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7 Tips for Launching a Successful Referral Marketing Program

One of the best ways to bring in new leads and customers is to leverage your existing customers through referral marketing. In fact, McKinsey reports that 20 to 50% of sales comes from word of mouth marketing. It makes a lot of sense when you think back to many of the products you’ve personally purchased. It was usually because a friend or family told you about it and you trusted their opinion.

While many businesses rely on referrals for a regular stream of new customers, they’re not doing enough to build a solid referral marketing strategy. They set up simple forms that ask their customers to recommend their business to their network and don’t do much else. There needs to be a system built around the strategy to sustain growth and get predictable results. Here are seven tips for launching a successful referral program.

1. Create a Strong Incentive

It’s not enough to ask for a referral. You have to give customers a strong reason to do so. Sadly, many businesses think that simply asking for a referral after a sale is made is enough to get people to spread the word. Incentivizing referrals is one of the best ways to get your customers to take action. You want to reward customers for referring other people to your business. You have to think about what you can offer your customer. The incentive should be relevant to your customer. It has to have some value to them.

Many businesses set up a system where they enroll their customers into their affiliate program where they are paid a flat amount or percentage of sales generated from their referrals. The customers are then given links and marketing tools to help them promote the various products and services offered by the business. While this has worked for some businesses, it’s not applicable for all business models. You can get creative with the rewards you offer. In fact, creative rewards can often work better than commission based rewards.

For example, if you operate a subscription site, you can offer a free month membership if the customers refer a certain number of new customers. If you run an online store, you can offer discounts, coupons or store credit as part of your eCommerce marketing efforts. These options often serve as better solutions because it doesn’t take away from your revenue and requires less accounting. Just think about what your customer would like to be rewarded with and test the incentive to see how effective it is.

2. Create a Low Barrier to Entry

If you want to increase your referrals to very high levels, you may want to consider creating a low barrier entry. To do that, you want to create an offer that doesn’t rely on a sale or is based on a low price point. What this does is create a situation where more of the referrals that your customers make come into your marketing funnel.

When your customers see that a large number of their referrals are converting into commissions or rewards, they’ll be more likely to continue sending your referrals. If you can do a good job with your marketing and know that you can convert a high number of leads into customers, this is a strategy that you should test.

To show an example, you can set up a landing page that your customers send their referrals to. The landing page can be a video that educates the visitor and gets them to sign up to an email list. Then, the customer is incentivized whenever their referral signs up to the email list.

Another alternative is to base the sale on a free trial offer or a low introductory offer. More people will be willing to make a purchase on a free trial or low offer than a full priced offer. This results in you being happy because you are bringing in more leads into your marketing funnel and your customer being happy because they are getting results from their referrals.

With that said, you have to be very careful about utilizing offers like these. There will always be somebody that will try to take advantage of the situation by sending fake or unqualified leads. If the offer requires a credit card, then the customer may try to get somebody to sign up and cancel before they are fully billed. You have to make sure you screen for these situations. You can also set specific criteria like requiring referrals to stay after the trial in order for the customer to be incentivized.

3. Promote Your Referral Program

Many businesses make the mistake of thinking that asking customers to join their referral program is enough to get their referral program rolling. That is far from the truth. You have to make sure that you’re promoting your referral program on a regular basis. The first thing on your customer’s mind won’t be to promote your referral program, so you have to remind them again in the future. You also need to promote your referral program across multiple promotional mediums to get a good amount of exposure.

Think about how you reach out to your prospects and customers, and create a promotion for your referral program. The list can range from anything from your email newsletter, social media channels, order confirmation emails, business blog, packaging, to customer service inquiries. The more mediums you use to promote your referral program, the more people you’ll sign up. If you want to get any kind of traction, you need to back it up with proper promotion.

You also need to sell the benefits of joining your referral program. Clearly communicate to your customers what they’re going to get out of referring you to their network. It always helps to share success stories, so you want to reach out to customers that have done well with your referral program. Get the permission to share their story to show a real life case study on how others can benefit in the same way they have. That can be more convincing than a sales driven message.

4. Test and Optimize Multiple Elements of Your Referral Program

Once you start getting your referral program rolling, you want to test and optimize various elements of your promotion to improve your results. Start by tracking where the sign ups of the referral program are coming from. Get rid of campaigns on promotional mediums that are barely bringing in any new sign ups. This will help you free up the space so that it doesn’t detract from sales or content consumption. Then, start focusing on the promotional mediums that are bringing in a high number of sign ups.

Start by optimizing the copy that leads to the sign up page to see what results in higher clickthrough rates. Then, work on the copy and design of the actual landing page where people sign up. Try testing different headlines, introductory paragraphs and various designs to see which elements results in higher conversion rates. Using multivariate testing software is usually a better way to find the highest performing elements than using standard A/B split testing software.

