How to build a successful referral program for your newsletter

Before we dive in, let’s first explore why investing in a referral program for your newsletter is a worthy use of your time and effort.

Aside from creating the best content possible (that should be a given), every newsletter’s next priority is growing its audience so more people can read its fantastic content.

The larger your newsletter audience, the more influential and prosperous the endeavor becomes. If you’re monetizing via ads or subscriptions, a larger audience more often than not correlates to more revenue.

So we’ve arrived where most newsletters end up sooner or later—understanding the importance of growing your list and trying to determine the most effective and cost-efficient ways to scale your audience as quickly as possible. Popular options for growth include:

• Paid acquisition on social (think Facebook ads, Instagram, Google AdWords, etc.)

• Paid promotions (think influencer marketing, sponsoring other publications)

• Cross-promoting your newsletter with other newsletters

• Content marketing (creating web content as lead gen)

• Requiring email sign-ups for events or E-books

• Word of mouth

These are only a few popular and scalable acquisition channels for newsletters. Still, you could realistically attempt anything from billboards to podcasts or even sponsoring the NYC Subway Wi-Fi screen (I’ve tried all of these).

Depending on the ambitions of your newsletter, it’s likely you’ll delve into paid acquisition channels at some point, but you always want to remain mindful of the breakdown of paid vs. organic acquisition.

I’d consider organic to be any subscriptions resulting from organic search or word of mouth. Everyone knows how Google search works, so I will focus the majority of this post on the latter—word of mouth.

Why Create a Referral Program

As a newsletter writer who spends most of your time creating the best content possible, the absolute best outcome could be readers recommending your work to others. In the sometimes opaque world of email, a referral shows a few things:

• The reader took the time to read your newsletter (opens ≠ reads)

• The reader genuinely enjoyed the content (otherwise, why share?)

• The reader thinks others will also enjoy the content (indicating your audience has room to grow)

Not only is this a ton of positive affirmation, but that referral is another subscriber for which you didn’t have to pay.

For the sake of simplicity, let’s ignore rewards (and their costs) and assume referrals are 100% free acquisition. If your average CAC is $2 per email, and you know that 1 in 5 people go on to refer one person…that actually decreases your CAC 16% to $1.66. At scale, when you’re potentially spending thousands of dollars on paid acquisition, that makes a meaningful difference.

I simplified that example in that each person who referred only referred a single person. Consider we keep the assumption that 1 in 5 people refer others, but of those who refer, they refer an average of 3 people. That decreases your CAC by 37.5% to $1.25. When normalizing and averaging your acquisition costs (combining both paid and organic) you’ve roughly cut your costs in half, i.e., each dollar spent on growth is going nearly twice as far.

While that quantitive analysis is helpful, it’s only assessing the up-front acquisition costs, ignoring the actual quality of the subscribers.

At Morning Brew, we performed a ton of cohort analysis, breaking down the engagement (usually using open rates) for each acquisition channel over time. An oversimplified example to show what I mean:

• Facebook ads: 15% open rate

• Google AdWords: 22% open rate

• Referrals: 35% open rate

With rare exceptions, referrals were always one of the higher-quality acquisition channels when measuring the actual engagement of the subscribers. It makes a lot of intuitive sense, too—you refer people who you think would particularly benefit and/or enjoy the content. As the social creatures we are, it also builds another web between you and the people you refer to. Anecdotally, there are a few newsletters my friends and I all read, and we frequently discuss the content together. Not reading (or unsubscribing) removes that connection we have together and isolates me from future discussions.

What Are Some Examples of Successful Referral Programs?

I’m partial to Morning Brew, where I spent 3.5 years of my life building cool tech and optimizing growth channels, primarily the referral program. The Brew’s referral program led to well over 1 million subscribers and continued to be one of the most consistent and effective acquisition channels month over month.

If you look at the largest newsletters today, almost all of them utilize a referral program to incentivize their top readers to share: Axios, The Skimm, The Hustle, The Future Party, Punchbowl News, etc.

Why don’t more newsletters leverage a referral program to grow? Based on the countless conversations I’ve had with creators, I’d say it boils down to two primary reasons:

• Unsure what incentives and rewards align with their reader’s interests

• Don’t have the bandwidth, experience, or skillset to build the tech to support a well-working one

Incentives and Rewards

Believe it or not, it’s possible readers aren’t interested in wearing t-shirts and hoodies with your newsletter’s logo on them. Far too often, I think people get lazy and immediately jump to the simplest thing Vistaprint has to offer—stickers, mugs, t-shirts, keychains, etc. Admittedly, Morning Brew benefited tremendously by building a brand their loyal readers identified with, resulting in a genuine interest in wearing Morning Brew swag... but I’d argue that’s not the case for most publications.

I’d recommend taking a step back and understanding why your subscribers signed up for your newsletter in the first place. From there, what tangential benefits can you provide readers that are a true value-add and something that would appeal to your audience?

• If you were a finance and investing newsletter—perhaps you could offer “exclusive stock picks” for readers who have achieved ten referrals

• If you’re a sports newsletter—maybe 25 referrals earn you two tickets to a game to see your favorite team

• If you cover crypto and NFTs—maybe you offer community tokens or early access to exclusive drops

People signed up for Morning Brew because they were interested in staying up to date on the latest business stories and benefited personally and professionally from the content our team curated. If the content is what they were extracting value from, why not offer more “exclusive” content as an incentive?

We offered an exclusive Sunday newsletter only to readers with at least three referrals, which was a massive success. Before leaving Morning Brew, that exclusive list included well over 125,000 readers (that’s 375,000 referrals at a minimum).

