5 Referral Marketing Tips That Drive Results

It’s never fun to hit a wall in marketing. You try out a new strategy and start seeing traction, so your team gets excited. But then results start to flatline and colleagues ask, “What happened?” 

This is a familiar story with early-stage referral programs, where good luck and random acts of marketing can bring in a trickle of new customers that impress stakeholders — for a while. To turn that trickle into a full-on blast of revenue, you must adopt a more strategic approach to referral program execution, measurement, and continuous improvement. 

Read on for actionable tips you can use to drive referrals — and results — for your business. 

Reinforcing the importance of referrals

Referral marketing is a powerful lever that taps into your customers’ existing networks to drive growth at a much lower cost than other channels like digital ads and paid social media. According to Nielsen, 89% of U.S. consumers say that recommendations from people they know are their most trusted channel. 

Optimizing your approach to referrals will lower customer acquisition costs (CAC) and increase lifetime value (LTV) — referral customers have a 25% higher profit margin than non-referral customers. However, to get the most out of customer referrals, you can’t simply rely on the word-of-mouth conversations that happen naturally. You also need to take action to inspire customers to make referrals that benefit everyone involved. 

5 essential referral marketing tips

Businesses that run profitable referral programs often have several things in common. For example, they have a deep understanding of their customers, which allows them to tailor referral incentives and messaging to resonate with their target audience. 

Drawing from the successes of these companies, here are five tried-and-true referral marketing tips you can implement today: 

  • Identify customers most likely to refer. 
  • Adopt a customer engagement platform. 
  • Introduce a limited-time offer burst. 
  • Level up your analytics game. 
  • Learn from top referrers. 

Identify customers most likely to refer

Another core tenet of successful referral programs is connecting with customers primed to make referrals. Here are some common traits of active customers who are most likely to drive results for your program: 

  • High satisfaction scores (e.g., NPS). 
  • Frequent, recent purchasers.  
  • Strong social media engagement. 
  • Previous referral history. 
  • Long-term loyalty and LTV. 

The more overlap a customer has with these characteristics, the more reason you have to target them with relevant offers. Ideally, you’ll have a tool that makes it easy to analyze and act on all of these data points, which brings us to our next tip… 

Adopt a customer engagement platform

Trying to piece together insights from a myriad of referral marketing tools is a losing proposition, as the time and effort required to interpret this information will reduce the ROI of your program. That’s why a customer engagement platform — a single place to manage your customer acquisition, retention, and loyalty strategies — is needed to drive more referrals. 

The Extole platform has everything you need to create and manage a referral program from the ground up. This includes customizable and personalized referral workflows, tracking capabilities, and seamless interaction with your existing tech stack, all while prioritizing compliance with applicable regulations and ensuring the security of customer data. 

Introduce a limited-time offer burst

Playing off of the principle of loss aversion, limited-time offers (LTOs) create a sense of urgency that encourages people to act now rather than later. In referral marketing, an LTO burst is often use to entice customers with a referral bonus with a bigger reward or discount than usual (e.g., a brief period where referrers can get 50% off instead of the typical 30% off). 

LTOs give you something to emphasize in shorter-term marketing campaigns, and they often result in an increase in advocacy long after the offer reverts to its normal, evergreen level. Here’s an example of how Uber Eats boosts weekend sales using LTOs. 

Level up your analytics

Boosting referrals is a game of continuous improvement. Rather than reviewing key metrics (e.g., reach, share rate, referral visits, conversion rate) at monthly or quarter intervals, real-time data analysis allows you to constantly measure the impact of small changes in your referral program.  

This is another area where a customer engagement platform provides immense value. Extole’s rich analytics features make it easy to surface noteworthy insights and understand which customers are most likely to refer others, the channels through which referrals are being made, and the impact of different incentive structures on referral activity. 

Double down on top referrers

Top referrers, also known as brand advocates, are your loyal and enthusiastic customers who actively promote your brand to their networks. Recognizing and forging a relationship with advocates allows you to recognize what motivates them to refer friends and replicate their success with other customers. To reward these loyal customers for their efforts, consider giving them special discounts or early access to new products and features. 

Highlighting the achievements of top referrers and sharing real-life examples on your website or social media channels can also inspire customers who are just getting started with referrals to increase their advocacy. Some Extole users have up to 40% of their referrals acquired by their super advocates! 

General Referral Guide_Featured Image

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.

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An inside look at referral program optimization

Mattress company Lull used to have a referral program that was difficult to manage and suffered from a low reward redemption rate. Beyond lackluster optimization and analytics capabilities, the company was frequently the victim of fraudulent self-referrals and spammers who negatively impacted ROI. 

Now, with Extole, Lull has a more holistic understanding of their customers and what motivates them to refer friends and family. For example, Lull now runs A/B tests to test and implement the reward offers that drive the most referrals. Extole’s advanced security capabilities have also snuffed out fraud and other suspicious activity. Together, these benefits have resulted in an impressive 9% conversion rate for Lull’s referral marketing program. 

How to generate more referrals with Extole

Improving your referral program no longer requires countless hours of difficult, manual work. Extole automates many crucial targeting, personalization, analytics, and reporting processes. Our customer engagement platform is guaranteed to help you drive more referrals and demonstrate that customer-led growth is a viable strategy for your business. 

Check out the full spectrum of customer engagement opportunities that Extole unlocks.

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