Referral marketing is one of the most powerful ways to grow your business. It’s when you get your existing customers to tell their friends about you, usually with an incentive or reward. According to Nielsen, 92% of consumers trust recommendations from people they know1. And McKinsey reports that referrals influence up to 50% of all purchasing decisions2.
But how do you create a referral program that works? How do you motivate your customers to spread the word about your business and bring in new leads? How do you craft compelling incentives and rewards that appeal to both your existing and potential customers?
In this post, we’ll share with you seven tips for crafting compelling incentives and rewards with Viralify, your viral marketing growth partner. Viralify offers a service that employs various tools and strategies to drive exponential growth for your business. Whether you need help with social media marketing, content marketing, email marketing, influencer marketing, or any other aspect of viral marketing, Viralify can help you achieve your goals.
Tip #1: Know your audience
The first step to creating a successful referral program is to know your audience. Who are your ideal customers? What are their pain points, needs, and desires? What are their demographics, psychographics, and behaviors? What motivates them to buy from you and refer others?
Knowing your audience will help you tailor your referral program to their preferences and expectations. For example, if your target audience is young and tech-savvy, you might want to offer them digital rewards like gift cards or subscriptions. If your target audience is environmentally conscious, you might want to offer them eco-friendly rewards like planting trees or donating to a charity.
You can use various methods to research your audience, such as surveys, interviews, feedback forms, social media analytics, customer reviews, and more. You can also use Viralify’s audience analysis tool to get insights into your audience’s interests, behaviors, and preferences.
Tip #2: Choose the right type of referral program
The next step is to choose the right type of referral program for your business. There are different types of referral programs that you can use, depending on your goals, budget, and industry. Here are some common types of referral programs:
One-sided referral program: This is when you reward only the referrer for bringing in new customers. For example, you might offer them a discount or a free product for every successful referral.
Two-sided referral program: This is when you reward both the referrer and the referred customer for joining your business. For example, you might offer them both a discount or a free trial for signing up through a referral link.
Tiered referral program: This is when you reward the referrer based on the number or value of referrals they make. For example, you might offer them different rewards for reaching different milestones or levels of referrals.
Leaderboard referral program: This is when you create a competition among your referrers and reward the top performers with prizes or recognition. For example, you might display a leaderboard on your website or social media and announce the winners at the end of a period.
You can also combine different types of referral programs to create a hybrid one that suits your needs. For example, you might use a two-sided referral program with a tiered structure to reward both parties and encourage more referrals.
Tip #3: Offer incentives and rewards that match your brand value
The third tip is to offer incentives and rewards that match your brand value. This means that the incentives and rewards should be aligned with your brand identity, mission, vision, and values. They should also be relevant to your products or services and reflect the quality and value that you provide.
For example, if you sell high-end products or services, you might want to offer incentives and rewards that are also high-end and exclusive. If you sell affordable products or services, you might want to offer incentives and rewards that are also affordable and accessible.
You should also consider the perceived value of your incentives and rewards. This is how much value your customers perceive from receiving them, regardless of their actual cost. For example, a personalized thank-you note might have a higher perceived value than a generic coupon code.
To increase the perceived value of your incentives and rewards, you can use techniques such as scarcity (limiting the availability or quantity), urgency (setting a deadline or expiration date), exclusivity (making them available only to certain groups or individuals), or social proof (showing how many people have claimed them).
Tip #4: Make it easy and fun for customers to refer others
The fourth tip is to make it easy and fun for customers to refer others. The easier and more enjoyable it is for customers to share your business with their friends, the more likely they are to do so.
To make it easy for customers to refer others, you should provide them with tools and resources that simplify the process. For example:
Referral links: You can generate unique referral links for each customer that they can share via email, social media, text message, or any other channel. You can track these links using Viralify’s referral tracking tool and reward customers accordingly.
Referral codes: You can create unique referral codes for each customer that they can give to their friends to use at checkout or sign-up. You can track these codes using Viralify’s referral tracking tool and reward customers accordingly.
Referral widgets: You can embed referral widgets on your website or app that allow customers to easily share your business with their friends. You can customize these widgets using Viralify’s referral widget builder and track their performance using Viralify’s referral tracking tool.
Referral buttons: You can add referral buttons on your website or app that prompt customers to invite their friends to join your business. You can customize these buttons using Viralify’s referral button builder and track their performance using Viralify’s referral tracking tool.
To make it fun for customers to refer others, you should gamify the process and add elements of surprise and delight. For example:
Points: You can award points to customers for every successful referral they make and allow them to redeem these points for rewards or perks.
Badges: You can award badges to customers for achieving certain milestones or levels of referrals and display them on their profile or dashboard.
Contests: You can run contests among your referrers and reward the winners with prizes or recognition.
Random rewards: You can surprise customers with random rewards for making referrals such as free upgrades, bonus products, or extra discounts.
Tip #5: Communicate clearly and frequently with your customers
The fifth tip is to communicate clearly and frequently with your customers about your referral program. You should inform them about the benefits of joining the program, the rules and requirements of the program, the incentives and rewards they can earn, the progress and status of their referrals, and the success stories and testimonials of other referrers.
You should use various channels and formats to communicate with your customers such as email newsletters, social media posts, blog posts, videos, podcasts, webinars, or live events.
