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5 Hints to Create a Referral Marketing Program That Works

16 Jan 2018
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9 min

Any thriving entrepreneur understands how important it is to maintain the constant flow of customers for the growth of a business. One of the most effective solutions to drive clients to your online business is an effective referral program. Besides, referred customers cost cheaper and have 16% higher lifetime value. But how to encourage your customers to recommend your business to somebody else?

In this post, we'll consider referral program examples, as well as give you some tips on how to set up a referral program successfully.

What is a referral program?

A referral marketing program is a way to encourage your current customers to drive newbies by telling them about your business. In the modern world, there are too many ways to spread information, so let's consider the ones related to the digital sphere and only the most popular of them:

  • Sharing posts/links on social networks;
  • Providing individual promo codes;
  • Sending emails;
  • Inviting friends or people from address book to start using a service. 

Your customers are more likely to recommend you to their friends if they're motivated enough to do so. There are several popular ways of how other brands encourage their customers to drive referrals:

  • In-service rewards -- 500 MB of extra space on disk in Dropbox;
  • In-service points, discounts etc. -- Evernote, iHerb;
  • Material rewards such as real money -- Tesla, PayPal;
  • Free rides or miles -- Uber, Virgin Atlantic.

Why do you need a customer referral program?

Multiple studies show that referrals trust to recommendations from people they know more than any marketing tricks like online advertising or branded websites.

Benefits of referral program: Statistics

Benefits of a referral program: Customers trust to their acquaintances (Source: B2C)

Most people refer to their acquaintances or search for reviews on services like Yelp to find some information about a service or product. At the same time, yet far from all business owners encourage customers to give recommendations to other people by providing certain bonuses. Not to mention that most of them don't motivate customers to leave reviews on Yelp and other similar websites.

A well-thought-out customer referral program idea will cost you not only cheaper than most other ways to attract customers but can be much more effective. That's because customers will more likely trust to recommendation of their acquaintances than any other marketing source.

Tips on how to build a referral program

A bit later, we'll consider customer referral program examples. But before, let's skip to our piece of advice on how to create a referral program that'll succeed.

1. Make sure you provide a customer with top-notch experience

If you want to create your own referral program, you must be sure that all the processes in your business are regulated perfectly. In other case, there are chances that you won't give your referrals the expected level of customer experience and your referral program idea won't bring the desired results.

Remember that you have lots of competitors over the concrete city, region or even world (depending on a type of a business). That's why every single detail matters, be it a box where you pack the food for delivery, fonts on your website or the way your personnel communicates with customers.

Jim Rohn
“One customer, well taken care of, could be more valuable than $10,000 worth of advertising.”

2. Keep an eye on your statistics

In case you have a working website, there is a chance you already have several referrals and don't even know about it. In order to keep track of all your statistics, you should use specialized tools like Google Analytics. They'll show you all statistics you need for your referral marketing program and even more. So, you would see where your customers come from.

Of course, it's not the only metric you should check during your customer referral campaign. To other ones, we can refer websites and social media platforms that bring you traffic, as well as pages that get most of the referral traffic.

Referral program tools: Google Analytics

Referral marketing tools: Google Analytics to check traffic

3. Get some referral widgets

What is a referral widget? Roughly saying it's a piece of code that you can integrate into your website in order to breathe life into the client referral program ideas.

Referral program tools: Website widget

Referral program tools: Referral widget

The referral widget will help your customers to engage their friends into participation in the referral marketing program without undue efforts. You may place the widget on several pages, for instance not only after a customer purchased something, but on the main page as well. Besides, it's a great idea to create a dedicated page on a website which will display all the possible ways to invite friends.

Referral program ideas: Dropbox

How referral programs work: Dropbox referral page 

4. Reward for referrals

How to create a referral rewards program? Just give your customers a motivation for spreading news about your company -- reward them.

We already mentioned several reward examples which different companies turn to. It can be any kind of a currency (dollars or virtual points), discounts, some free options such as a month of subscription etc.

5. Conduct A/B testing

A/B testing is a simple test intended to find out what works better -- variant A or B. This kind of testing is applicable to different call to action elements on websites and mobile apps. For example, if your CTA element contains text motivating users to do something, A/B testing will help you to learn what variant of this text brings the best conversion. The same thing with the placement of elements on the website.

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Do you want to learn more about testing? Read how we manage to create top-notch products at Cleveroad

On the example below, you see the original text motivating users to start an account along with the one selected from many other variants and bringing 30% better conversion.

Building a referral program: Test your ideas

A/B testing: Headlines (Source: Signal v. Noise)

Remember that even the most creative referral programs may yield no results if its texted CAT and design don't intrigue your customers.

Successful referral program examples

It's quite easy to forget that such giants as Airbnb and Dropbox started as small companies years ago. Now, they're worth billions of dollars and their strategies are used by hundreds of companies of different size. So, let's consider these companies' referral program examples.

The story of Airbnb

The referral marketing program of Airbnb is quite straightforward. The company offers its current customers to invite their friends to use the service and provides both sides with certain benefits. So, if you invite your friend you'll get $9 travel credit after his or her trip, while your friend gets $18 discount on the first trip. In addition, if the friend you invited through the program hosted a guest, you'll get $45.

Customer referral program examples: Airbnb

Referral program examples: Airbnb referral program

In fact, Airbnb pays to users who invited their friends only after these friends purchased something and relatively became users of their service. This wise step allowed the company to make sure they don't waste their money on referrals that bring no profit. As you understand, this referral marketing program worked perfectly. It doubled the number of users since the time it was launched in 2012.

The story of Dropbox

The niche of cloud storages is the highly competitive one. That's why PPC ads cost a small fortune and search terms are very competitive. Looking at this situation, Dropbox launches the referral marketing program where both parties involved get certain benefits.

The point is if you are a Dropbox user with the basic account and you invited some friends to join the service -- you get 500 MB of space per each referral and can increase it up to 16 GB. In case, you are a user of the plus or professional account, these figures double (to 1 GB per user and up to 32 GB of space). Respectively, the referred users get some benefits as well.

This referral marketing program helped the company to achieve unbelievable results. Now, approximately 35% of all signups come from this program.

The Amazon story

This e-commerce giant has also launched a kind of a referral marketing program. The point is, it allows influencers with a certain number of followers across different social networks to make posts with shoppable content and get commission from sells.

Customer referral program examples: Amazon

Referral program examples: Amazon influencers referral program

How to start a referral program for your business?

If you want to create a referral program for your e-commerce website, there are two ways to do so -- by using ready-made solutions or hiring professionals.

Referral marketing tools

If you have a limited budget, you should consider several SaaS-based tools that'll help you to create a referral program on your own. They're Girafi, ReferralCandy, Talkable, and others. SaaS means these tools are web-based and can be integrated with your website, be it a custom solution or the one based on e-commerce platforms (WooCommerce, Magento and so on).

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Do you need to create a website? Learn how much it will cost you in our article or watch our video on this topic

Tools for launching referral campaigns offer more or less similar set of features like management of your campaigns, ready-made templates for a campaign, A/B testing, prevention of frauds etc.

Custom referral program

Even though the tools mentioned above are capable of many things, they still remain limited. So, if your referral program ideas go beyond their functionality -- there's nothing to do but build one from scratch.

We're always opened to new projects. Here is the deal -- contact our managers and ask them your questions for free! Let's build your lucrative referral program together.

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