Often referral marketing programs incentivise customers to refer. That might be through offering discounts, cash, credits for future purchases, priority service or free access to something; these can be tweaked and altered as the programme is rolled out. In basic terms you’re telling a customer: get someone you know to sign up or make a purchase, and we’ll reward you – and sometimes the person you’re referring too.

Though creating a simple in-house program is possible, to reach the level of insight needed to optimise and scale the program, enrolling in an all-in-one automated software platform is the way to go.

– Developing a good referral program is all about testing and experimenting: with incentives, the language you use, and how and when you communicate with your customers.

 How to develop a referral marketing program

– Evaluate your product or service from root to branch. You need a product that’s suitable for word of mouth, with happy customers and a certain level of monthly transactions. Referral marketing is normally a growth accelerator rather than a growth starter. You’ll also need an appropriate level of customer service to launch – ask yourself whether you could cope with a big increase in enquiries, and how you’ll train your team to be fully versed on all the details.

– Decide on your goals for the program. Do you want more email addresses, bigger purchases by existing customers, a higher conversion rate, higher sales or simply more customers? The overarching aim of the program will dictate what type of program is suitable for your business.

– Determine whether you’ll manage it in house, either with developers or spreadsheets, or enroll on an automated all-in-one referral platform. Shop around here – each platform will have different nuances for different businesses, so you’ll need to have conversations. Things to consider include cost (naturally), scalability, platform and compatibility with your other software.

– Land on the incentive you’ll offer, if you’ll offer one. This is an area of trial and error – it can be changed over time, but it needs to make economic sense to the business and be actionable. Scope out the competition to see if they have anything similar set up, and consider A/B testing. You’ll need to set the terms and lay them out clearly – eg, who’s eligible and if there’s a limit on the number of people customers can refer. You’ll likely need to involve a lawyer to ensure everything is legit.

– Consider and refine the user experience – the program has to be straightforward and something anyone can do. The key to successful programs is that they’re quick, actionable and easily shareable.

– Devise a plan for how you’ll tell your customers about the program, and when. That could be whichever communication channels you use: be it social channels, newsletters, website, banner ads, SMS, post purchase pop ups or email sign-offs. You also need to consider at which point the customer will see the information. Ideally that would be at the high points of your relationship: after a new product launch, after they leave a positive review, or after they’ve just made a purchase.

– Set the key KPIs you want to track and your targets: that could be the number of customers who become referrers, the response rate, participation rate or the conversion rate. Having metrics to track and monitor is essential to launching – and improving – any successful referral program.


Things to note

– Not all businesses are suited to referral marketing – one aspect occasionally underestimated is the importance of social capital: your brand has to be something customers feel comfortable sharing and advocating to their friends. It’s really not all about the incentive.

– Managing a referral program is a complex thing. You’ll need the right systems and processes set up from day one to track, measure and optimise the program – particularly if it’s something you want to scale. There are several key metrics to track including reach, participation rate, share rate, conversion rate and return on investment. To observe, learn and iterate – and reach a high level of insight into customer behaviour – many businesses opt for automated software programs.

– Crucial to building an effective referral marketing program is the ability to assess the value of the customers who are brought in. Something to watch out for is the abuse that incentives – particularly monetary ones – can provoke, with customers not hanging around very long, or engaging with the product or service simply to claim their reward.

Whilst organic word of mouth remains the sought-after ideal, creating a referral marketing program can be a great way to drive customer acquisition.

When all is said and done, nothing beats a personal recommendation for acquiring a new customer. 

Referral marketing occurs when a new customer buys or signs up for a product or service based on someone else’s opinion or influence. Sometimes this happens for free (which is great) but plenty of the time it doesn’t – a study by Texas Tech University found that while 83% of satisfied customers say they’d be willing to provide referrals, only 29% actually do. That’s why businesses introduce structured and systematic referral programs that they can continuously manage, control and track. These programs range from the simple (basic spreadsheets built in-house) to the sophisticated (automated all-in-one software platforms from third parties).

 Why it’s important

Trust

With customers increasingly untrusting of mainstream advertising channels, hearing about a business from someone you know immediately builds in a level of confidence hard to replicate. 

Better matching

Customers who come from referrals are naturally a better fit than non-referrals as they’re likely to have similar attitudes, interests and buying habits as the customers already using – and seemingly enjoying – the brand.

Engagement

Referred customers often know the product or service better, having discussed it with the person referring them. They’re therefore more likely to use the product or service more extensively than novices.

Social enrichment

The relationship between the referred customer and your business is stronger due to the friend who referred them – being a customer of your business is now something the two have in common.


Word of mouth on autopilot

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Every plan comes with a dedicated success manager, on-boarding, and exceptional support

How will I generate more referrals with Referral Rock?

customer refer a friend program

Easy for customers to join and share

Integrate with your workflow

  • Refer a friend widgets
  • Registration pages
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Better engagement and repeat shares

Keep members coming back 

  • Statistics so they can see their impact
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Higher conversions through personalization

Personalize the experience

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Align rewards and incentives so everyone wins

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Smart analytics and Suggestions

Automatic program audits to give you the best outcomes 

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Viral loop with automatic invites

Tap into your existing funnel to automatically start the cycle all over again

  • Automatic invitations
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Marketers love referral marketing

Marketers love how they can…

  • control the brand experience
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  • integrate with their systems
  • unlock more referrals

Find out more

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