You should also use clear and compelling copywriting techniques such as headlines, subheadings, bullet points, call-to-actions, and testimonials to capture their attention and persuade them to join and share your referral program.
Tip #6: Monitor and optimize your referral program
The sixth tip is to monitor and optimize your referral program regularly. You should measure and analyze the performance of your referral program using key metrics such as:
Referral rate: The percentage of customers who make at least one successful referral.
Referral volume: The number of referrals made by each customer or in total.
Referral value: The revenue generated by each referred customer or in total.
Referral cost: The cost incurred by each successful referral or in total.
Referral ROI: The return on investment of your referral program calculated by dividing the referral value by the referral cost.
You should also collect feedback from your customers about their experience with your referral program such as:
Satisfaction: How satisfied are they with the incentives and rewards they receive?
Ease: How easy is it for them to make referrals?
Motivation: What motivates them to make referrals?
Challenges: What challenges do they face when making referrals?
Suggestions: What suggestions do they have to improve the referral program?
You can use various methods to collect feedback from your customers such as surveys, interviews, feedback forms, social media polls, or online reviews.
You should use Viralify’s feedback analysis tool to get insights into what your customers think and feel about your referral program.
Based on the data and feedback you collect, you should identify the strengths and weaknesses of your referral program and make adjustments accordingly.
For example, you might want to change the type or amount of incentives or rewards, to simplify or automate the referral process, to increase or decrease the frequency or intensity of communication, or to add or remove features or elements of gamification.
Tip #7: Showcase successful referral examples and testimonials
The seventh and final tip is to showcase successful referral examples and testimonials from your customers. This will help you build trust and credibility with your potential customers and inspire them to join your referral program.
You can use various methods to showcase successful referral examples and testimonials such as:
- Case studies: You can create case studies that highlight how your customers benefited from your products or services and how they referred others to your business. You can include details such as the challenges they faced, the solutions they found, the results they achieved, and the rewards they received.
- Social media posts: You can share social media posts that feature your customers’ stories, photos, videos, or quotes about their experience with your business and their referrals. You can also encourage your customers to tag you or use a branded hashtag when they share their referrals on social media.
- Reviews: You can collect and display reviews from your customers that mention their referrals or the incentives and rewards they received. You can use platforms such as Trustpilot, Google My Business, Yelp, or Facebook to gather and showcase reviews.
- Testimonials: You can collect and display testimonials from your customers that express their satisfaction with your products or services and their referrals. You can use tools such as Boast, Testimonial Monkey, or VocalReferences to collect and display testimonials.
You can use Viralify’s testimonial generator tool to create engaging and authentic testimonials for your referral program.
Conclusion
Referral marketing is a powerful way to grow your business by leveraging your existing customers and their networks. By creating a referral program that offers compelling incentives and rewards, you can motivate your customers to refer others to your business and bring in new leads.
However, creating a successful referral program requires planning, execution, and optimization. You need to know your audience, choose the right type of referral program, offer incentives and rewards that match your brand value, make it easy and fun for customers to refer others, communicate clearly and frequently with your customers, monitor and optimize your referral program, and showcase successful referral examples and testimonials.
If you need help with any of these steps, you can rely on Viralify, your viral marketing growth partner. Viralify can help you create, manage, and optimize a referral program that works for your business. Whether you need help with audience analysis, referral tracking, copywriting, feedback analysis, testimonial generation, or any other aspect of viral marketing, Viralify can help you achieve your goals.
Ready to start your referral program with Viralify? Contact us today for a free consultation.
FAQs
Here are some frequently asked questions about referral marketing and referral programs.
Q: What is the difference between referral marketing and affiliate marketing?
A: Referral marketing is when you get your existing customers to refer new customers to your business, usually with an incentive or reward. Affiliate marketing is when you get third-party individuals or organizations (affiliates) to promote your products or services to their audience, usually with a commission or fee.
Q: How do I track referrals?
A: You can track referrals using tools such as Viralify’s referral tracking tool. This tool allows you to generate unique referral links or codes for each customer that they can share with their friends. You can then track how many referrals each customer makes, how many referrals convert into customers, how much revenue each referral generates, and how much it costs you to acquire each referral.
Q: How do I calculate the ROI of my referral program?
A: You can calculate the ROI of your referral program by dividing the referral value by the referral cost. The referral value is the revenue generated by each referred customer or in total. The referral cost is the cost incurred by each successful referral or in total. For example, if you generate $10,000 in revenue from 100 referrals that cost you $2,000 in incentives and rewards, then your ROI is ($10,000 – $2,000) / $2,000 = 4x.
Q: How do I optimize my referral program?
A: You can optimize your referral program by measuring and analyzing its performance using key metrics such as referral rate, referral volume, referral value, referral cost, and referral ROI. You can also collect feedback from your customers about their experience with your referral program using methods such as surveys, interviews, feedback forms, social media polls, or online reviews. Based on the data and feedback you collect, you can identify the strengths and weaknesses of your referral program and make adjustments accordingly.
Q: How do I promote my referral program?
A: You can promote your referral program using various channels and formats such as email newsletters, social media posts, blog posts, videos, podcasts, webinars, or live events. You should also use clear and compelling copywriting techniques such as headlines, subheadings, bullet points, call-to-actions, and testimonials to capture your customers’ attention and persuade them to join and share your referral program.
