They’re often directly copied from web2 referral campaigns.

But with crypto, a ton of new possibilities have arrived.

And when you combine that with the latest research on human psychology, magic happens.

Whether you’re launching your product or token soon, or have already launched, referral campaigns are ideal for onboarding your next 1 million users.

In this guide, you’ll read exactly how to do it right.

Side note: before launching your referral campaign, I highly recommend going through a checklist of everything. Ping me on Telegram and I’ll send it over for free

Step 1: Create the best foundation for human psychology

When looking at web3, users want a few things:

• Status: being one of the first

• Exclusivity: accessing something unique

• Monetary incentives: seeing a positive financial return

• Pleasure: fun experiences online and offline Utility: using something that solves a problem

Focus on one of these five elements, and you’ll create a decent campaign.

Focus on all five of them, and you’ll create a perfect campaign.

These five elements are the key to an optimized referral campaign that brings the next 1 million users to your project.

Where you’d find “invite a friend and get $10” campaigns everywhere, it creates no hype.

It turns the experience into something transactional.

Nobody wants to turn their friends into a financial asset.

Instead, you’re going to need to offer something that people get hyped about.

Money by itself is no longer enough.

You need to focus on these prize elements:

• Exclusive perks: NFT drops, lifetime pro membership

• Exclusive memberships: lifetime access to VIP communities

• Cold hard cash: $

• Physical prizes: hardware, electronics, etc.

• Physical experiences: events, trips, meet the team

Keep prizes close to the core of your project.

A crypto exchange should focus on money, pro memberships, and events.

Whereas a web3 game should focus on electronics, NFT drops, communities, and money.

Combine the five psychological elements (Status, Exclusivity, Monetary Incentives, Pleasure, and Utility) with the five prize elements, and you’ve created the perfect foundation for your referral campaign.

Step 2: Create the highest N for maximum results N is your viral factor

It’s based on how well your referral campaign spreads.

An N of 1 means every person brings 1 new person, who then brings 1 new person, etc.

An N of 2 means every person brings 2 new people, who then bring 2 people each.

There are some psychological tricks you can use to maximize the N.

Note that these tricks only work if you nailed step 1 with the foundations.

Here’s how to keep the N as high as possible in a referral campaign from a tech standpoint:

• The best referral mechanics

• Make sharing as easy as possible

• Shower your users with updates

• Tiered rewards

• Quick dopamine

• Urgency and scarcity

• Leaderboards

Let’s go through them one by one.

1. Referral mechanics Psychology plays a massive role in referral campaigns

Here are the main ones that apply to web3 referral campaigns’ participants Brian, Adam, and Chris:

• Brian is more likely to refer Adam when both of them get something. Adam is also more likely to be referred because of it.

• Brian is more likely to refer Adam using his own perceived benefits of a project.

• Brian is more likely to refer Adam if he gets rewarded right away and gets rewarded again for referring his other friend Chris.

• Brian cares what Adam and Chris think of him when he’s referring them.

Here’s how that translates to optimizing your N number.

• Ensure that referrals have a two-way street reward (both Brian and Adam win).

• Ensure that Adam understands the benefits of participating.

• Ensure that everyone gets rewarded instantly when participating.

• Ensure that Brian looks good when he’s sharing things with Adam and Chris.2. Easy participation equals higher N Remove all the friction when onboarding new users

Basic is best when it comes to referral campaigns.

Don’t add 20 fields to sign up.

Keep it to the bare minimum while ensuring the quality of participants is high.

Just use name, address, email, and wallet.

Add KYC if necessary.

Don’t go overboard.

Every extra field means more friction.

More friction means fewer participants.

And fewer participants means a lower N.

Important thing to note: people will try to game your referral campaign. Always add a tool like ZeroBounce, DeBounce, or any other email validation tool to your sign-up flow to verify all emails.

3. Simplify link sharing This is the biggest win to increase your N.

Don’t make users think when they want to share their link.

A click should result in an action.

Clicking any share button takes them to that social platform.

Clicking ‘copy link’ automatically copies the link so they can paste it everywhere.

4. Write optimized pre-written social posts Add pre-written social messages to your social share buttons

Twitter allows you to add text to the hyperlink when a user clicks it.

Use that function so users don’t have to write their own messages.

And have a great copywriter write it.

Never half-ass this part of the share function.

It makes such a massive difference.

5. Optimize the preview image and copy Any link that is shared has a preview image and copy

It’s called Open Graph.

Make this pixel perfect.

Use an image that screams “Click me!”

Write copy that screams “Open this link.”

Don’t use “Participate in our referral program.”

Use “Win up to $10,000, exclusive NFTs”, etc.

A great image and good copy here can make a 500%+ difference in clicks, which usually leads to a 500%+ difference in participants from each referral.

Hire a YouTube thumbnail designer for the link image.

Get a professional direct copywriter for the text.

Seriously, this is one of the biggest wins in terms of results.

6. Send consistent updates to participants Just as much of a quick win as the Open Graph tags

Keep users updated on their referral milestones.

Once someone signs up through their link, send them an update email.

Update their dashboard on your platform.

Tell them how close they are to the next milestone.

If they’re only one away from reaching the milestone, send them an email.

Also, send emails when they haven’t referred anyone in a few days.

Keep them updated constantly.

Set up automatic triggers in your email software to send these emails.

Add instructions to your emails so they’ll keep sharing.

Show how other users got more referrals through Twitter, for example.

Push them towards more action, and you’ll increase your N.

7. Create tiered rewards for maximum incentives Create reasons to keep participating in the referral program

Don’t just give away a prize at a set number of referrals.

Keep pushing users to hit the next tier as soon as possible.

