11 Easy rules of efficient referral programs
Efficient referral program: gamification, diversified, surprising rewards and incentives, omni-channel approach, lightning integration and partnerships management.
11 Easy rules of efficient referral programs
Visit our other article on Airbnb to learn more about best performing referral programs out there.
We believe that you came here for a list and you'll get it! Scroll down to learn about top 11 rules of every good referral program:
Play the game - make your referral program a gamified journey
Levels in referral programs are a tribute to gamified journeys, so beloved by customers. They bring excitement and group referrers to distinguish the most precious brand advocates. You can use levels to motivate and engage with an increased reward value as a referrer comes to the top of the referral ladder.
Besides rewards for referrers, one of the program tiers with incentives should be reserved for your new customers. We call this configuration a double-sided referral program. As more and more brands take it as a standard setup, remember to check if this feature is supported before building your referral solution.
In double-sided referral programs, both referrers and new customers are incentivized. Thanks to this, recommendations are much more than just a word-of-mouth from your happy customers. They give referrers a real value to endow their friends and family. Ultimately, referral programs aren’t about the number of recommendations, they’re about the conversion growth.
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Meet your perfect referrer
Once program levels divide your referrers into segments, you can get a complete picture of your ideal advocate. Take a closer look at the customers who refer your brand most often and tailor a new campaign or add a new program tier that exceeds their expectations. It can be a ‘thank you' discount or a gift card balance for their favourite products. Taking care of customer loyalty is crucial to keep the most precious audience standing behind your back.
Play it safe and secure your referral budget
Double-sided programs have brought a fresh breeze to standard referral marketing which goes along with the need for a better-secured campaign budget. Brands and retailers need to control costs of both referral codes and rewards for referrers. In a customized referral program, budget and usage limits should be set separately for each campaign level. For example, codes ‘for sharing’ need to have a 'one per customer' limit when a reward should be active only after referring to a particular number of new clients. Both batches of codes should have a total budget set separately.
Keep the wheels turning and make your referral program unique
Diversity is often underestimated. And that’s a mistake. Truth is, it's hard to find a retailer or brand that doesn’t offer any promotion or referral program. The great majority of the market make promotions. Tons of ‘the best’ and ‘special’ offers flood the Internet every day.
Diversified, surprising rewards and incentives make your promotions stand out and shine amongst boring standard discounts.
- use the whole variety offered by promotion software: gift cards, unique and fixed-codes, cart-level sales, and loyalty campaigns;
- make the most of promotion rules - set time limits on incentives to create a sense of urgency, choose from product-specific rules or geo-oriented limits to personalize referral promotions, and go along with the local tastes;
- mix incentives with many digital channels; run referral programs with live chat flash-sales, personalized emails, social contests, in-app messages, or eye-catching website banners.
Of course, it's not about running new channels just to make more of them in your referral toolkit. The point is to use all of the channels that effectively interact with your audience as a promotion medium. You need to make sure that the joining info is impossible to overlook regardless of the channel or device.
Don’t be MULTI-, be OMNI-channel
Channels are not only about the promotion diversity. The multi-channel toolkit helps to easily adjust a referral process to the different generations of consumers and their specific habits. They’re vital to making outstanding and personalized customer experience possible on scale. Each day consumers use numerous technologies and devices changing to the channel that suits them while looking for promotions or shopping online. It matters if your referrers can share codes via your mobile app, website, or email. What's more, can they seamlessly change from laptop to mobile phone and still refer a friend with ease? The multi-channel technology is not enough to offer omni-channel experience. You need to make sure that switching from one technology to another doesn't affect customer journey at all. Look at the chart to see why it matters.
As you can see, differences on the top are slight. Gone are the times when only email or website was enough for running a successful promotion. While the world is going mobile, retailers and brands need to keep the omnichannel approach on top of their mind while planning referral campaigns.
