Starting a Refer a Friend Campaign? Here are seven tips to get you started.

If you are looking to acquire new customers a refer a friend campaign provides you with a great opportunity to gain them profitably. When done correctly, refer a friend campaigns can attract new customers at a much lower cost than traditional paid advertising. They can also act as a force multiplier for your other marketing activity.

But successfully pulling off a refer a friend campaign can be difficult.

Refer a friend campaigns involve encouraging your existing customers to invite their friends, family, or business network to try your product or business. Oftentimes, both the referrer and referee are incentivized to take part via a gift, discount, or other bonus.

In a traditional marketing campaign, you only need to convince your target customer to take up your offer or purchase your product. In a referral marketing program, you’ll need to get two people to convert. You’ll need to convince your current customer to pass on the offer, and you’ll need to convince your prospective customer, the referee being made the offer, to take it up as well.

With twice the convincing to pull off, it means it's doubly hard to successfully convert. You must plan a strategy that resonates with both parties.

Luckily, we’ve got some tips to help you pull off a great referral campaign.

1. What’s in it for your existing customer?

If you want your customers to do your marketing for you and refer their friends, you’ll need a good reason for them to do so. What’s in it for them?

For best results, you’ll need to offer them something of value. A free product or month of service has proven to be a motivating factor.

While incentives of a monetary sort are useful, they aren’t your only option. People share for many reasons including to bring value, nourish relationships, and express or define themselves. How will sharing your offer with someone who’s opinion they value help them?

Often, when people share something its because they think the person it is being shared with will get something of value from it. Bringing us to our next point.

2. What’s in it for the new customer?

The offer for the referee, the person with whom the offer is being shared, will make or break your campaign. Of course, you’ll need you existing customers to let new users know about your offer, but if they aren’t interested in your offer, if they don’t find it compelling, it won’t do you much good.

So while it’s important to properly motivate the referrer to share, you aren’t asking them for money. But with the potential new customer, you are.

What are the participants getting from taking up your offer? People are hesitant to hand over their hard-earned money, so you’ll need to figure out a way to overcome that hesitation.

By ensuring that both referrer and referee are getting something of value, you are giving your promotion a great shot at success.

A free product is a tried and true incentive. If your service involves a recurring charge, you can offer a free month of service. A free trial has been proven to lower inhibitions regarding new purchases. If you have a limited budget, you can offer a raffle entry to a larger prize like a gift card or electronic good.

Sometimes, the referrer and referee will get the same prize, but oftentimes the referee’s reward will be greater.

A powerful way to incentivize both referrer and referee is to add a sense of participation or mystery to the referral program. For example, the online brokerage Robinhood has conducted a promotion where both the existing and new customers get a free stock when the new user opens an account. While most users get a relatively inexpensive stock, users will want to know what company's stock the other received. This adds a social element to the campaign because both parties will be curious about what stock the other received.

3. Talk to your customers

To understand how to acquire new customers you need to throughout understand what your current customers like about your product or service. Talk to them in person. Conduct surveys. Ask them in their words what they like about you. Find out what it would take for them to refer a friend or colleague to you.

By getting a clear understanding of what your customers like about you, you stand a better chance to craft language and marketing material that will resonate with prospective customers.

4. Get noticed

Even with a promotion that offers great value to the existing and prospective customers, it won’t do you much good if nobody knows about it.

Spend the time coming up with an enticing offer as well as ways of presenting it compellingly. Craft your marketing to stand out and quickly convey the offer details.

You likely want to have different marketing materials for the referrer and referee because you’ll have different selling points for each. Like all marketing, imagery is important.

With solid creative, you’ll need to use all your marketing channels to get your offer in front of as many eyeballs as often as possible. You’ll want to use all your marketing channels to re-enforce the promotion. The more personalized you can make your marketing, the better the chance of it being noticed.

Tease the offer a few days before. When you kick-off the campaign you need to get it seen as much as possible.

If you have a decent-sized email list, email promotion can be the foundation the rest of the campaign rests on. Be creative when coming up with places to promote your campaign. For example, you can have employees include it in their email signature during the campaign duration. Or perhaps there are vendors or other partners you can enlist to help spread the word. Even affiliates can be leveraged to promote the campaign.

5. Be persistent

When crafting your strategy, make sure you focus on the whole of the campaign, not just the launch. You’ll want to tease the campaign before it launches and on launch day promote it as much as you can. But don’t stop there. Once your audience sees your offer, you don’t want them to forget it. Create retargeting campaigns on social media and other display advertisement so that your audience is constantly reminded. Continue to push the promotion through the lifetime of the campaign. A few days after you launch the campaign, send a reminder email. Reminders and refreshers can make huge differences in terms of uptake, so don’t miss any opportunity to get in front of your prospect’s eyes.

As the campaign end is getting closer, be sure to market that fact. You might want to change your ads each day to remind them how many days are left. Scarcity and Fear of Missing Out (FOMO) can be a great selling point, so be sure to remind your audience that the window to pick up the offer is closing. Using language that points out the limited time of the offer can help end your campaign on a high note.

6. Make it easy

To maximize the uptake number for both referrers and potential new customers, you have to make it as simple as possible for both sides of the equation. Keep the number of steps to redemption to a minimum. Don’t make them contact you, fill out forms, or jump through other hoops. That goes for both the referrer and referee.

For the person doing the referring, make it easy for them to let the other person know. Social media and email are likely the most powerful ways, but not the only option.

For the prospective customer, streamline your landing page or app to make it clear and simple to accept the reward. If possible, avoid making them pay right away.

7. Track your referrals

You can’t improve what you can’t measure. While it can be difficult to reliably track a referral campaign, you must capture as much of the process as possible.

Tracking your results will help you understand how well the campaign is performing and ideally allow you to make changes that will help focus and refine your offering. It will also help you if you plan on running a subsequent referral campaign.

How many people did you ask to refer? How did you ask them (email, banner ads on your site, ads on social media, etc)? How many of them sent the invite? How many of them were taken up? How many ended up being customers?

The metric you’ll ideally want to calculate is the viral coefficient, which measures how many new users an existing user generates. As Geckoboard explains, the Viral Coefficient is the number of invites sent per user multiplied by the percent of accepted invites, or the conversion rate. Determining your viral coefficient gives you a simple but powerful metric to understand the success of your campaign.

By capturing as much information as you can and analyzing it for key insights, you’ll be able to tweak your campaign to make it better.

While a refer a friend campaign can result in dramatic customer growth, it can be difficult to pull it off successfully. But if you thoroughly plan your strategy with your customer in mind, you’ll have a great chance at success.