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Customer referral schemes: 4 tricks to drive business with a referral program

Using tech to run a customer referral scheme has never been easier. So there’s no need to be daunted by the prospect of pulling together an enticing and effective referral program.

This article takes you through some common digital customer referral mechanics, and provides a loose guide to making them happen. But for our advanced readers, we’ll talk about how you can take these simple mechanics and put a more advanced spin on them.

So, to drive business through your door by harnessing loyal customer referrals, then simply follow our advice below.

Level the playing field with a customer referral scheme

We know not everyone is on the same page with technology in their marketing mix. For some, implementing a simple digital referral reward system would be a big deal. Whereas others are further down the road and need a bit more meat on the bones.

Harness the power of brand ambassadors

the best place to start your customer referral scheme is with your existing customersSome influential figures in the in the marketing world insist that you should have a favourable Net Promoter Score (NPS) before you ask for referrals.

We think that’s a sensible suggestion.

After all, a customer or user would only put their reputation at stake to promote something they believe in.

You can use a service like Surveymonkey and Mailchimp to send a simple satisfaction survey and get a feeling on whether your customers will promote you in public or not.

In your survey, ask customers whether they’d recommend you to a friend or colleague. If they say yes, ask them to follow through. Don’t try to outsmart the situation, just give them the tools they need and get out of the way.

4 ways to overcome inertia

Most businesses don’t inspire “organic” advocates and brand ambassadors though. It’s not an indictment of their company, it’s just the way it is. And if you’re reading this blog, we’ll assume you fall into that category.

If your audience won’t refer you for free, you need to sweeten the deal. Incentivise customers to tell their friends or peers.

You can start generating referrals through several mediums. These include email, social media, specialised platforms and your website itself.

To find out about each, skip to the relevant section below:

  1. Email
  2. Social media
  3. Referral platforms
  4. On-page referrals

1. Email

email is a super handy and accessible place to start your customer referral schemes

If you aren’t emailing your audience on a regular basis, it’s time to start. A basic email marketing platform like Mailchimp is free to try, and email is a proven ROI winner. According to Campaign Monitor, every $1 spent on effect email marketing returns $44.

Simple email referral schemes

Email your customers to ask for referrals, offering gift cards as a reward for successful referrals. These schemes are a boilerplate approach that many companies have used to generate new business.

You can put together a simple email referral scheme that (almost) runs itself. Start by sitting down and having a look at:

  • The amount of customers you have
  • How many customers you expect to sign up
  • How much you expect a new customer to be worth

On the back of that, establish what value  reward you want to pass on your referring customers. Ideally you’d split your incentive across the referring customer and the new customer. The process itself isn’t complicated once you’re familiar with your email marketing software.

Start by generating a web form

They’re forms that take details, store them in a database, and trigger automated emails. Most email marketing platforms let you generate them as part of a standard package.

Create a landing page

landing pages are a key component of any customer referral scheme

Take this web form for your referral scheme and host it on a landing page. Use the landing page to really sell the referral. Outline the reward your referring user will enjoy if their target becomes a customer.

If possible, offer the referring user the chance to send a personal message  to the person they’re referring. Testimonials and word of mouth are one of the most powerful endorsements available to you. They’re even more effective when they’re from a friend or colleague.

Send the link out

Then send a link to your existing customers promoting your referral scheme and linking them to your new landing page. You can do that with the same email marketing software.

Triggered emails

That landing page’s web form should trigger two emails. One email goes to your existing customer to express your sincere gratitude for taking the time to refer your company. The second goes to the person your customer referred.

In the second email, introduce your company and make it clear you’re in touch because a friend referred them. Go over your selling point and invite them to sign up. Also, if you can, include that personal message of recommendation from your existing customer. Link through to a second landing page promoting your product, and driving home the reward they’ll receive.

On this second landing page, include another web form. This web form is the start of their user journey. Here you’ll gather their details, ask their permission to use those details, and take the name of the person that referred them.

Query your data

analysing and understand data is vital for a better customer referral schemeRun a query on your database for the new customers that came in through those web forms. This is usually a yes/no process. Match up the existing users with those that referred them and distribute rewards.

If you’re a dab hand with your databases, you can automate the last part. But like we say: a good scheme that exists is better than the perfect scheme that never goes live. Don’t be afraid to go manual while you learn.

Important GDPR tip:

Your web form that sends the email to the referred person can’t store their email under GDPR, it can only deliver the message. Only after the 3rd party gives you permission can you actually store and use their information.

