Your virtual learning business needs a cyclical referral engine in order to succeed. Full stop. Happy customers tell friends and family who become happy customers, so it’s important to create a referral program that supports that organic process.

Over the last few years, we’ve talked with dozens of operators and founders of virtual learning businesses and, while there are many philosophies on what referrals look like and how the referee is acknowledged, rewarded, or compensated, almost every single founder agrees that referral programs are a non-negotiable function to making a business generate revenue.

Word-of-mouth marketing and the organic referrals that result from that exchange are arguably more effective than any piece of marketing material you create and distribute as a business. In fact, SEMRush reports that 90% of people are much more likely to trust a recommended brand (even strangers!) and 88% of people had the highest level of trust in a brand when a friend or family member recommended it. People need to trust your business and trust you can teach them the skill set they’re eager to learn. With a referral from a friend, family member, or other trusted source, you can spend less time selling potential members on your product and more time cultivating a meaningful relationship that leads them becoming an active member of your learning community.

Let’s look to successful virtual learning businesses, their respective referral programs, and the scalability that was achieved as a result of championing these efforts. These are four insights we’ve identified on how to create a referral program, incentivize members, and vet potential candidates to curate a world-class learning community.

Four insights on creating a referral program, scaling it for business growth, and cultivating lasting relationships

Create such strong outcomes, the referrals come naturally

No incentive or dollar amount can change the way people feel after completing your cohort-based course or soaking up the experience of being part of your learning community. The best indicator of a successful business (and, by proxy, the best generator of word-of-mouth praise) are successful, strong outcomes.

The team at School16 created a referral program and ran tests to see if offering a paid incentive made a difference in the amount and quality of the referrals they received from alumni. As it turns out, money wasn’t even a factor:

‍“Early on in School16, we had decided to experiment with paid referrals, mostly to see how this might change as our alumni base grows. Even if we don't offer a paid incentive, maybe we can offer other types of benefits. Whether it was a paid incentive or it was unpaid, it didn't change the amount of referrals that we got,”  founder Sergei recalls. “What did drive more referrals were really good career outcomes. The faster our students can have strong career outcomes, the faster they can get great salaries where they feel, for the first time, that career stability they may not have had and job satisfaction that they thought was outside of their grasp.”

‍Before considering creating a referral program for your current and prospective members, ensure your business and outcomes for students are so airtight that the referrals flow naturally — incentivized or not.

Cultivate real, meaningful relationships with existing members

In order to generate referrals that actually mean something, you have to develop a relationship with every member of your learning community. This goes beyond knowing their name and where they’re from; understanding the unique needs of every member and what drove them to your business is fundamental to developing a better relationship. In turn, they’ll feel better supported and (hopefully) more inclined to share praises about your community.

Dominic Blank, founder of Hyrise, says “Everybody talks about community, but few companies have really effectively built communities that have reliable, strong ties. Most have a loose association with people that have once consumed a product or service. But what I really mean is a sense of belonging. That's community.”

‍Dominic continues: “If you can establish that emotional tie, you need to capitalize on it. That's the easiest way for you to then have a positive association effect for new products or new services that you're launching. In startup life, you're short of time, money and resources in general, and you have to prioritize what you focus on. But it's important to not lose sight by continuing to pay attention to the community.”

‍Cultivating a community is the most important step you can take in creating a referral engine that functions as part of your organic marketing strategy. Here are a few ways you can accomplish that:

• Set up community office hours where members can meet with instructors, founders, and other team members
• Create virtual or in-person meet up opportunities so members can put faces to names
• Use a meeting scheduler so members can meet with founders or other team members to talk about their progress, goals, and ideas
• Generate an exit interview workflow so testimonials can be collected formally

It’s not sustainable or entirely possible for founders to be heavily involved in the community all the time, but Building a Second Brain Founder and live learning mastermind Tiago Forte invested a lot of time upfront in joining discussions, conversing with members, and being an active part of the community. He shares:

‍“I would respond to every single post in our discussion forum, just for those first few cohorts. And this was not sustainable. It was not profitable, but for cohorts one through five, I over-delivered and over-committed knowing that would produce those word of mouth kind of generators, who to this day are some of our most important referral sources.”

