10 Best Practices for Launching and Running a Referral Program

Word-of-mouth promotions have been an incredible marketing maneuver of the last decade. Leveraging people’s trust and dependency on their fellow beings for recommendations and advice enabled businesses to acquire a rich customer base on behalf of existing ones.

The rise of referral marketing is linked to the hours spent on social media, increasing digital influencers, and a growing distrust of sponsored ads. 84% of people trust recommendations from people they know before making a purchase.

But with all that reputation, referral programs do need something different and better to stand out. Whether it’s lucrative incentives or hassle-free referral design, you must offer something that distinguishes you from competitors.

Like any good marketing strategy, a little research into prevalent market trends and successful campaigns helps outline ideas for your referral program. After analyzing the key characteristics of top-performing programs, we have summed up ten best practices for launching a referral program for your business.

Referral Program Best Practices: Know and Prioritize Your Customers

Developing a great product is a prerequisite to a successful referral program. People will only recommend a product or service that they had the pleasure of using. Most of us are naturally hard-wired to share positive experiences with our nearest social circle, even without a proper incentive.

Knowing your ideal audience beforehand can help you devise a product that suits them and tailor your referral program to their preferences - or even exceed their expectations.

Gather insights from your loyal customer base about their needs and likings—after all, your target audience will share the same preferences. Segment your audience based on behavior and purchase history and prioritize users who are most likely to refer others and have a high lifetime value.

Many companies conduct qualitative surveys and interviews to gauge user experience, but if you believe in numbers and graphs, utilize analytics tools.

Try engaging influential customers and advocates with a strong social presence or significant influence within their communities. Arm them with special incentives and rewards in exchange for sharing their experiences and referring new customers.

Allplants, a plant-based eatery, pledged to plant a tree for every successful referral generated, encouraging brand advocates to take the step.

Determine Your Referral Incentives

Rewards are the driving force behind any successful program. If you offer a reward or incentive that your customers love and is worth their time and effort for propagating your business, you’re in safe waters. It shows you value and appreciate your customers’ efforts and reinforces their loyalty to your brand.

Referral incentives don’t necessarily have to be grandiose or hefty cash rewards. Whether you offer discounts, store credit, or free trials, the ideal reward should tie back to your business.

Tips for Setting Up Your Referral Incentives

Here are a few key strategies for setting perfect referral incentives:

• Understand Your Customer's Motivations: Are they driven by financial rewards, exclusive access, or recognition? Align your incentives with what resonates most with your customers.
• Present Value Proposition: Assess your budget and resources to identify the incentives that provide a fair value exchange for both the referrer and the referred customer.
• Tiered Incentive Structure: Reward customers based on the number or quality of referrals they generate, motivating them to refer more individuals and strive for higher rewards.
• Exclusive Benefits: Provide exclusive benefits to referrers, such as early access to new product launches, priority customer support, or special events.

Learn From Others’ Success

Most brands, like the Uber Eats referral program, offer double-sided incentives, where referrers and referred-in customers receive rewards. This encourages incoming customers to refer your brand to their circles of influence and increases the conversion rate.

Whereas other subscription-based companies provide a free monthly or yearly subscription in exchange for referring friends. For instance, Trello premium plans cost $5. But if you manage to bring in leads through your referral link, you can get up to 12 months of free access.

Shortlist Your Audience for Invitations

Who participates in your refer-a-friend program plays a big role in its success, especially if it’s part of your pre-launch campaign. Shortlist potential advocates from your audience to gather quality leads and ensure new customers will stick by. Besides, targeting a fraction of your audience allows you to tailor your invitations and referral program messaging to their specific needs and preferences.

Utilize Net Promoter Score (NPS) approach to identify passionate customers likelier to spread the word about your brand. Consumers who have rated your brand highly on the NPS survey are strong candidates for your referral program.

Potential Brand Advocates

Current customers: Your customers are already familiar with your brand, products, and services and the value you provide. Engage them with incentives to promote your program.

Past Customers: Don't overlook the potential of past customers. They may no longer be engaged with your brand, be can still be valuable referral sources. Reach out to them with a re-engagement campaign, reminding them of their positive experiences with your brand.

Social Media Followers: Your followers on social platforms have already shown an interest in your product or brand motto. Leverage their engagement by sharing program details, incentives, and success stories. Encourage customers to share your program messaging and increase conversion rate.

Email Subscribers: People who have signed up for your newsletters or updates are interested in the referral program, hoping to hear from you. Attract their attention with compelling subject lines and assign them unique referral links to spread out.

Employee Advocates: Employees are psychologically, emotionally, and financially invested in your brand. The higher the stakes, the more eager they are to bring new referrals and drive sales growth.

Design A Seamless Customer Referral Program

Unlike existing ones, referred customers interact with your brand for the first time. Your referral program's outlook and user experience can have a lasting impression on their behavior, suggesting whether to stay or flee.

Begin with a Catchy Slogan

With an attention span of 8 seconds, your program outline must have a catchy slogan to attract the audience’s attention at first glance. The referral procedure and eligibility criteria should be laid out in simple, clear language allowing users to join your referral program and bring new leads.

Common referral program examples usually include “Give X, Get Y” and “Refer a Friend, reward yourself.”

Employ Eye-Catching Graphics

To retain the interest and attention of your audience, don’t be shy of using eye-catching visuals. Instate compelling photos and interactive graphics on your referral landing page to promote your referral program and leave a lasting impact on visitors.

