Airbnb: travelling in the wrong direction

Airbnb referral scheme

Chances are that when you think referral and travel, one brand immediately springs to mind: Airbnb.

They’ve became a household name on the back of their referral programme. In fact, Airbnb — alongside the likes of Dropbox, Tesla, and Uber — just about wrote the referral rulebook, so you’d assume their scheme would be right up there with the very best. But here’s the thing: if you take a look at Airbnb’s referral programme, it’s actually starting to look worryingly out of date.

So that’s exactly what we’ve done. Below, you’ll find our expert take on Airbnb’s refer-a-friend scheme. But, first, a little history…

Airbnb Referral 1.0

Airbnb’s referral programme didn’t always look like it does now. In fact, they didn’t even have a programme until 2011 – three years after their initial launch. And the programme they did have was pretty basic, with no mobile version and sharing solely via Facebook and email.

Airbnb Invite Your Friends

Even so, it was a quick success, acquiring significant numbers of new renters and letters over its first year and driving millions of dollars of revenue. “Our users tell the story better than we do,” explains Airbnb Growth Product Lead, Gustav Alströmer. “Most people in the world hear about us from a friend – word-of-mouth is the strongest driver of our product.”

But, within a year, the momentum had died away and even Airbnb’s own staff began to forget about the programme. Alarmed by the tiny percentage of acquisitions they were making via referral – especially when compared with some of the (unnamed) brands they benchmarked as competitors – they set about reinventing their programme.

Airbnb Referral Stats

Airbnb Referral 2.0

Which brings us to the version we see now – which was first introduced in 2014. And, back then, it was pretty cutting-edge. Thanks to massive investment (a five man development team spent over three months – and 30,000 lines of code – working flat out, with additional resource from several other Airbnb units), it didn’t merely work on mobile, it was actually optimised for users on the go. And it incorporated a number of brand new features, such as the addition of Facebook Messenger as a sharing channel, the ability to import your email contacts and a dashboard where referrers could quickly track the progress of their referrals.

Airbnb Referral App

But the curse of massive internal investment (as opposed to using a third-party referral platform) is that, once you launch, those bountiful resources get deployed elsewhere, and your product rarely gets updated. In Airbnb’s case, what looked great in 2014 is now beginning to look tired, and several features which are becoming increasingly essential in the world of referral are sadly lacking. Let’s take a look at some of them…

1. User segmentation and flexible rewards

Here at Buyapowa, we power referral programmes for over 100 brands, across all kinds of industries – from international beauty giants like Space NK to mobile networks like T-Mobile, via everyone from River Island to Saga. And, through this wealth of experience, we’ve learned that each and every programme has to be carefully tailored to suit not just one but multiple different audiences.

Sadly, that’s something Airbnb continues to overlook, despite the fact that their customer-base is extremely varied. Whether you and your friends are happy-go-lucky couch-surfers or high-rolling c-suite expense accounters, you’re going to be offered the same referral proposition: £15 of credit when a friend makes a booking and £25 off for the friend. Now, that’s fine for some users – it’s often quite generous – but it’s bordering on insulting for others. If I refer a friendly neighbour megastar to spend a week at the super-swanky, £7,500 per night private chateau in the Loire Valley pictured below, then I’m going to expect a little more than pocket money for my trouble. A free night for myself might be nice. Or at least the chance to enjoy a complimentary time-of-my-life via one of Airbnb’s fancy new experiences.


Airbnb Chateau


The solution is simple. Actually, there are two – and, here at Buyapowa, different clients use one or both to make sure that every successful referral leaves both the referrer and their friend(s) feeling valued and keen to engage in the referral programme again. The first is segmentation, as used by clients including the mobile phone network, Vodafone. If they have a customer who themselves tends to spend big, then they know there’s a good chance their friends will do, too – so they segment customers on high-value tariffs and steer them towards a parallel referral programme where the rewards and incentives are greater, but so are the challenges. (Of course, spend isn’t the only factor when it comes to segmentation: gender, age, location and countless other details can massively influence the kind of referrals customers are likely to make. Which is why the platform you use absolutely needs to cater for each of those in umpteen different ways.)

The other solution is flexible rewards, something which Buyapowa clients including the leading beauty box brand, The Perfume Shop, have used to great effect. Instead of offering a static reward for every referral – and a fixed incentive to get friends shopping – our platform enables them to adapt their offering on a sliding scale. So, the greater the value of the referral, the bigger the payouts on both sides.

These are simple improvements that Airbnb could and should make to their programme. But, sadly, the huge investment they’ve made in building their programme from scratch – rather than leveraging an external platform which continually adds cutting-edge features – means that they’re highly unlikely to do so anytime soon.

