Choosing an item or a service, people frequently rely on somebody’s positive comments or feedback. This is a part of referral marketing — one of the most effective ways for entrepreneurs to popularize their brand through customers’ recommendations. But how can you persuade your consumers to advise your company to others?
This post will be your detailed guide as to the basics of referral marketing, tips on how to create a referral marketing program, and many more. Let’s begin finding out all the essential points right now!
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Referral Program: Everything You Should Know About
Before we start, let’s talk more about the crucial terms of marketing referral strategy to ensure that we have the same understanding.
A referral program (also called word-of-mouth marketing) is a well-organized way to encourage customers to recommend your company to others.
How can the clients do that? Below, we’ll mention some of the most popular ways to spread information:
- Giving personal promo codes
- Sharing links on social media
- Offering friends from the address book to start utilizing your brand
- E-mailing others to recommend your items/services, etc.
Meanwhile, you should consider that the customers should be sufficiently motivated in order to give positive recommendations as to your brand. You can offer the following referral incentives as material rewards, like real money and non-monetary motivation (e.g., free months of subscription, discounts, etc.).
What Are The Benefits of Using a Referral Program for Your Brand?
According to different research, word-of-mouth marketing is seen as a more trusted form of advertising than online ads or company websites.
Establishing an extensive customer referral program is often a more cost-effective and efficient way of gaining new customers than alternative marketing methods. It happens because people will be more likely to accept suggestions from those they know.
As a result, when you have an effective referral marketing strategy, you may allow your current customers to recommend your brand to newbie clients. This not only drastically lowers the cost of attracting new customers to your business but also improves customer retention, which boosts your business revenue and increases its attraction for clients.
The other benefits the referral marketing program can bring to your business are the following:
- Finding the valuable service customers
- Enhancing client retention rate
- Increasing brand awareness
- Showing your gratitude
- Boosting the brand’s reputation
- Saving more costs than for advertising campaigns, etc.
So, weighing the advantages of the referral program building, let’s think out how to create it and what peculiarities to consider.
TOP-5 Essential Pieces of Advice to Develop a Referral Strategy
A carefully constructed referral marketing campaign can increase your company’s credibility and draw in more customers. For the best results, you need to plan carefully every step of your plan.
We’ve prepared our set of advice, which will streamline your creative activities. Let’s start discussing them one by one.
Do A/B testing to maximize the effectiveness of your marketing campaigns
Running an A/B test allows you to compare the performance of two different variants you’d like to include to your program. This testing method can be used to assess various call-to-action features on websites and mobile applications.
For instance, you can deal with A/B testing to determine which CTA version is more effective in generating conversions. Likewise, the positioning of elements on the website is also essential, and it can also be checked the same way.
A/B testing example: comparing headlines to found one with better conversion
Care about the referral widgets
A referral widget is a fragment of code you embed into your website to manage your customer referral program effectively. The main aim of such an action is to simplify sign-up for customers to participate in the referral marketing program.
You can add a widget in various places, such as on the home page or a page appearing after a customer’s purchase. It may also be beneficial to create a separate page that gives a comprehensive algorithm on how customers can invite their friends and what they will get for it.
Offer your customers an excellent experience
Investing in customer service can be more beneficial than spending funds on advertising. In order to set up a successful referral system, you must ensure that your business operations are well-regulated and easy to use for your customers.
Your referral program should provide clients with an adequate experience – otherwise, you may find that it fails to generate the desired results.
Track and check your statistics
You may already have referrals for your existing website and don’t know about it. Using tools like Google Analytics can be beneficial for tracking your stats: they will present all of the metrics needed for your referral program and beyond. Therefore, you’ll be able to determine where your business clients come from.
Naturally, this isn’t the only way to look at while measuring the success of your customer referral program. You can look through other sources such as websites, social media platforms, and pages with high referral traffic to bring it to you.
Think out incentives for your referrals
What are the necessary steps to create a referral rewards program? Offer rewards to your customers to encourage them to talk about your business.
Several examples of rewards that businesses use have already been discussed. When creating a referral program, you can also consider using the following variants of incentives, depicted in the image below.
Variants of incentives for your future marketing referral strategy
How Referral Programs Changed Well-Known Businesses: Success Stories
It is remarkable to consider that companies as large as Airbnb or Dropbox once began their business path as small startups. Today, these companies have an estimated worth of billions of dollars, and their marketing techniques are employed by many corporations of various sizes.
Let’s look at the referral programs of these business giants.
Dropbox
The cloud storage market is incredibly competitive; moreover, pay-per-click advertising is quite pricey, and keywords are highly sought after.
That is why, Dropbox created a system where both parties get rewards for referrals. The company’s results were incredible due to its referral marketing program. These days, the program generates around 35% of all registrations.
