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Brand Management

How Instant Rewards Create Brand Advantages


How Instant Rewards Create Brand Advantages

Founded in 2007 by MIT students Drew Houston and Arash Ferdowsi, Dropbox did no advertising at all. By relying only on existing customers to attract new ones, Dropbox still succeeded in becoming one of the leading cloud storage providers. But there were other businesses offering the same services. What made Dropbox so much more successful than others who had been in business for years? It was a simple idea: instant reward. It is hardwired into our brains to overvalue immediate gains, and overlook what we may gain in the future.

This is why making a referring customer wait for their reward often fails. Most companies that try to use customers as a reference or sales force make the mistake of delaying the reward until the referred potential customer becomes a registered customer. Companies want to achieve the benefit before giving the reward. Dropbox, however, rewarded their customers immediately, as soon as they received the name and an e-mail address of a potential new customer.

It was not a huge reward – only 500Mb of storage, the smallest service Dropbox provided – but size is not important when you give an instant reward. The result is, of course, that you get a lot of names of new potential customers. And sooner rather than later, you will get business from this bulk. In Dropbox’s case, this is exactly what happened. By being generous, they had more responses and were able to quickly build up their business. In general, people are more careful about giving a name than most companies think. This is why references from other customers and users matter so much. And brain research confirms how important references are when you introduce something new to the market.

Another benefit of getting customers to refer friends is that it generates a behavior pattern. The decision-making brain is not impressed with verbal recommendation, but it does notice behavior. The friends we communicate with regularly generate very strong support for our decision making. We study, pick up new behavioral patterns from and gain inspiration from these friends. All this makes customer referral – word of mouth – one of the most important factors to consider when launching a new brand.

Contributed to Branding Strategy Insider by: Thomas Gad, excerpted from his book Customer Experience Branding, with permission from Kogan Page publishing.

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