After deregulation in the 1980's, the telecommunications sector in the US became highly competitive. At that time MCI, one of the contenders in the long-distance segment of the market, was locked up in a fight for dominance with its two main competitors — AT&T and Sprint. In order to get more customers to switch to their network, MCI came up with a new program called Friends & Family and offered a special discount to all MCI customers on calls made to another subscriber of the company.
Even though it was hard to set up and launch, the program became a huge success for MCI, with their competitors quickly following suit with similar offerings.
Friends & Family campaigns have come a long way from these humble beginnings, to become one of the staples of referral marketing. Today, you can find these campaigns run by retail, software, and even finance businesses. Almost any company that wants to experiment with referral marketing starts with this type of campaign. The problem is that most of them use the same repetitive model with a simple one- or two-sided reward that makes them boring and inefficient.
But technology continues to evolve and with it, so does the way people access the internet, shop, and refer friends. That means Friends & Family campaigns are bound to follow. In the future, they will become much more nuanced and selective. Brands need to learn to think much more creatively about them.
In this post, we give you three ideas that you can use to breathe new fire into your Friends & Family campaigns.
The success of these campaigns lies in the fact that they come from someone you know
Give your Referral Program a Unique Twist
MCI's program had a strong selling point that advocates could make when pitching their friends to sign up — it combined a hefty discount with the opportunity to use those savings on the people they tended to call the most — their closest friends and family members.
The big thing about this type of program that many companies miss is that for people making the referrals, it's not just about getting the reward. Providing unique knowledge or service to someone they care about is just as strong a motivator, as MCI's Friends & Family program shows.
Blinds.com offers another example of the success of this approach. The team was really excited when they first launched their referral program, but the results they got were underwhelming. The program was missing a critical piece of the shopping experience for the customer — working with a personal design consultant to select the best blinds for their home. So, Blinds.com changed their program to allow advocates to share the same consultant they worked with as part of the referral process. The result was an impressive 82% increase in conversion rate.
The team at Blinds.com knew that visiting a friend's house and seeing how the product looked in reality would have a strong impact on customers' motivation to buy. In addition, connecting people with the actual professionals who designed their friends' rooms provided an extra incentive to become customers themselves.
Personalize Programs and Make Them Sound Human
Getting customers to act as advocates of your brand is an essential component of referral programs. MCI's program was aligned well towards that goal. It was built on the sound premise that people trust recommendations from friends and family above all else. Although much has changed since the 90s, personal recommendations still come top of the list in consumer trust.
Unfortunately, one of the most common mistakes that programs aimed at generating word-of-mouth referrals make is removing the personal element. The success of these campaigns lies in the fact that they come from someone you know — and when you get a message from your best friend, you expect to hear from her, not from the marketing department of Acme Inc.
Instead of relying on flashy graphics and overly smart copy, allow the advocates of your brand to include a custom message. Feature their faces, if possible, to further strengthen the personal link the message is making.
A great example of this is Airbnb's referral program. Whenever someone gets referred by a friend, they get a message that features an image of that friend prominently.
Personalization breeds familiarity and creates reassurance that this message was intended for the recipient — rather than randomly blasted to thousands of unsuspecting victims.
Empower Advocates Through Technology
Ironically, MCI shot to success with their Friends & Family campaign by adopting a low-tech solution — the legend goes that they rented a warehouse and filled it with employees who were calculating discounts manually because it was going to take an extra 6 months to make adjustments to their billing system. That was done in an attempt to launch before their main competitors AT&T and Sprint, who were already working on similar programs.
Creating effective Friends & Family campaigns today is impossible without taking advantage of the latest developments in technology and making sure that your audience can take advantage of your program however they wish.
Cross-platform referrals is one of the trends that's become highly relevant in the last few years. We see repeatedly that people like to share and claim referral rewards in different ways, so if your program is not designed to take advantage of that, it will be very hard to achieve success with it.
Your program should exhibit the same versatility when your audience wants to claim their rewards. With features such as Extole's “Site-to-store”, you can create an omnichannel experience that empowers customers to claim rewards in-store, thus generating footfall.
This works great for brands who rely on getting customers to visit physical locations, but who want to take advantage of a highly-motivated audience, ready to act as advocates for the brand.
Personal care brand Ulta Beauty provides one such example. Buyers of cosmetics lean heavily on recommendations from friends and family when selecting products, but most still want to try new products in store before they commit to buying and using them. Ulta Beauty brings the two together by allowing their customers to redeem coupons any way they like — online or in-store.
After winning customers over with a unique proposition coming from a trusted friend, allowing them to claim their rewards in the way that works best for them is the third element of the secret formula that will turn them into loyal followers of your brand.
Are You Ready for the Age of Referral Marketing?
Referral marketing is becoming increasingly prominent as technology evolves. This is a clear sign of its bright future. We could soon be living in a time where existing customers are the biggest channel for earning new business.
That's why it's essential to act now and prepare your brand for this future.
As information turns into noise, trust becomes the leading currency of marketing. Referral programs are one of the best ways to make it work for your business.