Infuse a CTA Button (Referral Code)

CTA provides a clear and actionable pathway for participants to refer others and track their referrals effectively. Use concise and compelling messaging on the CTA button that clearly communicates the action you want users to take. For example, phrases like "Refer a Friend," "Share and Earn," or "Get Rewarded" can be effective in encouraging users to click and participate.

Set Up a Promotion Strategy

You can’t expect overwhelming participation from your audience if your program is difficult to locate. Without powerful marketing, your program may not reach its full potential in terms of generating referrals and acquiring new customers.

Before you start advertising the program, set up a promotion strategy. Whether it's increasing customer acquisition, driving repeat purchases, or expanding brand awareness, outline specific objectives you want to achieve with your program promotion.

Advertise your referral campaign on all channels that resonate with your audience or platforms where your potential clientele is most active. Communicate the value participants will receive for referring your brand to others and the advantages for those being referred. Present the outcomes and prospects of your program through banners, widgets, and compelling social media posts that reflect your brand personality.

Leverage Referral Emails

Even though various marketing channels have popped up in recent times, email is a powerful marketing tool used by 64% of small businesses to reach their customers. Once you learn how to create emails for your product launch, you leverage the medium to broadcast your referral program and share it with prospects.

Referral emails allow you to communicate with your existing customers and potential advocates directly. Providing exclusive attention to customers strengthens the relationship between your brand and the recipient. By addressing customers by name and tailoring the message to their specific preferences, you enhance the likelihood of their participation in your referral program.

With email marketing, you can segment your email subscriber list based on customers' purchase history and engagement level. Make sure you write persuasive copy and use immersive mobile-responsive graphics explaining the incentives of your referral program offers.

Include CTAs and designated referral links in your emails to track referrers' behavior and assign bonuses for each lead. MeUndies designed a mobile-friendly email offering a $20 cashback along with a 20% discount.

Enable Seamless Customer Sharing

Email referrals may spark the initial interaction between you and your customers, but there won’t be a multiplier effect unless you make sharing easy. As a marketer, you don’t know who might be your next customer. It could be someone outside your target audience demographics.

A program is easy to share if it enables customers to distribute their referral links with their network. The process opens up opportunities to reach new prospects who may not be familiar with your brand firsthand. Referral marketing works by affirmative psychology and social proof shared by existing customers within their circles of influence.

Some popular referral program-sharing strategies include:

• Insert social media and email sharing options on prominent spots on landing pages and customer’s account dashboard for better promotion.
• Offer pre-populated content or templates with pre-filled referral links to save customers time referring others.
• Ensure your referral program and sharing interfaces are mobile-friendly, with easy-to-use buttons and responsive design.
• Provide incentives and rewards to encourage customers to share your referral program and increase engagement.

Send Follow-Up and ThankYou Emails

Whenever you attract a lead, pounce upon it at first notice. If you let incoming leads set around for too long, you might miss the opportunity to secure these customers. Don’t forget, if your brand advocates have referred their friends to your business; they may have recommended them to a few other companies as well.

The best way to keep them from drifting onto other stores, provide your leads with exclusive treatment. Communicate why signing up on your platform or purchasing your product will benefit them. Not to mention, for users who might’ve forgotten about your program after signing up, sending them quick follow-up emails and reminders can ensure they stick with your brand.

The follow-up messages should read like “Hope you’re enjoying our referral program” or “We’re excited to treat your friends the same.”

Follow-up and thank-you emails provide an opportunity to nurture customer relationships beyond the initial referral. By staying in touch and providing updates on the progress of their referrals or sharing exclusive content or offers, you foster a sense of community and ongoing engagement.

Stay Updated with Competitors

Whether you’re planning your pre-launch marketing campaign or organizing a product launch event, competitive research always helps. Knowing how competitors' referral programs in your niche are faring not only gives an insight into their marketing strategy but also keeps you ahead of the trends.

Look at the existing programs in your niche—ones that are attracting massive leads to the referral page. Assess their features and drawbacks to identify the marketing tactics that may help refine your referral program. Noticing potential drawbacks in their strategy would help locate potential pitfalls and how to use them to your advantage.

Instate Referral Marketing Program Software

The key to staying ahead of the competition is to keep monitoring your performance and learning from your mistakes. Instating referral software simplifies the management of your referral program. It provides a centralized dashboard where you can efficiently handle program operations and track performance metrics, saving time and resources.

With a customer referral program in place, participants can easily access their referral links, monitor their progress, and redeem rewards for a referral through the software platform. It tracks a customer's activity, from making their first purchase to sharing referral program links.

If applicable, integrate the referral program software with your existing CRM, marketing automation, or e-commerce platforms. The integration will ensure seamless data flow between systems and allow a unified view of customer activity, referrals, and conversions.

Closing Note

If you’ve developed a great product and offer awesome customer service, chances are your customers are already talking about you in their friendly associations. An effective referral marketing campaign leverages the basic human psychology of word-of-mouth marketing and reinforces it with attractive incentives to turn previous customers into brand advocates.

Building an effective referral program that keeps you on track with your product launch objectives and ahead of the competition is challenging. But adopting the above-described referral program best practices will keep you en route to success. Join Prefinery.com for credible insights and in-house management from industry-leading experts.

FAQs

How can I track and measure the success of my referral program?

The ideal way to keep track of the referral process is by setting specific objectives and goals for your program and employing referral program software to measure them. These analytic tools provide insights into key metrics such as the referral program's conversion rates, customer acquisition costs, and ROI.

What are the best channels for promoting my referral program?

Every business owner or marketer uses social media platforms, email marketing, websites and landing pages, blog posts, and even offline brochures and referral cards to promote their referral program. Make sure you select the channels that resonate with your audience’s inclinations and preferences.