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How to create a digital referral program with the help of API?

Have you been aching lately to give referral marketing a go? Learn the ins and outs of creating stunning digital referral programs with API-first referral software.

How to create a digital referral program with the help of API?

According to research, such as the one done by the guys at Hinge described in their fantastic book “Inside the Buyer’s Brain,” it quickly becomes apparent that referrals deserve more of your attention. To quote:

“We wanted to understand how buyers go about searching for the help they need. Where do they look when they want to find a new firm? In our research, we heard the same response again and again: More than 70% of buyers ask a friend or colleague for a recommendation.” 

Alongside SEO and SEM, referral marketing is classified as the most powerful channel to connect with new audiences. Through referral activities, you get to proactively seek high-value customers with the help of people they trust – their family and friends who already fell for your brand. What is even better is that referred customers usually have higher NPS and LTV scores, making them an invaluable asset in your marketing game. 

Here are some other numbers that will make you want to launch a digital referral program:

Referred customers are:

  • 18% less likely to churn
  • 25% more profitable
  • 25% higher LTV

And if that’s not enough, you don’t need to search far and wide to find examples of successful digital referral campaigns – top companies run them all the time (Airbnb, Uber).

All in all, the message is clear and universal for businesses of all shapes and sizes – referral marketing is one of the most effective marketing techniques. If you’re not running a digital referral campaign right now, I urge you to run some experiments right away.

Building a digital referral program

In this post, I’ll show you how to achieve great referrals; you’ll see how a simple online referral program can be introduced into your environment without overburdening your developers, thanks to an API-first approach to marketing campaign implementation.

Disclaimer: 

Throughout this post, I will be reviewing our own product (Voucherify), as well as its latest digital referral program features.

What should a digital referral program be like and how to implement it?

A basic digital referral campaign you might want to start with could be a simple formula, such as “recommend 2 friends and you both get 25% off the next purchase.”

To do this, you need to put a referral mechanism in place that will help you identify customers of yours who bring in new customers – the Referrers – as well as those new customers that the Referrers brought in – the Referees. Then, once you have this information, the mechanism needs to provide both groups with 25% discount vouchers.

For this workflow to be effective, you will need individual online referral codes for your existing customers. You should send these codes to customers and they will share them with their family and friends, who will then enter the codes upon making a purchase. As soon as you receive an order made with one of the digital referral codes, you will be able to catch the referral and reward both the referrer and the referee as planned (with a 25% discount voucher).

At this point you may face a dilemma – you’re most likely already running an environment that covers your e-commerce, CRM, and marketing channels – and you’d like to have digital referrals integrated into it. But on the other hand, it’s hard to justify putting too much development effort into what is basically just an experiment, and this one sounds like it could easily get tricky during development due to multiple integration points.

Thankfully, you can skip the headache using Voucherify; it not only provides you and your team with a way to run online referral experiments quickly but also to do this in a way that is already integrated into your environment, without any development heavy lifting. Here’s how.

The benefits of API-first approach for promotions and loyalty programs

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Learn more in our short guide to headless promotions.

How to set up a digital referral program?

To start, Voucherify comes with a nice web GUI that you can use to set up a referral campaign.

Once you go into Campaigns and add a new referral program, you can specify the details in just a few steps. 

Decide if you want to run a single- or double-sided digital referral program and whether referrers should be rewarded for each referral or other custom behavior, e.g., referrer leaving a positive review online. 

Next, define how to reward both parties. Here, you can choose from the many types of incentives Voucherify works with, such as vouchers, coupons, or gift cards. For the sake of this example, we’ll choose a simple 25% discount voucher. 

If you’re interested in running a more advanced digital referral program, you can add tiers to referrals to make your program more gamified. 

Next, you are given the option to specify under what circumstances your referees will be rewarded. For instance, you may want to reward only new customers who place an order for $100 or more – a very handy option if you plan on devising a more nuanced digital program. 

Finally, you are given the chance to introduce similar limitations on rewards granted to referrers. You can specify to which customer segment (newly created or previously configured) you’d like to send referral codes – and what type of rewards the referrers will receive in return for their successful referrals. In our example, we chose to send the 25% discount voucher to everyone who has attracted at least two new customers.

