Tesla doesn’t advertise the way traditional car makers do.
The mythical company has grown almost exclusively relying on word of mouth and carefully orchestrated campaigns that focus on the power of social media.
But that’s obviously not the only way it has gained traction.
Its energetic CEO, Elon Musk, generates headlines everywhere he goes, whether it is an appearance at a global conference on climate change, a tour of possible new manufacturing sites or even a guest appearance on a late-night talk-show.
All points to Tesla as being the world’s most popular car manufacturer.
Tesla’s First Referral Program
Last July, Tesla announced its first ever customer referral program.
Existing customers who referred a new buyer got a $1,000 credit sent to their account with Tesla and the new buyer got $1,000 off the price of a brand new luxury car.
Tesla paid close attention to its referral program incentives and rewards.
Those who had the most referrals in various regions and worldwide could win some serious prizes, including a brand new Founder Series Model X and an exclusive invitation to the opening ceremony for Tesla’s Gigafactory in Nevada.
Tesla’s Second Referral Program
The first referral program was so successful, Tesla decided to do it again, this time focusing on its existing customers as the source of new referrals. Thus, the only people who could participate into Tesla’s program were customers – who were already ecstatic at the performance offered by Tesla’s product. This strategy created a tidal wave of evangelism coming from Tesla’s customers, creating thousands of new referrals for the carmaker.
Tesla’s worldwide referral leader lives in China and is named Wei – who identified only as wei70644.
Wei referred an incredible 188 people in just 2 months. At an average of $85,000 per car, that’s nearly $16,000,000 in revenue created by a single referrer for Tesla.
Tesla credited Wei $188,000 for his work and another $188,000 to newly referred customers about to make their purchase representing a ROI of about 42x on every dollar spent.
Talk about impact!
For his efforts, Wei will be awarded a new Tesla Model S P90D. He will also have a front row seat at the Gigafactory opening.
In North America, the referral leader is Canadian Sylvain Juteau, who has so far generated 34 referrals (earning Tesla nearly $3,000,000 in revenue). In Europe, perennial Tesla fan Bjorn Nyland once again leads the race with 51 referrals. Last time Tesla ran a referral program, Bjorn had won a Tesla Model X for his efforts.
But his particular quest to win the European contest became increasingly popular (for both himself and Tesla) when he decided to create a YouTube channel intended to chronicle his referral efforts.
He will now win a Model S P90D to go with it.
Referral Program Results
It’s been claimed that all referrers combined are responsible for selling about 5,000 new Model S cars during the contest period with a total value of $425,000,000, assuming an average sale price of $85,000.
A simple ROI calculation shows Tesla produced a return multiple in excess of 42x on every dollar spent towards their referral program.
“Tesla expected to deliver more than 18,000 cars during the 4th quarter that ended on December 31st, 2015. Without all those referrals, it would have missed its goal by a considerable margin,” says Sylvain Juteau.
Many people think the success of the two first referral programs will convince Tesla to begin a third contest.
Tesla has realized tremendous value with its referral program.
Looking at Q4 2015 alone, a goal of 18,000 cars aided by 5,000 referrals assumes Tesla can attribute over 25% of its new business in Q4 2015 to its referral program.
Tesla enjoys tremendous brand loyalty which is its main source of customer referrals. By engineering a quality program, Tesla has joined the likes of Dropbox, Airbnb and Uber in creating game-changing impact through its referral programs.
Read “How Brand Loyalty Affects Referral Program Success” to learn more about how brand loyalty and referral program quality collide to determine the success of a referral marketing strategy.