How to build a referral program that actually works with Kirsty Sharman, Referral Factory
Hello, everyone. My name is Christian. Welcome back to the TNW Podcast. Today, our our guest is Kirsty, the founder and CEO at Referral Marketing, which is one of the leading referral marketing platforms in Europe. Nice to meet you.
Kirsty Sharman:Hey. Nice to meet you too. Thanks for having me, Christian.
Cristian Dina:Thank you for joining us. At first, I will let you present yourself and the company. So please, please tell us more.
Kirsty Sharman:Yeah. Okay. So as you said, I'm Kirsty. I am the founder and currently the CEO of a company called Referral Factory. What we do is we help businesses all over the world build, launch and scale their referral programs, so they can ask their customers for referrals, obviously get referrals and grow.
Kirsty Sharman:And our business is like pretty much solely focused on that. Yeah, we are kind of one of the leading software providers in Europe, and probably most of the referral programs you see and interact with there, you might not know, but they're running off our tech on the back end. Okay, that's Yeah, that's us.
Cristian Dina:I like to go back to the basics and, and do simple things. So please explain the referral marketing to our audience like, it's the first time we we hear about it.
Kirsty Sharman:Cool. So, let me think. What's the best way to explain this? I always actually like to use maybe like childlike examples because they are the easiest to explain.
Cristian Dina:So Yes.
Kirsty Sharman:Imagine you were, you know, a Christian, imagine you were a 10 year old boy, you were going to sell lemonade, you know, you wanted to sell some lemonade to make some money. You know, imagine you said, Okay, cool, I'm going to make this homemade lemonade, I'm going to go outside and I'm going to sell it on the pavement where people walk past, they can buy. Your first problem you would run into is how do you actually get customers? And I think you would have two ways to solve that. The first way would be that you would probably put a sign up, you would say, you know, €10, not €10 for lemonade, you know, a euro for a cup of lemonade and people walking past would be able to see your advert and decide if they wanted to come and buy from you or not.
Kirsty Sharman:Now, there's another way you could also do marketing. And this would be called traditionally like word-of-mouth marketing. And really, these days, it's more kind of being phrased as referral marketing. But principle is the same is essentially instead of just putting the sign outside your lemonade store and hoping people come, what you would do is you would go to all your neighbors around your house. And you would say to them, if you'd go tell 10 people that we have the best lemonade, and 10 of people come and buy from us, I'll give you one free lemonade.
Kirsty Sharman:And instead what you do instead of you putting the sign in front of your store and relying on the fact that people will trust what you have on your sign, what you do is you leverage the trust of your neighbors,
Cristian Dina:right
Kirsty Sharman:to go and tell everyone in the community that you have the best lemonade and they should buy it from you. And, you know, both sorts of marketing really exist in the in the ecosystem. They both exist in today's world. But we really just focus more on marketing where you use people to influence others to come and purchase your product or try your set your service.
Cristian Dina:Why do you think this tactic is so successful?
Kirsty Sharman:Well, I mean, I guess if we talk about this specific example, the key really would be trust, I would say. If you imagine if I walk past your lemonade store, Christian, and I see a sign and that sign says, we sell the best lemonade in Europe, you know, am I going to believe you? Because of course, you're going to say that like it's your lemonade store. I'm not judging you for saying that. I just don't believe you.
Kirsty Sharman:But if somebody comes to me and says, Hey, have you tried that lemonade down the street? Is the best It's lemonade I've my friend. I trust them. And I have no reason to sort of doubt that. So I would say that's really the reason we see this working so much is that is really that like, it's it's becoming harder and harder for brands to advertise in a trusted way online where someone sees an ad and they think like, oh, okay, cool, I believe that and I'll buy it.
Kirsty Sharman:People are becoming more skeptical. So I think that's really, really what's causing the sort of rise in the referral marketing trend or the rise in brands launching referral programs is this element like they're looking for a marketing channel where people will trust the message that they hear or see.
Cristian Dina:Now getting back into the adult world, how does this work for your customers? Companies not not lemonade?
Kirsty Sharman:Oh, yeah. So how does it work for them in real life? Like real kind of practical example? Yeah, so usually a business, we tend to work with more like, I guess, midsize businesses, larger businesses, we do have some startups and smaller businesses as clients. But really, what will happen is they they end up in a position where they have already existing base of customers.
Kirsty Sharman:So say they have 1,000 customers or 5,000 customers. These could also just be people on your database, customers, fans, like people who interact with your brand. What they do in real life is they go and they ask these people who are already true natural ambassadors for their brand, because they're already purchasing the product, they're really like the brand. They go and they ask these people to tell their friends. And usually how they do that is they have a thing called a referral program.
Kirsty Sharman:That's essentially what we help companies build at Referral Factory. And the referral program is like, you know, you can imagine it was you. So say you were one of the customers of this business, they would give you a referral link, you would either sign up to get a referral link or they would give you a referral link, you would share your referral link with a friend, that friend would essentially like fill in their details to claim some sort of offer or whatever on that link. The referral would then go into the business and the business would then be able to trace that lead came from you. And then if that lead qualifies, they would be able to issue you a reward.