Amazon
This online business giant has also used a referral program to attract more clients and boost profits. This way, the social media influencers with a set amount of followers have the ability to share shoppable Amazon content and receive commissions from sales made.
Airbnb
Airbnb’s referral program is easy to understand. Current customers of the company can invite their friends to avail of its services, and both can gain various benefits:
- You can invite a friend, and they’ll receive an $18 discount off of their first trip while you get a $9 travel credit.
- Furthermore, you’ll receive $45 if someone your friend invited through this program books a stay.
Airbnb only compensates users who have successfully referred their friends upon the purchase of a product or service and subsequent registration on their platform. Thus, the company has ensured not to expend resources on referrals that were not financially beneficial. This referral program was a success: since its launch in 2012, it has seen its user base double.
What Is Essential to Launch a Referral Strategy for Your Particular Business?
If you’re looking to implement a referral program on your website, you can either use a prepackaged solution or enlist the services of marketing specialists that can assist you in creating a customized referral program. So, now it’s the high time to talk more about a custom referral marketing program, and tools to ise for it, as well as the algorithm of how to create it for your business.
Referral marketing tools
If your budget is limited, you can use various SaaS-based tools (e.g., Girafi, ReferralCandy, or Talkable) to build your own referral program. Software as a Service (SaaS) tools enable the integration of your website, whether it is custom-built or placed on e-commerce platforms such as WooCommerce and Magento.
Referral strategy launching tools usually provide features such as campaign management, pre-built templates, A/B testing, and fraud prevention which is necessary for seamless and secure management of your marketing campaigns.
Customized referral program
Although the aforementioned tools are quite powerful, they are restricted in terms of capabilities. Therefore, if your referral program ideas exceed their functionalities, you will need to develop one from the ground up.
Creating and maintaining custom referral programs is an excellent strategy for enhancing both customer loyalty and new customer acquisition. Companies ensure that their referral process is straightforward, communicating the advantages and rewards of the program effectively. The clear benefits of the program ensure customers understand what they are getting from it and encourage them to use it. By providing appealing rewards for referrals, businesses have been able to establish successful referral schemes that benefit their present customers and potential new ones.
How to develop a referral strategy for your business?
Now we’ll go through the algorithm of how to create a referral program that will benefit your business.
Crucial stages to create a referral strategy for your business
You should deeply understand the needs of your customers. Make a brainstorming session to find answers for the questions like the following:
- What is preferable for the clients in your delivered product or service?
- How they are motivated for it?
- Which social media help them engage your brand?
The questions like ones given above can help you analyze the people’s needs and make your upcoming referral campaign more effective and attractive.
Think about incentives. Based on the previous step, consider what rewards you can offer during your referral program. The rewards should be thought out both for the customers and the friends they will invite.
Create unique referral mailings and web pages. Think out what you’ll write in your reminder and post-purchase e-mail letters, as well as how your join and share pages will look for your customers.
Integrate your referral program to your corporate software and launch it. You can do it through Shopify or apply to a software development vendor to facilitate your task. If you need to develop a corporate website from scratch, the referral program development and implementation price will be included in the overall web design cost.
Now that the program is integrated and ready for use, it is still important to ensure that it is set correctly to optimize referral sales. The vendor’s experts will be with you to enhance the results of the program and help you stay on top. Their expertise will help you gain new loyal customers and increase the awareness of your particular brand.
Please also consider the following: the referral program should be promoted through multiple channels, such as email, social media, and so on. Developing a referral program with these considerations in mind can help businesses increase customer loyalty and acquire new customers.
TOP-10 Successful Referral Marketing Strategies of Famous Brands
The effectiveness of referral marketing programs built from scratch has helped many companies to increase their brand awareness. Let’s look at the TOP-10 ones, and see what they did for their success.
Dropbox
Dropbox is a secure platform designed to facilitate collaboration, file storage, synchronization, and sharing. The Dropbox referral program incentivizes customers through providing extra storage capacity; participants obtain additional memory when someone they referred creates an account and verifies their email address. Referred accounts may be rewarded with bonus storage ranging from 500 MB to 32 GB, depending on their plan.
Referring friends to Dropbox is a great way to earn bonus storage – up to 16 GB for Basic and 32 GB for Plus/Professional accounts. For a simple way to get started with the Dropbox referral program, just visit the page and share your personalized link. Upon verification of their email address, you will be rewarded with additional storage space in your account after signing up. Dropbox makes sharing and collaborating on files with friends or colleagues incredibly easy, thanks to its cloud-based platform.