It seems like omni-channel referral marketing leads through heavy technological investments. In fact, it doesn’t have to be that way. The next paragraph shows how modern cloud and API-based solutions can save your day and money.
Lightning integration and partnerships management
A big pause here. This point is crucial.
The very first thing that comes to mind while thinking of running referral programs is probably “how will this referral workflow fit into my existing toolkit?” or “how will I sync my service providers, business partners, and the website with the referral machinery?”
No doubt there is no point in doing referral campaigns that aren’t consistent with the rest of your sales promotion strategy.
Referral software providers always list their integrations amongst available features. Despite many available solutions, the chances you'll find an affordable option and all your providers on the features list are often low.
This frequently drives retailers and brands to give up the unsupported channels/ providers in their referral programs. What's the other choice instead? There is no silver bullet rule but we have two things to recommend in this matter:
- Choose referral software providers who offer an API - seems like we’re throwing tech details in marketing content but let's be honest, investments in heavy infrastructure are expensive in terms of time and effort and so every marketing decision-makers must be aware of technical basics while creating their providers. Referral software with API means integration flexibility and minimum effort on the part of the developers' team.
- Always ask vendors about missing integrations. Many software providers offer customizable solutions based on individual customer needs. By doing comprehensive research of their offers, choosing the best option is much easier and credible.
Say 1:1 thank you
Expressing your gratitude for engagement is a good idea before and after a customer actually recommends your brand. In practice, each message with an invitation to join a referral campaign should mention your ‘thank you’ for every good word shared. In the case of ‘after-recommendation’ thank you pages, they're worth even more effort.
It’s natural you’d like to encourage each active referrer to bring new friends for as long as possible. You should start with creating an exciting multi-level reward schema and end up with personalized messages with incentives and 1:1 thank you.
Having all of these features in your referral programs provider means you can create truly customized campaigns. Question is, how can you track such personalized referral experiences? Let’s take a closer look at the most important metrics saying if your referral schema works or not.
Tracking personalized referral program - what’s catching on?
Firstly, you need to know how many of all the invited users have responded to your referral program. Depending on how they can get involved you can measure clicked invitation links, email metrics, or sign-ups. Basically, the goal is to estimate how many of the people who have seen your invitation have made a move towards joining your referral ranks.
How many recommendations turn into new customers?
In this point, unique referral codes play their part. Basing on how many sharable referral codes have been published to your customers and how many times they’ve been redeemed, you can estimate a referral rate. It shows you:
i) if the incentive for a new customer is attractive enough, and
ii) if your existing customers are willing to recommend your services (if the reward is tempting enough).
RR = number of published codes / number of referral codes redemptions
Score above 1 means your on a very good way to success
Keep an eye on your referrers
It’s very important to measure the effectiveness of each program tier separately. The results point out the flaws of your rewarding schema. You’ll see if some levels are too hard to reach for your customers and where most of them give up next recommendations.
Overall performance - does your referral program work at all?
There are many ways of measuring the overall performance of referral campaigns and choosing the best one is an individual matter. The basic estimations come from analyzing the total campaign spent, achieved engagement, and program costs:
- Low engagement means you need to work on a more appealing way of presenting referral info to your customers. The number of involved customers is always a reference point when further metrics are evaluated.
- To simply estimate if the referral program works, you can compare the total referral spent amount and costs of running a referral campaign:
total referral spent amount = orders made with referral codes + orders made with rewards
costs of running a referral campaign = referral software + total discounted amount*
*In the case of the double-sided program, total discounted amount = total discounted amount of referral codes + total discounted amount of rewards
Summary - ready for your customized referral program?
The bottom line in every program is to convert new customers. The customization of referral campaigns significantly increases your chances to meet a referred customer at the checkout or storefront. Keeping that in mind, choose a provider ready to adjust to your business and create outstanding experience for your potential and existing buyers.
Learn how to improve your customer acquisition & retention with Voucherify referral campaigns