Putting more in to get more out

Filter your audience down to generate quality leads. Recent happy customers, customers with glowing Trustpilot reviews, or clients with a successful project delivery. Asking them to refer increases the chance you’ll get quality customers, not just reward chasers.

Happier customers are more likely to act, and they’re more likely to refer high quality new business.

This is because they’re satisfied to put their reputation at stake when they believe in your company. Combined this makes better use of your reward budget.

Even further:

better audiences make a customer referral schemeGo a step further on your audience filtering. Put together a list of existing clients that you know have a relationship with prospects you want to target.

Rather than focusing on the reward message, put more emphasis on the quality of your existing relationship. Write some key messages for your account handlers, and ask them to email their customers personally.

Personal message are more likely to be opened, and more likely to generate action.

Better referrals make for better clients

The advanced ideas revolve around generating higher quality new business. While they all pay you the same, the reality is not every client or customer is equal.

Better customers understand and value your product. That means they need less support from your team. It also means they get the most out of what your company does. This improves your reputation as a provider when other consumers or companies interact with them. Quality customers mean less stress, a better reputation, and a higher likelihood your existing business will recommend you to others.

2. Social media

social media is a power customer referral scheme tool

At their most basic, a referral is just word of mouth. And word of mouth is one of the key outcomes you want to generate from social media.

A simple social word of mouth referral scheme

Use a “like and share to win” contest to spread the word about your brand. You will have seen these on social media. The low bar to entry makes users more likely to act, and the promise of a reward prompts users to get involved without putting much in up-front.

Put aside a reward that will motivate your audience to act. It has to be interesting enough to break through the natural indifference and inertia of a social media user.

Create a post that highlights your product, and prompts users to enter your contest with a share and like to enter your contest.

To pick a winner, open your brand page’s notifications. Pick a user, and contact them to deliver the reward. You might also create a new update for your social channels to celebrate the winner as a bit of social proof.

A word to the wise

By offering rewards, you’re very likely to generate interaction. But it will be high volume, low quality interaction. That doesn’t mean it can’t be profitable, you just need to understand what to expect when organising.

Think carefully about whether you think your brand and product works for this approach. Absolutely anyone could come across your message with these broadside campaigns. Not only does your product need to have mass-market appeal, you need a solid hook that sells it in a second.

You have to push past reward-seeking behaviour and prompt a complete stranger to make a purchasing decision.

The next level: Building engagement, not buying it

you can attention for your customer referral scheme or you can build it

Like and share campaigns can feel a bit desperate and grubby. And if we’re completely honest, a lot brands rely on them because they lack imagination.

Incidentally, there are two ways to promote audience building on social media. Creating genuinely quality content, and showcasing social proof that your products work.

This is why many companies use “influencers.” Essentially taking your biggest fans and turning them into advocates for your company.

Use a media monitoring service to find customers talking about your brand or products on social media. If they’re positive, speaking to a significant audience, and represent your brand well, reach out.

Establish a quid-pro-quo arrangement. Equip them with the products and resources needed to improve their content around your brand. And be sure to promote their content through your own channels where possible, too.

The arrangement puts you in front of an audience with implicit endorsement of someone whose opinion they value. To encourage your customer’s audience to become customers, include discount codes or rewards for any conversions that come from their content.

Tip for advocates:

Make sure anyone you work with makes it clear on their posts you’re sponsoring their content. Being deceptive isn’t just bad for your reputation, it can be illegal.

3. Incentive platforms

Specialised platforms make it easy to run more complicated incentive and referral schemes. They take the legwork out of referral schemes. The trade-off is giving up a bit of control over the scheme to keep everything accessible and streamlined.

This is ideal if you want to run a customer referral program when you don’t have someone in your company with the skills to put together the emails, web forms and landing pages.

Platforms make incentives simple

Use a referral platform, like Mention-Me, to send out a referral request to your email database.

Depending on the platform you use, the process will be different. The luxury of having the process taken care of by the platform is you can focus on the basics.

Get your audience right, get your messaging right, and get your rewards right. Then let the scheme go and catch your new business.

Engage loyalty and rewards platform

Drives sales, referrals and loyalty with our market-leading incentive platform.

Taking platforms to another level

If all that feels a bit basic, try a more powerful incentive platform. We offer one called Engage.

These platforms let you go beyond fire-and-forget referral programs. That’s because they’re based not just around referrals, but on incentives in general. And referrals are just an extension of an incentive when you’re trading rewards.

With a more advanced system, you can track user actions over time. That opens up some possibilities.