Kirsty Sharman:So that's kind of the like technical flow about how it works in reality. But but yeah, in reality, works as you would have a referral program, like an official referral program that your customers know, they refer a friend, they can get €100 for example, as a reward. This is their unique link, and they can share that with friends.
Cristian Dina:I see, I see. What is the difference between customer advocacy and referral marketing? Because it's one thing to leave reviews to
Kirsty Sharman:that's a great question. I would say that referral marketing, it fits into the customer advocacy bucket, but customer advocacy is quite a lot wider. So often when you're looking at a customer advocacy strategy, you'll be saying we want to ask our customers for reviews, we want to ask our customers to share our content, maybe we want to ask them to do a survey. And then we're also going to ask them for referrals. So referral marketing, I guess, would be a bucket in there.
Kirsty Sharman:We really only focus on referral marketing. Because as a business owner myself, I know the most important thing businesses need is like customer acquisition, they need leads. And in the kind of advocacy basket, having a referral program or trying referral marketing is your, your kind of best bet to get leads as fast as possible. Because say you have 100 customers, they all go tell their friends, they'll bring you new customers. So I would say that referral marketing really sits within the advocacy bucket, but should really be treated by marketers as a as its own channel, and really more of a lead generation channel, I would say, than just a general advocacy channel, because there's one goal of a referral program, only one goal.
Kirsty Sharman:And that goal is to bring you leads.
Cristian Dina:New customers. Right. Correct. Yeah. Can you share some examples?
Cristian Dina:Some of the most successful example for customers, either industries, names, whatever you can share.
Kirsty Sharman:Yeah. So I think maybe what might be helpful is if we post this podcast, I would be able to share with you some links to some case studies. And we have quite a lot of referral case studies on our website. So if anyone goes to the Referral Factory website, they'll be able to find case studies of, know, how this works in, say, the solar industry, banking industry, etc. Probably just
Cristian Dina:a quick question, please. Yeah, some of your customers for them, this is the number one strategy for getting new customers, I imagine, correct? Yes. That's amazing. That's amazing.
Kirsty Sharman:Yeah, yeah. But yeah, so I would say on our case studies, I would say really are probably like one of my favorite actually is we had an education like an online learning platform. They were actually relatively new, but they had quite a big base, quite a big like base of first people that had rolled into their their course. And it was like an online course. And they kind of like the CEO was deciding like, Okay, cool.
Kirsty Sharman:We either have to hire a marketer to like do marketing to bring us more customers. Or what we could do is just ask every single person who comes to the course to say, if you refer someone and they get a and you can give them a free class, and if they take a free class, your next class would be free. So it costs them no money. Like and essentially, what happened is this like online business managed to generate like 2,000 referrals, of which 50% went on to pay. Like 1,000 of those went on after their first class to continue paying and taking more classes.
Kirsty Sharman:And if you kind of go back to the beginning, the CEO was like, should we either build a marketing team or should we just ask for referrals? And they managed to get 1,000 new customers in six months without any CMO, any marketing team. And all they did was really, really intentional. Yeah. About just saying if you came to this class and you enjoyed it, please invite someone else.
Kirsty Sharman:Just invite someone else. And this works really well with anything with classes, you know, like gyms, like health, anything in that sense, where you have classes, because everyone who goes to a class often knows someone else who would like it. Let's be honest, as humans, we love to hang out with people who are the same as us. So, you know, we might maybe be into marketing, I think both you and me are into marketing, but we probably have other friends who are into marketing. So if I did a really good course, it would be very easy for me to refer others just because we're human and we hang out with people who are the same as us.
Cristian Dina:That is correct. Same as the conference I mentioned. So if I really like a conference, I will will tell you, hey. You need to
Kirsty Sharman:go there next year
Cristian Dina:because it's, it's amazing even though I I win nothing from that. But let's, talk about maybe a skeptical person hearing this podcast. Let's say there's a business with 1,000 customers, and they're looking to implement referral marketing. How many should they expect? Of course, it depends on, niches and and everything.
Kirsty Sharman:Of course, it's a little bit of a how long is a piece of string question, but I'll give you our best data. Because we now have enough referral programs out there running in the ecosystem. We can we can pretty much perform like fair averages, I would say.
Cristian Dina:Okay,
Kirsty Sharman:it would be more for some industries, and it would be less for other industries. But we have fair averages. And generally, what we find is this is like the most simple kind of maths and it is rounded to make it like perfect to make it easy to kind of remember. But say you have 1,000 customers, if you have 1,000 customers, it's very likely that about 20% of your base, if you have a good brand that people like, and and you're offering a good reward, so you're saying there's a really great reward for this. In most cases, 20% of your customer base would make two referrals per year.
Kirsty Sharman:So what does that mean? If you have if you have like 1,000 people, it means like 200 of them will generate two leads each year, you would get 400 new leads. So from a thou if you ask 1,000 people to refer, you can often get about 400 new leads. And then you have to say, how many of those leads would convert into actual customers? And that's really actually where referral
Cristian Dina:becomes on you.
