Read time: 4 minutes 23 seconds

Fun Fact #1: Dropbox turned down a 9-digit acquisition offer from Steve Jobs.

Fun Fact #2: Dropbox was the fastest SaaS company to reach $1b ARR (at the time).

Fun Fact #3: I write back to every email, so reply to this email with your ideas / qualms / dreams and let’s jam.

— Tom

The legendary Dropbox referral program

Chess Move

The what: A TLDR explanation of the strategy

In 2009, Dropbox grew from 100,000 users to 4 million in just four months.

The referral program accounted for 35% of their daily signups.

By April 2010, Dropbox users were sending 2.8 million invites to other people per month.

Roughly 1 invite per second. Every second. Each requiring zero incremental effort from Dropbox.

It passed 50 million users in October 2011, 100 million in November 2012, 500 million in 2016, and 700 million in 2021.

Arguably the most successful referral strategy in history.

Today, the specific user journeys, incentives, and experiences Dropbox pioneered have become the industry standard template for SaaS referral programs.

With this strategy, the devil is in the detail. The psychology, scalability, and timing of what you choose to put in front of users matters.

Here are the exact mechanics Dropbox used, for you to consider when architecting your own referral program:

Breakdown

The how: The strategic playbook boiled down to 3x key takeaways

1.  Incentivise sharing, onboarding, and usage

The virality of Dropbox’s referral program can be understood as a carefully constructed layering of incentives.

Incentive #1: Make the product better when people share it

Dropbox offered 250mb of extra storage space to any user who invited a friend, once that friend created an account.

The core value of Dropbox is cloud storage, so offering more storage to referrers tangibly improved their experience with the product.

With more space, they were more likely to stay as an active user, meaning the referral program drove new customer growth and improved customer retention.

Incentive #2: Reward the referrer and the referred

Originally inspired by PayPal’s double-sided $10 reward, Dropbox issued the 250mb storage bonus to both the existing user as well as the new referred user.

Existing users are more likely to refer friends and new referred users are more likely to convert.

Plus, new users joining through the referral program are more likely to become referrers themselves, creating a viral loop.

Incentive #3: Reward activations over shares

The referral rewards were only issued when referred users actually sign up and start using the product.

This encouraged referrers to be more than just net promoters who shared Dropbox on social media.

They became enthusiastic sellers who would follow-up with friends to make sure they onboarded to the product, actively pushing them down the activation funnel.

Incentive #4: Improve rewards for paid users

As a pioneering ‘freemium’ product, Dropbox offered a generous free plan, but relied on paying subscribers for monetisation.

While free Dropbox users earned 250mb of free storage per referral, up to 16gb, Dropbox Plus / Family / Professional accounts received 500mb per referral, up to 32gb.

The referral program became a product-led-growth engine for paid upgrades as well as free user growth.​​

2. Offer multiple frictionless ways to share

Dropbox provided various mechanisms that made it as frictionless as possible for users to invite their friends, at scale.

Bulk invite contacts:

• Enter email credentials

• Automatically pull contacts from Gmail, AOL, Hotmail, or Yahoo

• Select contacts to bulk invite without leaving Dropbox

Invite individual email addresses:

• Copy-paste email addresses

• Send invites multiple invites with 1-click

Share on social media:

• Pre-written post

• Authenticate with Facebook or Twitter credentials

• Instantly share with your entire network

Unique invite link:

• 1-click to copy link

• Manually share with friends

The referred user was greeted with an equally frictionless journey to rapidly sign up to the app:

→ Email is personalised with the referrers name in the Subject Line and email body

→ Details on bonus reward for being referred

→ Single CTA to ‘Accept invite’ and land on signup page

→ Landing page personalised with referrers name

→ Email field of the signup form is pre-populated

→ 1-click to ‘Sign up for free’

No unnecessary info, clicks, or screens that might increase drop-off.

3. An integrated experience, not an afterthought

Dropbox leverages various tactics and touchpoints to make its referral program as visible as possible throughout the user journey.

Onboarding: When new users sign up to Dropbox, they are introduced to the program as one of the onboarding steps.

→ Even if the user doesn’t refer right away, they are at least made aware of the program, so will remember it when the time is right.

Running out of space: Users are reminded that they can get free extra storage when they are close to using up their current limit.

→ Timing the CTA when user intent is high.

Tracking dashboard: Dropbox provides users with a panel, accessible at any time, to see how their invites have performed and how much space they have earned in total.

→ Detailed status tracking incentivises users to follow up with whoever they’ve invited.

Core usage: Dropbox was engineered to be viral - when users share a file with someone who is not a Dropbox user, the recipient is invited to open an account.

→ Even without actively participating in the referral program, users become referrers just by using the product ordinarily.

Rabbit Hole

The where: 3x high-signal resources to learn more