‍Invest in your community above all else in an effort to help your members reach their specific goals. In doing so, a structured referral program may not even be necessary because the referrals will happen so organically. This gives you an opportunity to surprise and delight those alumni that do send people your way, like the team at Victory Lap does. They quietly incentivize alumni at $250 a pop and don’t tell them until after the fact; that way, the referrals are given because the alumni actually had a great experience, not just because there’s a financial incentive.

Offer financial incentives plus other unique benefits

Sometimes, money talks — and it’s not always a bad idea to incentivize your alumni with a gift card, cash, or other financial prize for sending qualified leads your way. After all, it’s likely more affordable to pay current members than it is to spend money on ads or other paid channels.

‍Dribbble uses a three-pronged approach to generate referrals to their Product Design Course. Alumni can opt into any level of referralship and reap additional rewards at each stage:

• Incentivise alumni by going beyond monetary rewards and offering discounts on upcoming courses and one-on-one sessions with mentors
• Convert mentors into course advocates by offering monetary incentives for referrals
• Provide scholarships to folks who opt into becoming brand ambassadors

Approaching a referral program this way allows the top few percent of your alumni base to really benefit from championing your brand and becoming a vocal advocate for your business.

The team at d.MBA offers an additional, unique incentive to their highly popular business design course. They only open applications twice a year, and the waitlist is already long as it is, so d.MBA created a referral program where both the referrer and the referee gets a slice of the pie:

‍“What we came up with is if you recommend your friends [to d.MBA], they could skip the line. Because we would open applications only twice a year, it would fill up quickly. So we said, ‘If you have a friend, help us build the community. You can refer them, and they can skip the line.’ That's worked really well,” says founder Alen Faljic. “Now, the last version of this is that we do offer a small thank you. If a member of our alumni community recommends somebody, they skip the line and get a lower price, plus the recommender (alumni) gets an Amazon gift card. So that's what we have currently, as a system, because we want to better track if this is happening or not. Most of this word-of-mouth is just happening outside of the system, meaning people show up with an application or call and they say ‘I heard about it from this friend and then I decided to join."’

‍Skipping the line may be unique to d.MBA’s referral program, but there are plenty of ways to leverage unique features and functions of your business in order to generate more referrals. This could mean giving alumni access to new products, courses, or curriculum or inviting them to create marketing materials with you that helps them generate their personal brand (think video interviews, podcast guesting, or an opportunity to host webinars, for example).

Don't create a referral program at all

Counterintuitive? Maybe, but not every virtual learning business benefits from having a word-of-mouth program in place —  not a formal one, at least.

Christian Peverelli, founder of WeAreNoCode, specifically opted to not create a referral program — and here’s why:

‍“We don't even allow students to market it, but we allow them to do referrals,” Christian says. “The reason for that is because we want to keep control about the way that we present ourselves. A lot of people who work with affiliate programs, they'll say anything. So if someone signs up so that they can make a commission, there's some danger in terms of your brand equity. You don't want to water down your brand,”

‍While Christian’s philosophy negates that of other founders, it’s worth a second consideration if a referral program is right for your brand. Just short of providing formal scripts and talking points for alumni to use in their word-of-mouth, you have little to no control over what alumni say to prospective new members. There are pros and cons to either side of the argument, so it’s always important to test different opportunities before landing on one truth for your business.

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Learn about referral programs and word-of-mouth marketing from the best in virtual learning

No two referral programs will look the same, but the best and brightest minds in virtual learning have insights that anyone can apply to their unique business.

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Join us every week for our Modern Learning Empires series and find past articles from founders and creators on Disco’s blog.