Kirsty Sharman:Yeah, quite exciting because they trusted leads. These people already like trust your business. So you'll see an incredible conversion rate of those leads. Really, our average is about 50%. I mean, I don't know if you know other brands that are advertising on better and Google and like ask them the conversion rate from lead to paying customer 5%
Cristian Dina:or maybe ask a call caller and their conversion rate.
Kirsty Sharman:Yeah, exactly. So but so generally we find you get a conversion rate of about like 50%. So from a thousand customers that you would ask to refer, you probably would generate about 400 leads, and probably about 200 actual customers of that. And this is like an average over an annual period. So generally, what we say I like to say to people is, this is often how we start our sales calls, which is like, would you like to get 20% more leads next year?
Kirsty Sharman:Like, would you like to get 20% more customers next year? Like this year, you got X amount? If would you like to get 20% more than that next year? Would you like to acquire 20% more than that? I mean, everyone will say yes.
Kirsty Sharman:And then we would say, why don't you have a referral program? But that's kind of the data we're seeing in our numbers that we really see about a 20% lift, like in the amount of of like customers you acquire every year. If have a good referral program with a good reward, you can easily increase the amount of customers you're acquiring every year by 20%
Cristian Dina:What simply by launching a referral. Yeah, and I totally agree with you. Every company is looking for new customers, new leads. Yeah, do think? What do you think are the best industries for referral marketing?
Cristian Dina:Are there any industries where this doesn't work?
Kirsty Sharman:So I wouldn't say there's any specific industries that I want to say, like never tried us. In a lot of industries, it does work. I would say you have to be a bit careful. There's some like in the legal industry, it's actually not allowed in many cases. So if you are a lawyer or something, we still have some customers that run referral programs, but I'm not sure that's a good idea.
Kirsty Sharman:But I think in the legal industry, there's some rules about what you can and can't refer. But I would say like our top six industries that when they run referral programmes are highly likely to get the best results. Education is probably first anything in education, online learning, etc. Real world schools, we have a lot of schools, universities, student marketing, one industry. The second industry is like banking and fintech.
Kirsty Sharman:Like, actually, are probably our largest set of customers that in Europe, not in US, but yeah, solar and home services. So plumbers, roofers, etc. It works really well there. Also another category like weight loss, health, wellness, etc. That's really a topic that people generally talk a lot about and their friends kind of talk to their friends about.
Kirsty Sharman:Another interesting industry that it works really well for is not an industry we targeted, but one we found out that worked really well because we got clients in this industry is like any industry that works for the network. So broadband, for example, like you want to get max coverage broadband in an area like telecom networks, actually EV charging networks as well. They often are using referrals as well. And then really anything in like advisory services where you really, you you got to think like one of our biggest categories like financial advisors, because money is so hectic and people don't want to Google to find a financial advisor. They want to invest with someone who your friends already did.
Kirsty Sharman:Yeah. But yeah, we really can cater to every industry. But I would say that like those six industries probably are the ones that see the highest results when they launch referral programs.
Cristian Dina:Great. I think so far the audience is convinced there's a huge value in, referral marketing, but let's talk about the launch. So let's say there are some, people, some companies that want to launch a referral program tomorrow. From your experience, what makes a program succeed? What makes a program fail?
Kirsty Sharman:Okay, so the same thing that makes it succeed would be the same thing that makes it fail. I would say the number one reason we see referral program and maybe I can say there's like two things that are important. The first thing is the way you structure your referral program is really important. And I might talk about this just for a bit, because I think it's really relevant is if you think about like me as the referrer, now imagine I'm going to refer a brand, if you have if you give me an incentive, to offer my friend, it's much easier for me to go tell my friend. So if I could come to you, Christian, and I could say, Hey, you should try the SaaS tool I tried, like, it worked really well.
Kirsty Sharman:It helped me generate leads. And if you use my link, you'll get an extended free trial or you'll get upgraded to the pro plan or you'll get 10% off your first month. When you put an incentive in your referral program, meaning the people referring can give something to their friends, not sell something to their friends. That makes a huge difference. Because now all of a sudden you have these advocates and they're not selling for you.
Kirsty Sharman:They're like, wow, I have this like benefits bonus. And I can tell many people and it makes me look good and they enjoy it. And it totally just creates a win win environment. So I would say that having an incentive and a reward is really important. Don't just offer rewards the person referring make sure you offer rewards the person referring as well as an incentive to the person being signed up.
Kirsty Sharman:And you want to structure in a way it looks like the referrer is giving that incentive to their friend, rather than selling to their friend. That's really important thing. And then I would say the other thing, the number one reasons referral programs, whether they are successful or fail is actually about marketing. Probably the biggest mistake we see customers make is they spend two, three weeks creating their referral program journeys like this is the design of everyone's referral link, we make pages, when this person refers that person, then they get an email notification, there's a dashboard they can log into this. They focus really on the technical aspect of this and, and getting all the technical components right in the tracking, which is important.
Kirsty Sharman:I'm not saying it's not, but it is not definitely not as important as promoting your referral program. So where we see people fail is they spend all this time building a referral program, and they don't tell anyone about it. They don't advertise it in the newsletter. They don't say to their salespeople, please tell your customers about this referral program. They don't put a widget on the website so everybody can see that they have a referral program.
