This infographic shows three techniques for upgrading your referral marketing and turning more recommendations into conversion growth.
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How to Create a Referral Program That Works
The success of referral programs comes from our natural tendency to trust word-of-mouth much more than any other form of ad. Referrals are low-hanging juicy fruit for your business.
Referral Marketing generates 3-5x higher conversion rates than any other channel.
If you stop at that, not even 30% of satisfied customers will share the experience with their friends and family. It would be a colossal waste, right? So, let the referral incentives walk on their own stage.
Incentives such as
- gift cards,
- loyalty program membership, or
- free items which motivate to spread by word-of-mouth.
More than 50% of people are likely to refer a company if offered an incentive in exchange.
39% of consumers claim that incentives such as discount coupons, free items or gift cards significantly increase their chances of referring a brand.
Referral programs aren't about recommendations; they're about conversion. The bottom line in every program is to convert new customers. How best to meet a referred customer at the checkout or storefront?
I have many recommendations, where's my conversion?
If more than 90% of people trust in the opinion of their friends more than in any other form of advertisement,
and only 74% decide to purchase for the same reason (recommendation),
what happens with the other 20%?
These are only examples of stats which present a gap between the number of recommended customers and the final amount of referral acquisitions. In the real life of a traditional referral program, this gap can be much bigger.
This next section shows three techniques for upgrading your referral marketing and turning more recommendations into conversion growth.
During a double-sided referral campaign, the incentive is divided into the referrer and their friend. For example, your customer gets 15% off the next purchase and a gift card for a friend with $10 to spend in your store.
I. Your customers are motivated to share by word-of-mouth.
II. It’s a chance to endow friends or family with real value carried by a gift card or coupon code.
III. With an incentive in hand, referred customers are more likely to follow the word-of-mouth.
MULTI-LEVEL REWARD SCHEMA
Run a program which is fun for customers. Gamification is no longer a marketing embellishment, it's a proven technique for keeping customers involved along the way.
Multi-level programs reward customers according to the number of referred customers. Thanks to this, clients won't stop at just a single recommendation. Rewards are like levels in the game. With every new acquisition, a customer gets a new, better reward.
- Make rewards a surprise.
- Inform customer at the very beginning about the program rules and reward schema.
- Put a time limit on every incentive.
Create segments within your referral groups. Different promotions with attractive incentives may activate dormant users and show you clues for improving reward schema.
- Run rapid flash-sales for referrers. For example, if you introduce your friend tomorrow, you'll get 50% off your order.
- Launch campaigns of gift cards with a predefined balance to spend for friends and family of your customers. By adding a short time frame, you can count on a fast conversion spike.
- Create social contests for customers and their friends, reward both sides for social shares or other activity within your profile.
- Offer product-specific deals based on order history or cross-selling. Such personalised campaigns help you to exceed customer expectations and build loyalty.
Customer loyalty and referral acquisitions are worth all your resources. The stats are pretty clear here.