From there, you want to test the incentives. Test different incentives to figure out what results in more sign ups. You can try commission, reward and discount based incentives to see what works best. Some businesses like to build structured incentives where you earn higher rewards according to the number of referrals you generate. Another similar way to go about this is to set up tiered incentives.

5. Deliver on an Exceptional Customer Service and Experience

If you want your customers to send you referrals, then you really have to do a great job and impress them. The first thing you need to do is to do a great job with your product or service. Pay attention to the feedback you’re getting from your customers and make the necessary improvements. You have to inspire the confidence of your customers through your products and services to even make a referral program work. From there, you can work on improving customer service and providing a great experience.

There are numerous things that you can do to improve customer service. The one thing you can do is to offer multi-channel support from social media, email, FAQs, to the telephone. An effective eCommerce marketing tactic that many online stores use is to set up live chat options. The live chat options allows businesses to answer customer questions in real time and also save money on setting up a large customer service center designed to answer phone calls.

From there, you want to work on creating a great customer experience. You can start by making sure your order confirmation is in order. You can then set up follow ups that provide instructions on how to use your product or service. Then, you can add loyalty programs, send discounts to customers on their birthdays and personalize their browsing/shopping experience. All of this adds to a great customer experience that your customers will want to share with their network.

6. Make Your Product or Service Experience Shareable

Not all referrals are pushed through incentives. You need to understand that consumers often like to share their purchases on social media. However, you need to set up the situation that makes consumers want to share their experience with others. There are many ways to do this from free gifts, packaging, to contests. Give your customers a strong reason to want to share your products or services online.

For example, nothing says wow like beautiful packaging. If you can present your packaging in a beautiful or unique way, customers will naturally want to share their unboxing experience to their social media followers. Another way to push customers to share their experience is to add an unexpected gift. If the customer orders three pairs of shirts, you may want to say thank you by adding a free set of cuff links as a surprise gift. Customers will not have anticipated the free gift and many will be motivated to share the nice surprise online.

Finally, you can use contests as an effective word of mouth marketing strategy. Come up with prizes that you think your customers would love to win. Then, ask customers to share a picture or video of how they’re using your product or service on social media. You can choose the winner based on the quality of their social media post or a random drawing. These kinds of contests can result in thousands of shares and referrals for your business.

7. Partner with Influencers and Brand Advocates

Building a referral program from the ground up can be a slow process. One way to really ignite your referrals is to seek out influencers and brand ambassadors. Influencers are individuals with a large following or access to an audience that you want to target. Use social media, publications and blogs to look for influencers that may be interested in your product or service. Reach out to the influencer and see if you can possibly set up some kind of business deal.

How each influencer works varies from person to person. One influencer may ask for a flat rate or commission based deal while another may be okay with the standard referral rewards. Send the influencer your product or service to help them see if it aligns with their online presence and to review the quality of what you’re offering. Some influencers may already be using your product or service. In these scenarios, it won’t take much to strike a deal with them and get them to mention you on their social media platforms.

Brand advocates are regular people that are enthusiastic about your product. The best way to locate them is to use social media tools to search for mentions of your brand or products. While they do not have as large of a reach as influencers, their passion for your brand and business can be an asset for your referral program. When working with brand advocates, you’ll need to provide them the tools and guidance to promote your business.

Those are just some of the many things that you can do to launch a successful referral marketing program. As you can see, you can’t just expect your referral program to grow organically. You need to properly plan how to set everything up and build a system that helps scale the referral program. Like every other marketing strategy, you get out the effort you put into it.

5 Response to "7 Tips for Launching a Successful Referral Marketing Program"

  1. Comment From Julie Randall

    I have experimented with different incentives and what I have found is offer a high initial commission to get people motivated right from the start. I also evaluate my affiliates commissions every quarter and then increase the commission rate of my top performers



  2. Comment From George Eckert

    I have been able to test using different social media ads, banners and various creatives that my affiliates share. I then just analyze the results and see which creatives perform the best. You can also just ask your affiliates and see what they think about the creatives and get ideas from them.



  3. Comment From Thomas Caine

    One way to find top influencers in your industry is just do searches on hash tags and find people that have lots of followers. You can then approach them and see if they will sign on to be an affiliate and promote you to their followers.



  4. Comment From Julian Yikaras

    I have just recently tried to give my affiliates other easier ways to earn a commission like referring 5 people to join my mailing list. This can be a quick win for them and is easier to get than a referred sale.



  5. Comment From Sally Sizemore

    I have seen that is is very important to promote your referral program in all the touch points you have with your customers. Start with the order confirmation page and order confirmation emails. If you have a customer account portal, you can even promote there.



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