Kirsty Sharman:They don't send a launch mailer telling everyone about this. They don't say on social media that they have a referral program. Like, you know, there's so many things we offer customers at Referral Factory, like a widget when someone logs into your product, that there's a widget that pops up and says, refer your friends get this reward. That for me is like mission critical. You've got to do the work as a marketer to make sure people know you have a referral program.
Kirsty Sharman:Because if you don't, it's a nice marketing channel that sits in the corner and really, no one remembers it. No one knows that there's any benefit to kind of becoming a referrer. So really, please, marketers put as much work into thinking about how you're going to get the word out about your referral program and make sure all your customers know about it equally amount as you think about the tracking and the rewards, etc. Those two things are equal.
Cristian Dina:I think it's the same with startups. There are some technical founders that, focus a couple of months to build a perfect product, but they don't know how to distribute. They don't have the channels, they don't have the relationships, and it fails because they never ask ask customers. They build something that the community doesn't want.
Kirsty Sharman:And it's exactly the same with the referral program. Like, you know, just launch, go and like, make a basic program and ask 10 people to refer. Like, you don't even have to launch your whole customer base to start. Just just get going with it. And and you'll figure out over time the right ways to promote it.
Kirsty Sharman:Every business is different. But, you know, marketers generally know their businesses really well. They know their customers really well. And if they put effort into it, they'll be able to market their effort.
Cristian Dina:I believe there's also an obvious question I have to ask. Maybe people listening are having it as well. Is it always the best idea to give cash as a referral? Yeah. Or is it better to offer, like you said, a perk, a free trial, some credits, some free sessions?
Kirsty Sharman:So we pulled a bunch of data off the back of 2025 to
Cristian Dina:try
Kirsty Sharman:and understand like what rewards are. I'm not now going to talk about the incentive for the for the person being invited or the lead. I'm just going talk about the reward for the referral. So we pulled a bunch of data on that to try and understand like what rewards are moving the needle, what is getting people out of bed and getting people referring. So if say cash majority majority rules, Cash is king, always has been, probably always will be.
Kirsty Sharman:So if you have the ability to give a cash reward that works really well, and the bigger the reward, honestly, the better. And a lot of brands often pay want to pay a lower order amount because they they try and say like we're to pay what it costs us to get a lead. We will also pay for referral. But remember, the beauty of a referral program is you only pay when a lead converts. So if Kirsty refers Christian Christian comes into the business, you you should have your I mean, I don't know if all platform offices, but Referral Factory allows you to put a criteria in that says like, when you know, Christians only when the lead spends $100 should it qualify.
Kirsty Sharman:Yeah.
Cristian Dina:So otherwise you can just refer a even fake pay
Kirsty Sharman:the reward if you made money. Like if someone made a referral, you got a new customer and you made money. So make the reward big, make it the price you would pay for acquisition, not the price you will pay for a lead. So it can be a larger amount that you can offer for reward. But cash is definitely king, often happening in like digital Visas and MasterCard's, not really like cash to bank accounts.
Kirsty Sharman:That's a bit more tricky, but it'll come in like a digital Visa or MasterCard.
Cristian Dina:Gift cards, I imagine.
Kirsty Sharman:Yeah. Secondary, I would say is gift cards like gift cards is also strong. People love a gift basket, so it's like a voucher and they can kind of choose. And then I would say that third is maybe like discounts, perks, promos. There are some businesses where that has real value.
Kirsty Sharman:But please marketers don't give branded hats with your logos as rewards. That is not a reward. No one cares. No one's gonna make it your referrals. But sometimes they do have really exclusive things like tickets to events and like stuff you can't get.
Kirsty Sharman:That's often worth more than money. But please like not traditional swag, water bottle with a logo. That's not a reward. Don't give those rewards. People do not appreciate them.
Kirsty Sharman:Yeah, I would say cash being king, cash definitely being the number one. And that's really across Europe and USA. We play in both of those markets. Yeah, gift cards second and third would be like, I want to call it like exclusive perks, like basically gifts from the business. But it's it's not just a hat with a logo.
Kirsty Sharman:It's it's something more special or unique.
Cristian Dina:Yeah. Yeah. But what about gifts for the leads? Because I also get a ton of messages saying that, hey, if I can get you on a demo, I can give you a gift card, no strings attached. You don't have to buy.
Cristian Dina:They offer actually.
Kirsty Sharman:Yeah, they often gift cards work really well. Like, if I had to say to you, hey, Christian, if you use my lead, if you become a customer, you'll get an Amazon voucher or something. So cash is maybe a bit of a dirty thing there. Like people don't like to really offer cash there. Probably people would like it.
Kirsty Sharman:But they offer me offer like one of two things to the lead is either either like a gift card, like a sign on bonus, something like that, or they will offer like a perk, something like you will get upgraded from basic to pro, you'll get a dedicated account manager, you'll get an extended free trial. Usually it's something because in reality, like you also want to drive quality referrals, people really interested in your product. Do you know what mean? If someone is really genuinely interested and you offer them upgrade, that's really exciting for them. If they're not really interested, like, they shouldn't be there anyway.
