Everyone talks about turning loyalty into new customers. But traditional loyalty programs don’t seem to do that. Why not? There’s a piece missing: that little arrow you see in some funnel diagrams going from the bottom of the funnel back up to the top. Refer-a-friend gives you that piece. It lets you market through your loyalty program members to fill the top of your funnel. (Read more about this in my conversation with Loyalty360.)
Why referrals work with loyalty programs
The opportunity to pair referrals with loyalty is potent, and marketers are noticing. Your loyalty program contains your best customers and most likely advocates. They’re already motivated by incentives. And your loyalty currency gives you a familiar rewards currency. Refer-a-friend lets you take advantage of all this to create a source of new customers who have higher LTVs, higher AOVs, and higher likelihood of referring than customers you’ll get anywhere else.
Four ways to set up refer-a-friend to benefit loyalty programs
Brands are realizing the potential and building refer-a-friend to work with their loyalty programs. Here are four ways you can do it, too:
• Ask your loyalty members to refer friends to your brand in general.
• Ask loyalty members to refer friends to the loyalty program itself. With this approach, you can help hit your new member goals.
• Market refer-a-friend to all your customers, not just loyalty members (promotion is critical for referral success in any program). Reward advocates and friends using your loyalty currency. This way someone can earn the reward without being a loyalty program member, but to take advantage of it they have to become one.
• Encourage something most marketers want to prevent: self-referrals. One of our travel-industry customers did this and told customers who weren’t loyalty program members to refer themselves along with friends. When they registered, those customers got rewards that acted like sign-up bonuses. That helped acclimate new program members to the idea of referrals so that future refer-a-friend promotions resonated even more.
It’s a good idea to have multiple campaigns within your program to reach as much audience as you can, so try these and see how they work for your brand. Let us know the results And check out my whole conversation with Loyalty360 about how referrals are the missing piece of loyalty.