Robinhood
Robinhood is a stock brokerage company offering customers the opportunity to trade stocks, options, ETFs, and cryptocurrencies without any commissions. When your friend joins the platform, gets approved, and links their bank account, you will be rewarded with a gift stock from their referral program. Rewards of up to $200 for each successful referral are available, but the cash can only be withdrawn after being held for a minimum of 30 days. Moreover, referral partners can be rewarded with up to $1,500 in stocks per year.
More details on how to begin the referral strategy can be found on the Robinhood website. You’ll be provided with guidelines for inviting people along with details of the rewards associated with successful referrals.
Payoneer
The Payoneer platform is an ideal choice for affiliate marketers, providing convenient online services to receive and transfer money. It offers an attractive referral program, rewarding each successful referral with up to $25. You can earn the incentive at various points, like when the referral supplies their info, goes through the interview process and is eventually hired. Incentives may still be available to an employee who is not actively employed. All these points encourage people to choose Payoneer, successfully use it and advice it to others.
Tesla
Tesla is an automobile manufacturer that has impressively increased consumer loyalty. Their creative referral scheme, which has a 40x return on investment with no advertising expenses, is principally responsible for this.
When a consumer buys a car thanks to somebody’s recommendation, they receive 1,500 free kilometers of charging as a reward. Furthermore, referrals are capable of participating in quarterly lotteries for a chance to win a brand-new Tesla vehicle. This way, the customers became brand advocates assisting the company in capturing the electric car market.
PayPal
PayPal is a widely-used online payment platform available today. New customers received a $20 credit when they signed up for an account through a referral link as part of the company’s first referral program. The prospect of receiving money into their accounts was enough to encourage users to register, verify their email address and add a valid credit card. PayPal experienced rapid client growth as a result of this approach.
You can get up to $100 today by referring ten friends, linking a bank account or credit card, and spending or transferring at least $5. Successful referrals are rewarded with $5 for both parties. The company grew their client base and increased awareness of their services through a successful referral strategy.
Coinbase
Coinbase is an online platform enabling customers to purchase and trade cryptocurrencies with FIAT money. Moreover, Coinbase provides a $10 reward to customers who invite their friends to purchase or sell crypto worth $100 US through the referral program. This incentive will be paid into both the referrer’s and referee’s accounts within 180 days of the transaction.
Coinbase provides supporters more of what they value while still encouraging them to promote their preferred cryptocurrency exchange platform by basing awards on goods or services rather than cash. For each referral of a friend, they provide customers $10 worth of bitcoin. Customers are encouraged to promote Coinbase by using this incentive program, which also aids in the development of their own cryptocurrency portfolio.
Wise
Wise is an international company that provides money transfer services and allows customers to manage multiple currencies conveniently and cost-effectively. Wise provides fast and easy money transfers and transactions for both individuals and businesses. When referred by you, they will each get a discount on their first transfer. Various incentives are available. For instance, you can get a £50 bonus from the UK’s referral program when three of your friends make transfers that are at least £200.
Uber
Each user of the Uber ridesharing app receives a unique referral code as soon as their account is activated. It’s a part of the referral program implemented into the product. Then, both participants receive a free Uber ride if a new account is opened using a consumer’s referral code.
Referral programs with two-sided incentives (like the one offered by Uber) enable your followers to provide their friends and relatives with specific benefits. Additionally, they’ll feel better knowing that their contacts are receiving more than just an email, increasing their likelihood to recommend in the first place.
ReadyTalk
ReadyTalk, a supplier of audio and web conferencing services, was selected to participate in a referral marketing program to grow its top clients after launching some unsatisfactory email campaigns.
Prior to requesting recommendations, they built stronger relationships with their consumers by using their new referral programs to reward modest actions of customer engagement (such as posting material on social media or leaving a review). Additionally, the more modest acts of support worked as word-of-mouth advertising for ReadyTalk.
Fiverr
Businesses may find freelance talent on demand using the internet marketplace Fiverr. Over 400 different digital services, including graphic design, digital marketing, software engineering, writing, translation services, animation, and more, are available through its nine verticals.
Your referrals will receive a 10% discount up to $100 off of their original investment. Following that, you’ll get Fiverr Credits (up to $100 per qualified transaction), and up to $500 in Fiverr Credits might be yours in total.
Looking through these examples of referral marketing strategy use will not only inspire you on what way to choose but also give you a hint on how to plan and create your referral program which will be enough benefits for your company, understandable and attractive for customers.
Summing Up
Referral marketing program development is a perfect way to increase your customer base engaging new clients and retaining the existing ones. That’s why it should be accurately planned, prepared, and implemented into your existing business digital products. You can entrust this mission to an outsourcing software development vendor. The vendor’s specialists will answer all of the business questions that disturb you and help you integrate a referral program into your current company software or create a new one from scratch.