Kirsty Sharman:So it's fine.
Cristian Dina:Yeah, I totally agree with you. And what about the referring itself? Should it happen through a code, a link, a QR code, in person, email, webinar?
Kirsty Sharman:Okay, so there are different platforms on the market. They all offer different referral solutions. Referral Factory's preference, I would say, is links like giving each referrer a unique referral link. We do also offer like the ability to give referral codes instead of referral links, or QR codes instead of referral links. So we give businesses all the options, but actually the QR code just opens the link.
Kirsty Sharman:So it's like the same thing. Think the big difference is codes versus links. And I personally am because I'm the founder of Referral Factory, I also push our customers into this direction because I think this is what delivers the best performance. Think referral links are far superior to referral codes.
Cristian Dina:Simple.
Kirsty Sharman:And the reason I would say that is, if I send you a link, you click on that link and you open it. And that link actually is a personalized landing page like how it works with Referral Factory. It says Kirsty is inviting you to get a 50% off discount. Kirsty loves it's like a personal landing page from every one of your referrers. Like, you don't get anything more high converting than that.
Kirsty Sharman:Whereas if it was a code, I'm like, okay, Christian, use my code Kirsty, you know, 10 or something, you kind of stuck with like, okay, where do I go from here? Like, how do I use the code? Then you forget the code. The link is a really nice experience, because Kirsty sends a link to Christian, he opens that link, and it's like a personalized page just for him. Kirsty is recommending this product.
Kirsty Sharman:Like, Christian would fill in his information to say, like, I'm interested in claiming this offer. And then he's redirected back to your product website to continue his his kind of purchasing journey. But the lead got your deets, like the brand got your details upfront. It wasn't like I gave you a code, and we hope for the best. We hope you
Cristian Dina:go right.
Kirsty Sharman:The fact that you had to unlock your code means that the brand got your details. So they now know you are high intent, you want to buy, they can market to you later. So I think personally referral links are superior because of the fact that it's not actually a link. It's a dedicated landing page for each referrer. And as marketers, we all know, the more personalized the landing page, the higher it converts.
Cristian Dina:No question about that.
Kirsty Sharman:Yeah. And then I also think like, it just isn't an easier flow, because I send you a link, you open it, you fill in your information, and the brand gets your details right away. Whereas if I gave you a code, and you went to their website, and you decide, Oh, I'm not gonna I'm not sure I'll buy today. Let me think
Cristian Dina:about You forgot about it.
Kirsty Sharman:So that's not a great win for the brand. And for them, what they want to do is get as many details of new potential customers as possible. And even if they don't buy now, they can build your mailing list, you can retarget them, etcetera.
Cristian Dina:Correct. I I I totally agree. Again, smart. Really smart. You you share a lot of insights.
Cristian Dina:But let's move further. We launched the program, and now we want to manage it. You think need to hire a dedicated person for referral marketing? Or is it something that that you can manage internally?
Kirsty Sharman:Yeah, so generally, I would say if you're running a customer referral program, it means that you will have a high volume of referrals, you won't just have one or two. You have one or two referrers, just manage it personally on email, you don't need software. If you have hundreds or 1000s of referrers, it becomes like a nightmare to manage. And then really, as a as a brand, you have two options. And I guess this is essentially why I built Referral Factory is option one is you would hire someone, you would hire someone internally, they would become the referral manager, their focus would just be this, they would be managing largely on spreadsheets, etc.
Kirsty Sharman:Or your second option would be really to use like a plug and play software, something preferably with like templates. And that's essentially what we do at Referral Factory, which is like from the time your referral program launches, it should largely be 99% automated. We often have to think like, what can we do to get people to log into Referral Factory? It automates managing. You have pages, pages, people sign up, you can send them in HubSpot, you can qualify them automatically when an event happens in HubSpot, then it automatically issues the rewards the user, the user has pages they can track.
Kirsty Sharman:So like, you don't need a human to manage it because Referral Factory actually takes care of the end to end tracking management reward for you. But if you didn't want to implement like a third party software, then yes, more than likely you would have to hire like a referral manager. And usually, actually, like in some companies, they even have a referral manager and they still use our software because like they have multiple referral programmes and more complex setup, etc. But for a regular business, that's a bit more simple. Say you have two options.
Kirsty Sharman:One, you're going to hire someone, they're going to basically spearhead this view, I guess it could be a freelancer or full time. Or number two, you would use a software like Referral Factory. And that would be able to kind of manage the end to end build, promote, track, reward out of the box for you and wouldn't really need to do much management.
Cristian Dina:I see. I see. Let's let's dive more into the European factor. You're a founder, you're building a company in Europe. Is there something different with European customers about privacy, about the different asks?
Cristian Dina:How are things moving today?
Kirsty Sharman:So I would say that actually when we launched Referral Factory, we're almost five years old now. And we launched in Amsterdam back in January 2021. But we grew largely in The USA for the first two years.
