match rates and revenues per customer than traditional digital solutions. Singles trust a recommendation from a human being, particularly a person they know well, more than anything generated by an algorithm.
The Biggest Opportunity lies in Business Recommendations
Although recruiting is a large sector, Ponder’s biggest opportunity lies in providing business recommendations. Creating trust-based communities in a fun gamified environment can help generate more business or product referrals and therefore convert more customers.
The magazine Forbes recently wrote “Media noise is replaced by human recommendations – and that creates a new economy around the power of the Referral.” Ponder is well positioned to ride this new wave and bring blockchain technology finally into the daily lives of everyday people. Ponder’s token sale runs from July 1st to August 30th.