2. Customisable emails

Airbnb are extremely proud of the feature which enables users to import their Gmail, Yahoo! Mail or Outlook email contacts – though, by their own admission, few people are willing to grant the digital permissions that this feature requires. And people are right to be hesitant about doing so. Ever since LinkedIn settled a multi-million dollar class-action lawsuit for spamming customers’ contacts, consumers have become increasingly reluctant to grant brands unfettered access to their friends and family’s inboxes

But that natural concern over a brand hijacking a user’s communication with their friends goes even further in Airbnb’s case. Emails sent from referrers to their friends via Airbnb’s platform are entirely uncustomisable – there’s no way to edit the content of those emails, there’s no way to write your own personal note, you simply surrender the entire message to Airbnb and hope they’re going to contact your friends in the manner you’d like them to. And, judging by this example, I’m not sure that they’re successful in that regard:


Join Airbnb Referral

First, I’m not sure I’m 100% comfortable with Airbnb revealing how many times I’ve used their service – certainly not without asking me first. It seems invasive.

And, secondly, this simply isn’t how I’d describe their service. I’d never use the word ‘host’, for example – despite the way that whole touchy-feely-hang-out-with-a-stranger element is a core part of how they perceive their brand. I, and millions of other people, use Airbnb in spite of that stuff (I always feel incredibly uncomfortable when I’m forced to interact with hosts) and, if I were selling their service, I’d definitely play it down while playing up the fact that you can get a whole house for the price of a hotel room. And my friends would be way more into that, too.

Oh, and finally: two out of the three sentences in this email end with exclamation marks – which just comes across as desperately needy. Maybe I’m nit-picking, but – hey – that’s what happens when you force people to send their friends words which you’ve written. They gripe about the grammar.

3. Legal emails

There’s a final problem with Airbnb’s email system, and it’s rather more serious than the ones above. Back when they were building V2 of their programme, they considered whether these emails should be sent by their servers or natively, via users’ own webmail accounts and email applications. As Airbnb software engineer, Jimmy Tang, explains: “We decided to go with the server-side approach because it’s easier for us to track – and it’s easier for friends to unsubscribe, complying with laws.”

The first reason we should let slide. As a user, it’s always a bit creepy to be tracked, but business is business and maybe it’s understandable that Airbnb would want to know how their product is being used. The second reason, though, is naive and, sadly, inaccurate. There is absolutely no need in either Europe or the US for people to be able to unsubscribe from personal emails sent to them by friends. Yet, ironically, by mandating that these emails come from their servers rather than users’ personal accounts, Airbnb have imposed this problem on themselves.

And now it’s become even more serious. In May 2018, the EU’s GDPR (General Data Protection Regulation) came into effect, prohibiting the collection of any individual’s data where that individual has not personally opted in. That immediately rules out Airbnb’s contacts import functionality, since Airbnb are no longer be allowed to harvest the email addresses of a user’s contacts without those contacts’ consent. And it also rules out server-side emailing. Simply by asking customers to type their friends’ names into a form, they’re breaking the law and they’ve become subject to a €20 million fine – or potentially, 4% of their global annual turnover.

Once again, these are the kinds of mistakes which brands who don’t understand referral make when they try to do things themselves. If they’d sought the insight of experts, they wouldn’t be in this predicament. Now, with some very serious repercussions waiting in the wings, one can only hope they find a solution before it’s too late.

4. Multiple referral drivers

Ask most people what constitutes a successful referral scheme and they’ll say it’s anything that encourages a user to sign up and share, and a friend to click through and shop. This is a mistake. A successful referral programme recognises that, once a fan or customer has achieved one referral, they’ve proven their ability to attract new customers – and it does everything in its power to ensure that they keep sharing and that their friends keep coming.

But Airbnb have nothing in place to incentivise multiple referrals from each of their customers. In fact, given that people’s friends are likely to book trips weeks or months in advance, but could cancel at any time (meaning that referrers won’t even get a congratulations notification for the same super-long stretch of time), there’s very little to keep the referrer engaged after their initial participation.

Here at Buyapowa, some of our clients regularly see 10, 20, even hundreds of referrals generated by their most active advocates. In fact, across all our clients, one in every 50 referrers is responsible for almost 20% of all referrals. So, how do they achieve that?

Well, in two ways.

The first is tiered rewards: stretch targets which hand referrers a bonus reward whenever they hit a certain threshold (be that three, or five, or any appropriate number of referrals). Tiered rewards can make a huge difference, and it’s something Airbnb could apply straight away (providing their platform permitted it) by offering an additional account credit or even something more experiential to get their users’ juices – and referrals – flowing.

The other way to stimulate multiple referrals is gamification, where referrers are pitted against each other to see who can introduce the most people within a set period of time. Whoever tops the leaderboard when the time runs out wins something special – and it doesn’t take a genius to see that Airbnb’s niche in the travel world puts them in a perfect position to offer something both on-brand and extremely exciting. While tiered rewards have universal appeal, gamification targets a brand’s superfans – the 20% of customers who frequently generate 80% of all referrals – and the results are always compelling.

We hope you enjoyed your stay…

No one’s saying that Airbnb’s referral programme is a catastrophe. In fact, it remains an example I happily cite whenever someone asks where the modern explosion in referral began. But things have moved on and, strangely for a brand that’s all about travel, Airbnb have stayed very much rooted to the spot.

If you’d like to find out how your business can holiday in the future rather than staycationing in the past, just get in touch.

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