Cristian Dina:Okay,
Kirsty Sharman:we didn't really get much traction in Europe off the bat. And a lot of that was related to restrictions like data privacy issues, compliance issues, because if you use referral software, it means like, essentially, your software would have access to see who their clients are. So if I have to generate a link for one of your customers, it means I would have the name and email of your customer. So obviously, I don't want to say that American companies don't care about data privacy, that wouldn't be accurate. But they definitely don't have much as much rules and regulation and red tape, They can kind of just do whatever they want.
Kirsty Sharman:And so for that reason, we kind of took off largely in America for the last first two years. We pretty much just focused on The US market. And then what happened was we started getting demand from the European markets. We had companies that were reaching out to us, like, for example, like actually now we in I think, six or seven banks in Europe. But these brands started reaching out to us and they were saying, hey, we want to use the software because we want to get more referrals.
Kirsty Sharman:Want to we want to like, we want to do this thing. And initially, I couldn't get past the compliance team. You know, the European business would say, yes, we want to buy this. They would say, great, you have to now go speak to procurement. You have to speak to my compliance team.
Kirsty Sharman:And they would say, no, no, no. And that really led us to a journey of just understanding what the needs of European businesses are. So understanding there's restrictions on where you can host your customer data, it needs to be hosted in European environment, understand you have really strict compliance data retention issues, for example, loading your data on top form. If you cancel after three months, it should be deleted, etc.
Cristian Dina:So, okay,
Kirsty Sharman:we really had to upgrade our kind of security posture infrastructure in order to service these European customers. We went we got SOC two certified, we went we got ISO certified. So we now carry like a series of certifications in order to be able to kind of host a brand's customer data just just like a HubSpot or Mailchimp would to be able to host these customers data online. But yeah, I would say that that was really a journey for us. We actually didn't really service the European market for the first two years, because we we had to learn about all these things.
Kirsty Sharman:And we kind of just thought, Oh, this is so cool. Like, like, you know, upload your whole customer base and Europeans would like, no. So we so we had to go through all of these, like compliance steps in order to get certified in order to, I guess, just mature as a business. We had to move our host.
Cristian Dina:Do you think this is a stop into European businesses? Do you think this is a block? The regulation for entrepreneurs who are starting businesses that want to you are from Europe, right? Yeah. And you want to do business in Europe.
Kirsty Sharman:Talk about that for days. Yeah, it really is a huge block, we totally see it in our business. I see it as me as like a founder. Cool. We've managed to upgrade it.
Kirsty Sharman:And now we have a really nice European product because we cater specifically to that. It means you have to design it for a European market to be compliant, to be GDPR compliant, to be safe, to follow all the kind of regulation that we should follow. But I would say as a business, I really see I see a lot of European a lot of European startups that have a lot more red tape. In The US, you see these companies launch, they really just do whatever they want. And I think the biggest irony for me is like, yeah, we we have to pay like we pay €37 a month for like a GDPR compliant cookie banner to be on our home homepage.
Kirsty Sharman:But like to say that we would like protect users data, I'm like, okay, you know, that's fine. But, you know, I get emails like 30 cold emails a day from like American companies just like selling and like they don't care. They'll just email anyone. They don't protect data like so. I'm not I almost am a bit in the camp of the middle.
Kirsty Sharman:Like, I think it's good that Europe puts a bit more care into that and actually cares about the data of users, how it gets used and forces businesses to be responsible for it. I don't think that should just go away. But I think maybe there's a middle ground because I think sometimes the regulation can be a bit tight and actually makes it harder for us to compete with your with US startups, who honestly can just do whatever they want without any consequence. So, you know, maybe there's a middle ground where we can look after customers data, but just give startups a little bit more room to break the rules a bit because kind of that's what we do. And that's how we usually get out of the starting blocks.
Kirsty Sharman:So yeah, I guess in my future, I would like to see maybe more of a middle ground. Don't think we should just not care about how we look after our users data. I think that's irresponsible, and I think we should care about it. But yeah, I don't know. Maybe there's a middle ground.
Kirsty Sharman:But at the moment, I would say I often feel that the playing fields are not super even because I mean, there's even tools like in our own product. We have like two features. One is like a sticky bar and the other one is a submission form. So like a sticky bar is when someone logs into your product, they can submit the details of their friends rather than send their friend a link rather than send their friend a link and tell their friend to opt in and say, like, I want to, you know, be referred, they can just fill in the details of their friends to say, call this friend, call this friend. Our European customers can't use that because it's not compliant.
Kirsty Sharman:But it's getting tons of referrals for The US customers. So, know, it's a difficult thing because and I've seen that myself as well. There's another product called like our B2B and it's like a lead gen tool and like, I can't use it in Europe. Like, it's a great tool, but we can't use it because it's not compliant. Yeah.
Kirsty Sharman:So, hopefully in the future, we'll see some middle ground where we all can be responsible. We can look after data, but we can just help startups maybe have a more of a level playing field.
Cristian Dina:Yeah, I totally agree. Next question for me would be why should a company choose a platform, maybe in Europe, a platform like Kirsty, instead of building something, internally from scratch? I guess a lot of spreadsheets.