Points banking changes the game

banked points are a super motivating aspect of a customer referral scheme

This one is taken straight from the handbook of our Engage platform. Instead of giving rewards for a referral, give points. The points are eventually traded for rewards, but it opens a unique possibility – doing another referral and banking the points over time for big rewards.

You can choose to have points bank for any amount of time you like. By banking points for every successful referral, your customers compete against themselves for a bigger reward. That makes the customer more invested in the scheme and more likely to advocate for your business.

Introduce a leader board and a reward for the most referrals in a quarter, and your customers are competing against each other, too. The rewards will always get customers interested in referrals, but you can keep them hooked in with competition and bigger rewards.

These are all modules you could activate in an incentive platform and enjoy.

Take advantage of reporting and data

Another advantage offered by your platform is capturing data that would usually disappear into the aether.

Right off the bat that gives you the power to do two things:

  1. Identify and celebrate the super users that bring the most referrals, and the highest quality of referrals.
  2. Take the guesswork out of your scheme. When you go to close a quarter’s worth of incentives, you have data and reports to reflect on. No more guessing.

For most companies this data just slips away into the aether. Not everyone has the knowledge or the skills to capture and use the data they generate. Platforms make it simple.

Tip on platforms:

If you don’t know, ask. The beauty of having a managed platform is that it’s not you against the world. It’s you and your account manager against the problem. They have the knowledge and the enthusiasm to help you pull your scheme off.

4. On-site customer referral programs

If you don’t ask, you don’t get. If you generate plenty of web traffic, lean into what’s already at your disposal and ask your users for referrals.

Simple on-site referrals

your website is the ideal place to start your customer referral scheme

For a simple on-site referral scheme, use a similar process to the email scheme we mentioned earlier.

Build a web form in your email marketing software. The web form will trigger a referral email (without storing the users’ email data).

Insert the web form on your site alongside a message prompting the user to make a referral and offering a reward for successful new business.

When the user becomes new business, you marry their referral up to the referee and distribute rewards.

Simple enough when you know how, right?

The next level

Instead of offering a traditional reward or discount, offer free product. For instance, if you sell access to software, offer a free month for new customers.

And offer a free month for customers that generate multiple referrals. For instance, if your customers can generate 10 successful referrals, their next month’s subscription is free.

How much you offer should be scaled against how much it costs you to administer the accounts for the referral clients. Unfortunately we can’t make that decision for you, we can only make suggestions.

Tip for referrals:

Put a time limit on incentives to light a fire under your users. If a user can generate 10 or more new customers in a month, they earn a suitable reward. It’s a more traditional reward or extra access to your product. Anything likely to compel the user to bat for you.

Pick the right rewards for the deal

Gift cards and vouchers

Love2shop Gift CardsWe stock and sell cards and vouchers (and reward codes) because we know they work. And our thousands of clients agree.

They make it incredibly simple to incentivise a diverse user base to take action and reward them afterwards. Let the audience pick their own rewards and they’ll always have a gift they’ll love.

When you’re trying to motivate someone to action, cards, codes and vouchers make a great bet.

Merchandise

Merchandise is a simple, but often an extremely effective approach. Desirable consumer goods like tech, design apparel and sporting equipment are cheap heat. They’re desirable enough to spring the right audience into action.

Or, as we pointed out earlier, if you sell software, that also makes a great reward. Particularly anything sold on a SaaS model – the easier it is for someone to get started, the more likely they are to stay.

Travel

travel is a very motivating reward for a customer referral scheme

Travel generates intense motivation. One of the most inspiring and tantalising prospects for anyone is a holiday. Especially when it’s a trip they couldn’t have arranged for themselves.

And you don’t have to book everything yourself. Just put the budget aside and a provider (like our Love2shop Holidays team) will take care of all the booking.

Big ticket prizes

If your business is in life’s biggest one-off purchases – property, cars, white goods – a £20 gift card just doesn’t feel like an adequate reward for bringing new customers in.

That’s where our big rewards excel. We can offer exclusive experiences like skydiving, travel or supercar driving. Or VIP events, like big sports events.

They’re the kind of rewards that make sense when your customers bring thousands of pounds of business to your company.

Build a good customer referral scheme today, make it perfect tomorrow

If you can’t automate your referral scheme straight away, don’t hesitate to do it manually and worry about automation later.

Plenty of good ideas die on the vine waiting for someone to come up with the perfect solution. All they needed was for someone to pick up the ball and start running.

If you need any advice, you know where we are.

Customer rewards are stocked with untapped potential

Customer rewards aren’t just a bribe to manufacture loyalty, it’s your chance to create better customers

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