Building rules for your digital referral program

Roll your digital referral program out

At this point, you are ready to run your online referral campaign. To do this, you’ll need three things:

Firstly, you’ll need to ensure that customer data is present in Voucherify; so that it knows who to distribute the codes to. You can import customer data on your own, using a bog-standard CSV file. Any CRM you are working with can export a list for you in this format which means getting your hands on the data should be hassle-free. The only thing you’ll need to make sure of is that the data contains everything that Voucherify needs to work with. This is easily achievable with the use of Excel, especially as everything you need to do is carefully described in Voucherify docs.

If you have more development time for this, there’s also a convenient API that you can use to reflect your customer data in Voucherify and keep it consistent with your CRM. This approach has the benefit of scale and pays off quickly when you start working with more digital referral experiments, keeping your total experiment cost low.

Migrating customers to a digital referral program

Having migrated the customer data, you’ll need to put something into place that will validate the codes upon checkout – a way for your customers to enter a referral code, and then a bit of code that will pass that code on to Voucherify.

Voucherify makes this much easier than it seems, it’s designed for plug and play. For a web-based checkout, it provides a ready-made widget that your devs can embed in no time that will handle all the necessary input and backend interaction and send back a signal when a code is validated. For other channels, there is a well-documented API your devs can work with that makes it just as simple.

This, again, will only have to be done once. All digital referral campaigns that you will run afterwards can reuse the integration that your devs put into place at this point.

Finally, you’ll need to send out the codes. This is specific to the channels that you work with. Voucherify provides a good API for generating the codes and sending them out, e.g., using MailChimp. Some coding will be necessary here, but once again, we’ve made sure to keep it brief for your devs – and, as usual, once you have publishing infrastructure in place, you can reuse it later.

And that’s it! All that’s left to do is sit back, relax, munch on some popcorn, and await the results.

Discover how your digital referral program performs

Ok, so the online referral codes are out. Now you’ll want to know if people are actually using them as well as how many new customers the campaign is bringing in.

If you fancy carrying out a quick experiment like the one in our example, Voucherify got you covered. In addition to the mechanism for collecting digital referrals, it also provides you with a dashboard that you can use to visualize and analyze them.  All you need to do is select your referral campaign and check out the redemption history. This will give you a comprehensive view of all customers that have used your referral codes as well as details of their transactions.

Tracking a digital referral program

If you’re looking for a speedy means by which to check if your campaign is gaining traction, there’s no need to look any further. Still, should you wish to analyze the data in more detail, you can always make use of the built-in data export functionality which presents you with all the campaign history data and can be used either in Excel or your BI environment.

...and react when it doesn't

Once you take a closer look at the data, you may find that not all of your referral sources are equal. Regardless of your target group, it is not impossible, or even uncommon, to find sources of poor quality referrals. For example, some users may repeatedly bring in new customers who make low-value purchases just to get a discount voucher.

Clearly, this kind of behavior can significantly harm the efficiency of your digital program but don’t despair! You’re armed with a weapon with which you can fight back.

With Voucherify, you can protect your campaign by blocking customers that you suspect are trying to exploit it. All you need to do is invalidate their referral codes. I’m sure you’ll agree that it doesn’t get any simpler than that.

Here are some other ways of keeping your digital referral program safe. 

Conclusions

In this post, we’ve shown you how to run a basic experiment for a digital referral campaign. Voucherify will make it easy for you to run it as a one-off occurrence. But its true power lies in running multiple campaigns in sync across other promotions and business environments.

The key to unlocking this power is integration with your existing environment of CRM, distribution tools, and more. This is especially important when you are already running a tailored environment that allows you to experiment with marketing campaigns and scale them quickly and cheaply.

Voucherify is designed with an API-first mindset, exactly for the purpose of lightweight and seamless integration into such environments. This guarantees that not only will you find it helpful, but also the developers on your team will appreciate the time savings, and those savings will quickly start accumulating into a much lower total cost of running and maintaining digital referral campaigns.

Wait, there's more!

In the next post, we will continue on the topic of referral campaigns, focusing on the finer details of integration and getting the most out of the API. Make sure to check it out here.

Voucherify is not just a tool for fantastic digital referral campaigns. It can easily handle coupons, and gift cards, loyalty programs, and cart promotions. It will allow you to reuse the rewards you define, such as coupons or gift cards, across campaigns, including online referral campaigns. And, most importantly, it will give you low-level API-first access to everything it supports, so that you can integrate it into any kind of software environment and support any marketing scenario.  

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