Kirsty Sharman:Yeah, yeah. Spreadsheets or, you know, like, you know, a good old vibe coded solution. Okay. Well, you know, the good news for brands, and I think really, that's the important message I want to share today is you do have a few options as brands like we are playing to one side of the market. And the market we play to is brands that want to launch a referral program, but they don't really want to like hire someone and they don't really want to like take on any additional technical debt.
Kirsty Sharman:For them, it totally makes sense to use an off the shelf software. You white label everything, no one knows you're using it, and you can be up and running in like a week. Okay, your other option is you're going to have to build this yourself. It's really not impossible. But again, you end up with some issues.
Kirsty Sharman:So like, okay, cool. You want to vibe code this? Okay, now you have to upload your customer base to this. Is this secure? Does this have SOC two compliance?
Kirsty Sharman:Is it ISO compliant? No. So you would run into the same problem, even vibe coding the solution like, cool, we got a lovable vibe code solution. Yes, it can make a solution that can make a link. But like, is it secure to upload all of your customers data into there?
Kirsty Sharman:Probably not. And then also, I would say that referral programs have lots of like little elements. Like you've got to think when I make a referral, I refer you, you fill in your details, like I should get an email, you should get an email. When when the referral converts, you become a paying customer. I need to be sent a reward.
Kirsty Sharman:I as Kirsty need a place to log into where I can track and monitor my referrals. Like there's a lot of little things with referral that I don't know. My honest opinion is like, it's not that it's impossible to build it, but the maths doesn't really make sense to, first of all, have another asset internally that you have to own. It would take your team weeks more than likely not because prompting is hard, because you've got to figure out all these little nuances in these place. People get an email notification and set up an email server and like, you know, you can just rent it.
Kirsty Sharman:And we kind of cater to the rental market because but we do have some customers, by the way, that like we chat to, and what they want is so like complex and ingrained into their business. And our honest advice is, we think you should build this yourselves. We don't think you should use our tool because you want something really unique and you know what you're doing. And every business is different. So for every business, the answer is different.
Kirsty Sharman:But I would really say it's the age old build versus sell. If you build it yourself, it means you have to figure out everything yourself, and you have to maintain it. And if you rent it, it means you don't have to worry about that stuff. So, you know, I guess every business kind of has its own needs, and they will see what the right fit is for them.
Cristian Dina:Yeah. I have two more questions for you. So I agree with you. It's harder and harder today to to do distribution. Everybody can build a product.
Cristian Dina:It's hard to to find those initial customers. Do you think we're entering in an era where your existing customers are more important than acquiring Nuance, and those can help you actually acquire new zone Nuance? Because trust is really hard to get. But when you hear a recommendation from a friend, you get the perk, you get the bonus. Maybe that can be
Kirsty Sharman:I have to say, I think as marketers, traditionally, we've really just worried about how do we get more people in the funnel? Like some marketers will disagree with me, but I think most of you internally know this is true. Mostly like 99% of your brain space and your function is just thinking how to acquire more customers, how to acquire more customers, how to acquire more customers. But what I'm finding, and I really think this is actually a lot of like AI's influence on the market is it's now becoming easier and easier for people to like switch products, change tools, change insurance companies that the user experience is like they're making it easy and easier to switch. Like now you see adverts like switch to this one will do your whole migration for you and and and right.
Kirsty Sharman:So I think that think that marketers over time are really going to have to start rethinking that split about how much they focus on advertising to their current customers, to keep them happy, and retained, and to generate word-of-mouth. Think previously, we've maybe gotten away with not being able to do that because like it was the land of milk and honey and people, you know, reach was cheap on Facebook. But reach is getting more expensive and search ads are getting more expensive and the things you post online are becoming less trusted. And I think that's pushing us to a corner as marketers actually where we kind of have having to go back to basics and say, like, you know, maybe this isn't so easy. Maybe we need to look after these customers better.
Kirsty Sharman:Maybe we need to talk to them more. Maybe we need to build a relationship with them more to make sure they don't leave because it's so easy for them to leave now. I do think I wouldn't say that it's like more important, but I would say it's becoming more important every year and probably in time will become equal.
Cristian Dina:Yeah. And it's easier to retain rather than
Kirsty Sharman:totally
Cristian Dina:fill the bucket every time.
Kirsty Sharman:Things that are referred are like, have a higher retention rate, spend more on average and spend faster on average. So it's like, again, it goes back to like quality. Like, think as marketers, we're a bit tired of chasing these like cheap dreams. You know what I mean? It's like we just want real customers that are high quality that are going to spend money.
Cristian Dina:Yeah, to be honest, when you say it, it sounds obvious. But
Kirsty Sharman:often you don't do that as a brand. I've been guilty of it myself. Like, that's why I couldn't say.
Cristian Dina:Yes. What would be your best piece of advice for a founder, for a company, looking to build in, in 2026? Anything, that you learned in your journey so far?
Kirsty Sharman:For a founder looking to build, I would really just say that, I don't know, I got so excited about AI when it first came out. Was like, is like, it's going to change the game. It really has helped us to be more efficient as the business. But be careful of shiny object syndrome is like what I would kind of the advice I would give you is something I've learned is that building a company really just got a lot easier. Building a company got a lot easier.
