Digital marketing pioneer Ann Handley said it best: “We’re past the age where if you build it, they will come. You do have to have some sort of promotional program in place.”
Enter: Referral marketing, a tried-and-true way to quickly grow your business. It can boost your word-of-mouth, helping you connect with loyal customers who support your brand. But when so many companies have a referral program in place, how do you make your program stand out?
The best programs are ones that are optimized for a brand’s audience. That includes knowing the kind of reward your customers want, the best time to launch a campaign, reaching your most actionable customers, and making your program easy to find.
Tip #1: Choose the Best Reward Incentive for Your Audience
All referral programs offer some sort of incentive for people to hype a brand. The tricky part is finding the right reward type for your customer base.
A few of the main options for referral rewards include discounts, coupons, store credit, and charitable donations. You might also find a different kind of reward that works best for your audience. Below, we take a look at the most common kinds to consider.
Rewards That Contribute to Social Good
Consumers, particularly millennials and Gen Z, are increasingly drawn to brands that support social causes. A 2022 study found that 46% of all consumers in the U.S. consider a brand’s social responsibility efforts when they buy a product. Even more, 70% of consumers want to know what brands are doing to support social and environmental causes.
Brands are now starting to jump on the social good bandwagon. Consider Warby Parker, who baked their “Buy-A-Pair, Give-A-Pair” program into their business plan from the very beginning.
Financial planning and workplace management platform Vena offers referral rewards to customers in the form of a charitable donation in lieu of monetary rewards.
Existing clients can refer anyone to Vena. If the referred person becomes a client, the company will make a $2,000 donation in the referrer’s name to a charity of their choice. You read that right. The referrer chooses the charity, and the company forks over $2k.
Gamified Rewards
Gamification works on a neurological level to tap into your customers’ innate need for reward. The best part is that it works for audiences of all ages, so you don’t need to risk alienating age groups by using a tactic that doesn’t appeal to them.
Gamification fuels a natural reward compulsion loop, which taps into our human need for reward. Remember winning points or gold stars for doing a good job in grade school? That’s gamification at work.
So when a customer refers a friend or family member to your brand, that customer can earn a reward that comes in the form of a game. Once they complete a short activity and win something, it triggers their brain to release dopamine. This feel-good activity will make that customer more likely to continue referring friends in order to chase that feeling.
The investing app, Robinhood, is an expert at gamifying rewards. Their referral program takes place within the mobile app, offering existing customers the chance to win a free share of stock — up to $200 — when they invite friends to join.
Robinhood doesn’t tell you up front where the stock comes from. It’s randomly chosen once you complete your referral. That’s the best part: anyone has the chance to win big. Plus, because there’s no limit to how many times you can refer, it triggers customers to continue sharing their referral code as long as they’re a user.
Numerical Discount vs. Percentage Discount
A marketing theory called the Rule of 100 explains that people perceive a subconscious difference between a numerical discount and a percentage discount.
Here’s how it works:
- If an item is under $100, offer a percentage off
- If an item is over $100, offer a numerical discount
For example, if you want to give referrers a discount toward an item worth $200, you’re more likely to entice customers with a $50 store credit than a 25% discount. Even though the discount leads to the same product cost, customers are more drawn to $50 off.
High-end furniture company, Floyd, has plenty of products valued at over $100.
Their refer-a-friend program incentivizes customers to share a referral link with their friends. Customers can give a friend $75 off their order of $400. Once that friend completes their purchase, the referrer gets $75 toward their own purchase. Notice that the company offers a numerical discount as a reward, rather than a percentage, which would be less than 20%.
Referral Marketing – The Best Practices You Need to Know
Written by veteran referral marketers, this guide will help you optimize your referral marketing program and supercharge growth
Tip #2: Time Your Referral Campaigns for When Customers are Most Engaged
To maximize the impact of your referral program, amp up messaging around busy times, like holidays or important shopping moments. Doing so will incentivize your customers to earn rewards during times they’re already planning to shop.
It’s important to create a marketing campaign with language specific to that shopping period. For example, if you know business picks up for your brand around Christmas, launch a campaign in October (or perhaps even earlier, depending on your audience) that targets customers buying presents. You can call the campaign something like “The Gift of Giving” and create Christmas-themed graphics in order to really play into the holiday.
Cryptocurrency exchange company, Binance offered a limited-time Valentine’s Day referral campaign to encourage their customers to refer their friends.
They called it “Spread the Love” and offered pink and red “mystery boxes” containing different amounts of cryptocurrency, some up to $500. Customers earned more mystery boxes for each referral, with the opportunity to win big. The design of the digital boxes played into the theme of love we associate with Valentine’s Day.
Another way to meet your customers at their most engaged moment is to target them with messaging at pivotal times throughout their customer journey.
For example, if you know 50% of your customers are likely to join your referral program when they’re reminded to sign up, make sure to put plenty of CTAs in front of them to pique their interest. This might look like a pop-up window that appears while they shop your website, a soft reminder at the bottom of their order-confirmation emails, then a strong follow-up email three days later.
Tip #3: Make Your Refer-a-Friend Program Easy to Find
A referral program is no good if your customers don’t know how to access it. Take a stroll through your website and pretend like you’re a brand new customer. Can you find your referral program? (Be honest.)
The easiest way to remove any barriers to your referral program is by placing a link on your website’s landing page. Label the link clearly with something like “Refer-a-Friend” or “Referral Program” rather than something gimmicky. Clear-cut and easy-to-understand language will always beat out clever and obscure.
In addition to clearly labeling your referral program on your website, you can spread the word by sharing information about your program across different marketing channels. Here are a few ideas:
- Email: Plug your referral program and its benefits in a monthly newsletter
- Social media: Ask customers to tag you in TikToks hyping the program, or post on Instagram Stories and save that story to your highlights
- Blog posts: Dedicate an article on your blog to your program
- Order confirmation: Tell customers about your program when they complete a purchase
- FAQs: Add a question on your FAQ page to describe your program, how customers can get a personalized link to share with friends, and any eligibility requirements
Tuft & Needle is a mattress, bedding, and furniture company that became immensely popular in the 2010s for its bed-in-a-box product.
Something that stands out about their referral program is that it’s clearly listed in the footer navigation on their website. Click the link, and you’re taken to a landing page that lays out the terms of their referral program and prompts you to sign up.
Tuft & Needles’ tactic is effective because it’s simple. They’ve taken all the guesswork out of how to get started. Customers are able to find exactly what they need to share a link with referred friends and start earning rewards.
Tip #4: Manage Your Refer-a-Friend Program with a Growth Marketing Tool
A growth marketing tool can save you time and money by automating referral processes, like payouts and tracking.
Some tools, like Extole, even have the ability to create lookalike audiences that mimic your best, most actionable customers.
This will help you not only reach your existing audience but also other people who have similar buying habits and could be influenced into becoming a customer.