Prospecting: Referrals Prove an Effective Prospecting Tool for GemLust

Breaking into the crowded flash-sale site industry is a daunting task. Therefore, GemLust knew it needed to do something to generate some positive word-of-mouth. The private online jewelry retailer in the mold of Gilt Groupe (members have to be invited to join the community) launched a promotion in late August where members were given a $100 credit to the site when they invited a friend to join the GemLust community and that friend made 
a purchase.

When a new member uses a referral, they're granted immediate access to the GemLust website. Those without a referral are added to GemLust's waiting list. The retailer's back-end database system differentiates the two groups, allowing it to clearly track which members have referred others. To date, approximately 70 percent of GemLust's customers have been acquired via the member referral program.

"Because the $100 credit is given to members when each of their referrals makes their first purchase, we very closely track where these orders are coming from," says Adam Kubryk, co-founder and CEO of GemLust. "While a percentage of orders will always be organic — members who weren't referred to the site — the large majority of orders have been from customers who were referred by other members. Once the original member is notified of their $100 credit, their return rate to the GemLust website is nearly 100 percent."

GemLust's jewelry is made available to members for a limited time each Monday. Members are notified of the sales via email. Other incentives that GemLust offers its prospects include the flexibility of a one year buy-back program, which allows members to enjoy their jewelry for up to one year, after which they can choose to keep it or sell it back to GemLust at 50 percent of their original purchase price; a free gift and free shipping with every purchase; and insider access to a professionally curated library of hard-to-find jewelry.

In addition to its member referral program, GemLust plans to use press campaigns, social media advertising, online and offline partnerships, email lists, and local events to help it acquire new customers, Kubryk says.