While you can hypothesize what your audience may be incentivized by, it’s also super helpful just to ask. Whether you include a few surveys in your newsletter or identify your top 50-100 readers and ask them directly, there are plenty of ways to learn from your audience and understand what would entice them to share your content with others.

Launching Referral Program on beehiiv

At Morning Brew, we had a dedicated engineering and growth team that worked hand-in-hand to consistently iterate the referral program, from the gritty technical implementation details to the copy of the automated emails.

While it may appear relatively simple on the surface, there are a ton of technical intricacies if you want it to work seamlessly for your readers (fraud detection, automated email triggers, consistent reader experience, managing fulfillment, dynamically generated content, etc.).

Because not every newsletter has a dedicated team of engineers, and not every 3rd party software tool is dependable or compatible with your newsletter platform—we built a world-class newsletter referral program directly into beehiiv’s platform. This means your referral program can be spun up with just a few clicks, and all of the data, configurations, and aesthetics live within the same platform as your newsletter… which unlocks a ton of benefits, not to mention simplicity.

Users on our Growth plan can access the referral program from the Grow tab in the navbar. From there, it’s as simple as adding the rewards you want to offer and assigning each reward a milestone (# of referrals). After that’s in place, you simply hit the referral program icon in the text editor to drop the “referral section” into your newsletter wherever you’d like.

It’ll automatically adopt the styles and configurations already set for your newsletter, so it looks like a totally native part of your newsletter.

We’ll dynamically render a unique referral section in your newsletter for each of your readers, provide a unique and protected referral hub directly on your website (where your readers can track their progress and access rewards), and handle all automated emails and triggers. All referred emails traverse through multiple layers of fraud detection before being accepted.

Automate by Bulk Uploading Promo Codes

While you could manage the fulfillment of the rewards yourself, some of the most successful referral programs utilize a Shopify store and sync with a drop-shipping company to automate the fulfillment and shipping of merch and rewards.

How to integrate beehiiv with Shopify:

However, utilizing a single promo code (e.g., "use code XXXX to get a free t-shirt") leaves you susceptible to people abusing the code. The solution—single-use promo codes.

Using one of the many available plug-ins, you can auto-generate hundreds (or thousands) of single-use promo codes. And with our latest update, you can upload them directly into beehiiv, so readers who achieve certain milestones automatically receive a single-use promo code to claim their rewards.

You can bulk upload a different list of promo codes for each reward in your referral program so that they can be reward and milestone-specific.

In theory, once you have your store configured to accept the promo codes and your beehiiv referral program is set up—you can have your referral program completely on autopilot without ever needing to manage fulfillment and inventory.

We'll also send you an email notification when your inventory of unused promo codes is running low so that you can import additional codes.

Finally, you’ll be able to manage the fulfillment of your reader’s rewards directly in your dashboard. We’ve also built robust dashboards for you to analyze and track the progress and success of your newsletter’s referral program.

This provides the precise infrastructure needed to match the world’s most successful newsletters’ referral programs almost identically, so you can convert your readers into a growth engine.

Shopify plugins for creating bulk promo codes that we recommend:

• Bulk Discount Code Generator

• Bulk Discounts

Position Yourself for Success

While our referral program acts as an extension of your team, providing the tech and infrastructure to help you actualize your newsletter's true growth potential, simply flipping the switch and turning it on doesn’t guarantee success.

You still need to:

• include rewards and incentives that align with what your audience wants

• be able to fulfill rewards promptly to keep readers confident and engaged

• educate your readers about the existence of the referral program and close any knowledge gap

Another common misnomer is that all referrals are free. While technically possible, if you have any physical rewards in your milestones, you need to account for those costs + shipping.

One thing that we were very cognizant of at Morning Brew was ensuring our referral program was incredibly cost-efficient:

• at three referrals, we added people to an exclusive newsletter (zero marginal costs)

• At five referrals, we sent readers stickers (sticker costs + shipping was sub $1)

• At ten referrals, we extended an invite to an exclusive Facebook group (zero marginal costs)

It wasn’t until 15 referrals that we shipped a more expensive good (either a coffee mug or a phone wallet). Meaning a reader who made 14 referrals cost us ~$1 (or roughly 7 cents per subscriber). Not only was 7 cents per subscriber a bargain but as mentioned earlier, the quality of these readers was much higher than our average new reader.

So what should you prioritize when building a referral program?

If you can offer digital goods (community access, tokens, more content, NFTs), you’re removing most of the costs associated with the referral program.

If you’re offering physical goods, there are two primary approaches we’ve seen work best:

1. Handle fulfillment yourself. When they achieve an award, have them complete a Google Form or Typeform to collect their address in the automated email readers receive.

   Then whether you’re shipping from your house or using a 3rd party, you just handle the fulfillment yourself. Our fulfillment dashboard will help you manage and keep track of this. This is the workflow we utilized at Morning Brew.

2. Set up a Shopify store and sync with a dropshipping company like Oberlo or Printful (dropshipping means you have no inventory. Rather, when someone orders something, these companies will print on demand and ship it directly from the factory).

   When a reader achieves a milestone, include a promo code in the automated email so they can select the reward in your Shopify store and checkout with the promo code.

We’ll continue to build custom integrations for our referral tool, monitor which users are having the most success (and how), and share those insights in future blogs.

On the day we launched our referral program tool, we had one newsletter launch their referral program and see over 350 referrals from their first send. The point is, that there’s a real opportunity to maximize the growth potential of your newsletter if you’re willing to invest in the right tools and team.

…and if you’re interested in using beehiiv’s integrated referral tool, here’s a demo walking you through how it works: