PayPal experienced many changes in its early days, including merging with Elon Musk’s x.com. Their big initial challenge was to acquire new customers. Remember that it was way before anyone used or trusted online payments. They tried advertising, but it was too expensive.
Referrals helped PayPal get 7 to 10% daily growth, catapulting their user base to over 100 million members.
The Growth Hack
They needed organic, viral growth, which led them to build a referral program.
They’ve decided that the value of customers is high enough to pay each new customer $10 for signing up, and existing ones who referred the new user got $10 for referrals. So growth went exponential, and PayPal soon had to stop this program as they decided that the referral program costs were too high. But, it certainly brought them a lot of customers early on. So it possibly helped them cross the tipping point to growing exponentially.
The Results
PayPal’s referral program is a legendary growth hack that led to a daily growth of 7 to 10% and helped grow their user base to over 100 million users.