Kirsty Sharman:Like we can all use Claude code or codex, we can build products. Sure, like I'm not saying like anyone can do it and write a prompt, but creating things has become a lot easier and building your business like concepts has become easier. But what hasn't become easier is marketing. And what I would kind of advice I would give to new builders today, people that kind of want to launch like a new startup or new company is it used to be that we would focus 90% of our efforts on building the most amazing product and 10% of our effort on marketing. And I now think that's like just being reversed.
Kirsty Sharman:Actually, founders need to be great at marketing. Need to be willing to like, you know, go on to a podcast like I am. Like they need to have the guts to do these things because products are becoming a dime a dozen and distribution is becoming incredibly important. And if you can't do distribution as a founder, probably more than likely no one will ever find your product. So if you want to do this, I would say like get good at marketing really quick or partner up with someone who's a really good marketer.
Kirsty Sharman:And spend most of your time thinking about how you will distribute your product, not how you will build your product. Because like, I don't know how many kind of founders are listening to this, but I'm sure they will gonna like feel the pain of this is like marketing has got a hell of a lot harder since since AI. And why that is, is there's just more products, more competition, more content online. It's just harder and harder than it ever was to stand out. And it really means that I think like distribution is is is now more important than product and like thinking about how to distribute.
Kirsty Sharman:Of course, if you have a rubbish product, no one's going to buy it. So what's the point? But to be honest, it used to be that you could kind of have a bit of an average product and like it would be fine. And, and like you could also like even if you had a good product and you had average distribution, it was fine, like it would spread. But now it's hard.
Kirsty Sharman:So think really heavily about distribution before you kind of decide to launch your business and make sure you have a really good go to market strategy or distribution plan. And if it's not your skill set, partner up with someone who understands it. Because 2026 is probably one of the toughest toughest markets I've ever seen in order to like distribute businesses online. And yeah, hopefully, of course, you can use referrals to do that. But yeah, there's lots of other ways.
Kirsty Sharman:But guys, it's about distribution. It's not about product anymore. Like, you need a new skill set.
Cristian Dina:Great piece of advice. And I'm on the same page with you. Actually, I have one follow-up question. How many customers do you need as a minimum? Yeah, to use a platform like Referral Factory?
Kirsty Sharman:Okay, so I would say that you can use a platform from Referral Factory once you have like 100 customers. You can sign up and you can use Referral Factory. But I would say that more than likely, you would start seeing meaningful results from if you have 1,000 customers or more. So if you've got like 1,000 customers in your database, remember, like 1,000 customers is also people on a trial or people it could be
Cristian Dina:okay, okay,
Kirsty Sharman:you know, like a bit of a wider net than you're paying customers. But I would say you've got to have really at least 1,000 people to ask to refer in order to make this impactful and make this work for you.
Cristian Dina:Makes
Kirsty Sharman:sense. You do see some products that are very different. Like a good example is like PayPal launched a referral program when they first launched. They didn't have any customers, but it was just such a referable product that it worked really well. You know, the education business I told you about, they launched a referral program with their first class, but it was like a case where it was a very referable product.
Kirsty Sharman:So I would say like, you either have to have this like hyper referable product, or more than likely you need a couple of 100 customers, let's say thousand customers in order to make and I want to say meaningful results, because I like to make sure that when people come to Referral Factory, they take the time to set up a referral program, that the results they get are meaningful for them. And it pays them a good ROI on their time investment. And I see that at about kind of the thousand customer mark. If you have more than that, it's very unlikely that this wouldn't work, to be honest.
Cristian Dina:I totally understand. Yeah. To be honest, again, some things are obvious once you hear them, but you shared great insights today. Can you make me think I'm about
Kirsty Sharman:so be here.
Cristian Dina:And yeah, is there anything else that you want to share with the audience today?
Kirsty Sharman:No, I just want to maybe maybe what will be helpful to share with the audience today is a secret little tip or trick.
Cristian Dina:Okay,
Kirsty Sharman:which is if you go to our pricing page on if you if you navigate to Referral Factory's website, you can just Google Referral Factory and you'll find us if you navigate to our pricing page, and you go below the pricing blocks, you will see that there's like a black banner. And that banner takes you to a place where you can get a startup discount. At the moment, we are just approving anyone who's ballsy enough to ask for a discount. So that's a nice little tip for everyone is that Referral Factory kind of does have a startup and small business program, you can get 50% off forever pretty much like you just need to apply to it. So they come in and they pay full price.
Kirsty Sharman:And I'm now giving away all of our secrets that you go to our pricing page, you go underneath the pricing block, you'll see a little banner there, click on it, it takes you to an application page, apply, and you'll get 50% off Referral Factory for life. So that's a sneaky little trick. If you were thinking about trying referrals, there's a nice way you can do it at half the price.
Cristian Dina:That's amazing. Thank you so much for sharing. And I think this is the gift. This is the perk of the listener that stayed until the end of the podcast.
Kirsty Sharman:Yeah, exactly. Cool. Thanks so much for
Cristian Dina:having me, Kirsty Sharman. It was
Kirsty Sharman:nice to be here.
Cristian Dina:Same here. Thank you so