Once they reach 5, push to 10. Then to 25, then to 50.

And for each, give them a new reward.

If it’s money, give them multipliers once they reach a new tier.

$x per new user, but 50% more money per user once they invite 50.

Or give them a set amount once they reach that new milestone on top of regular rewards.

Psychologically, humans need something to work for.

And preferably, once they reach that goal, they can reach a next goal.

8. Provide A LOT of quick dopamine

Hormones are huge in psychology.

Hit the right triggers in the brain, and users will keep going.

Casinos use it. Video games use it. And referral programs need it as well.

Dopamine is the leading trigger for preferred behavior and getting people hooked.

So focus on giving users dopamine.

In this case, dopamine hits are tied into rewards and the psychological elements that we discussed earlier: Status, Exclusivity, Monetary Incentives, Pleasure, and Utility.

Each action that a user takes should result in at least one of those five elements.

Reward them for signing up → money or exclusive access as dopamine triggers

Send email when they have a new referral → money, status, or pleasure as triggers

Send email when hitting a new milestone → status, pleasure, exclusivity, or money as triggers

Send email when hitting top 5% of referrers → status, pleasure, and exclusivity

Create a scenario where these dopamine hits are frequently coming in.

Put some fire into the brains of your users to keep them coming back.

9. Add urgent and rare prizes

Your main target here is Fear Of Missing Out (FOMO).

Think about limited edition, exclusive things that are only available for a short time.

Use that mechanic in your referral campaign to increase your results by 200-500%.

Here are some examples you should use:

For users that refer 5-10 people in the first 7 days, enter them in a separate raffle for a big prize. Give exclusive perks and memberships to the first 1,000 people who refer 25 people. Reward your top 10 weekly/monthly referrers with unique prizes.

Give your participants something special that is only available for a short period of time.

Make them long for something great and exclusive.

Here it’s all about status and exclusivity.

Creating urgency is super important, especially with deadlines for users.

Because the sooner someone invites as many people as possible, they sooner those people again will invite more people.

10. Keep users in the loop of their progress (+ a leaderboard) Create a dashboard where users can track their progress and number of referrals

Include the milestones they’ve reached and prizes they’ve won.

More importantly, show them the next milestone and upcoming prizes.

Always show them the next goal.

And add a leaderboard to all of it.

Show users their current ranking.

Show what they would win based on their current rank.

Add competition to the entire campaign.

Humans thrive when there’s someone to compete against.

Leaderboards are extremely effective to push competition into the campaign.

There are several leaderboards you can create:

Daily top performers Weekly top performers Monthly top performers Overall top performers

Each leaderboard has its own unique set of prizes.

At the end of each day/week/month, post a tweet with your top performers.

This will create extra engagement on social media to draw more people in.

Step 3: Optimize. Absolutely. Every. Single. Thing.

Once your campaign is live, track your metrics across the entire referral campaign.

Each of these elements of the referral campaign has its own metrics: Landing page Sign-up form The link share page Your link preview image & text Verification emails Onboarding emails Referral update emails

Each page needs to be optimized with one metric in mind: quality participants.

Track the conversion rates on each page.

Set up A/B tests for each page.

Focus on ultimately increasing your virality factor (N).

Let’s do some math.

There are seven parts in your funnel.

Let’s say each part converts at 10%, pretty mediocre.

You run some A/B tests and see an increase to 30% on different pages.

On one page, this means an increase of 200%, so 3x the results by the end of the funnel.

But this increase on two pages results in 3 times 3 = 9x the results by the end of the funnel.

And getting this increase on three pages will result in 3 x 3 x 3 = 27x the results.

That means that small changes on a single page significantly increase with other pages once they’re multiplied.

Getting a 2,700% improvement in your total participants; that’s good stuff.

Focus on improvements, and you’ll quickly see a significant increase in your bottom line.

Step 4: Psychological best build-up of campaign prizes

Here’s using everything listed above into a prize setup that incentivizes your users.

Start with two-way street winning; for every 1 person they refer, both users get a reward (cash or tokens)

Set up tiered rewards that are always within reach:

• Reaching 5 referrals unlocks a one-time higher cash reward or an NFT

• Reaching 10 referrals unlocks an even higher one-time cash reward

• Reaching 20 referrals unlocks the next reward

• Reaching 35 referrals unlocks the next reward

• Next up are 50, 75 and 100

If it makes sense financially, over 100 referrals could be an option to choose a prize, such as an iPad, xbox, PS5, a hardware wallet, tickets to an event or something else.

As long as it fits your company, it’s great.

Don’t just start giving away Macbooks, it’ll likely attract too broad of an audience.

Do this again for 150, 200, 250, etc.

Add the absolute biggest prize for 1,000 referrals. There will always be a few people who will reach it.

Add urgency referral rewards:

• Getting 5 referrals in 24 hours unlocks a new cash prize

• Getting 10 referrals after a week unlocks a new special prize

• Getting 50 referrals within a month unlocks a new prize

Add limited referral rewards:

• First 100 to refer 10 people get a special prize

• First 1,000 to refer 5 people get a special prize

• First 10 to refer 100 people get a special prize

Add daily, weekly and monthly rewards

• Top 25 daily get a special prize

• Top 100 weekly get a special prize

• Top 250 monthly get a special prize

• Top 100 overall get a rare prize

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This might seem like a lot of extra steps but it will for sure increase your overall results.

Most basic referral programs see an influx of a few thousand users.

But invest in a better foundation that’s psychologically driven and you’re going to look at a million new users.

It will lower your customer acquisition costs (CAC) heavily.

Good luck!

- Frank

Last note: before launching your referral campaign, I highly recommend going through a checklist of everything. Ping me on Telegram and I’ll send it over for free.