How to Create a Winning Referral Program That Works

There is a reason why big brands are using referral systems to promote their websites. It works. The best part is it continues to work despite all the search engine algorithm changes that happened. This means that you can expect it to work even in the years to come.

What’s a Referral Program?

Before you proceed to the creation of your referral program, you need to know what it is. A referral program is a system when you allow your customers to promote your brand for you. In doing this, they give you the contact information of their family and friends. But it doesn’t stop there. Their family and friends can also similarly promote your brand.

What Makes a Referral Program So Effective

There are several reasons why referral marketing is more effective than other methods. But it is essential to consider what makes it so successful. Out of all the reasons why you should launch a referral system for your business, here are the top three.

It Leverages Networks

Referral marketing works because it leverages networks. Unlike doing your marketing all by yourself, you allow your customers to help you. In this method, you are not doing all the marketing alone. You have an army of customers who can help you advertise your website.

It Spreads Through the Circle of Trust

When your customers promote your brand, they will do it to the people that they know and trust. This can either be their family and friends. These are people that the customers personally know and trust. Because of this relationship, they are far more likely to act on the recommendation. This is because the referrer is someone that they know, and they trust that he is giving him the right advice.

It Elevates a Brand’s Social Proof

The third reason why referral marketing works is social proof. Since the method works through social networks and personal circles of trust, it can positively affect social evidence. Social proof plays a significant role in sales conversion. When a prospective customer is on the verge of buying, he only needs a slight push in a positive direction. Social proof is that ‘push.’ Positive reviews or simple recommendations can do a lot for your brand. It can help your prospective customers see your brand in the positive light, and this will encourage them to buy from you.

NOTE: Referral marketing is also great for eCommerce. The reason is its impact on cart abandonment. It is one of the keys to stop shopping cart abandonment and increase traffic and sales. This is the reason why referral software is often available for eCommerce platforms. It is quite useful for online stores.

Characteristics of a Winning Referral Program

Ideally, you’ll want a winning referral program. Any business owner can easily create a referral campaign. Even new business owners like Best Drums Set Labs have done this with success. However, you’ll need to implement some practices if you want to get the most out of referral marketing. Here are the characteristics that you’ll need to look for if you’re going to create a successful referral system.

The Program Can Be Easily Found

Your customers must see your referral system. It is useless to create this if it is just buried in your website’s sitemap. The link to the referral page should be prominent. It should be seen on the front page of your website, and your customers should be continuously reminded to advertise the website. You can do this in critical places in your online store. Some of the most common locations for referral program promotion are on the homepage, checkout page, and emails. This will allow you to personally reach out and tell your audience that you have a referral system that they can use to earn rewards.

It Gets Regular Referrals

If you are going to determine the success of a referral system with one factor, that would be the number of regular referrals. This means that references should not only come in when you have just created your referral system. It should also come in regularly. This shows how well you are promoting your referral system and how well your audience is responding to it.

Referrals Have a High Chance of Conversion

Aside from the number of referrals, the quality of references matter as well. This means that you should not only get a ton of referrals for your system. You should also get referrals that have a high chance of converting into sales. You can measure this by dividing the number of transactions with the number of referrals. This will show you the percentage of references that are converting into sales. This is also a useful metric to consider when you want to measure the overall effectiveness of your campaign.

How to Create a Winning Referral Program

A winning referral program is produced with the right processes. You need to ensure that every step in the process is executed well. In this section, you’ll learn the steps that you need to implement to have a winning referral program for your brand.

Start with Your Target Audience

A winning referral program starts with the right reward. How can you know if the prize that you have set is right for your business? That’s simple. You can ask your audience. Many business owners just skip this,.They usually resort to guessing the proper reward. This is a grave mistake, for it often results in a referral program that is ignored by the audience. The best path is to ask the audience about what they like and give it to them. Don’t assume. Always make it a point to ask.

Experiment with Different Rewards

There are times when you will not be able to know the right reward. This is when you have done your part of asking your audience, but they came up with mixed answers. They may have given you some answers, but it is not enough for you to make a decision. So what can you do? That’s simple. You can experiment. This is where you take the suggestions of the audience and experiment with them to see which will be received by your other customers. This is also good for testing the system. Some customers like to say that they prefer a particular reward but will not sign up when it is released. This is the best way to test these suggestions to see if the audience will act on them.

PRO TIP: One way to encourage the audience to sign up is the “rule of x3”. If your customer gave you a suggestion that you should give away a particular reward, always multiply that by three. By adding more rewards, it will also triple your chances of getting more signups. This is a strategy that worked for me, and I think that it can work incredibly well for you as well.

Experiment with Different Rewarding Modes

Every referral system has 3 rewarding modes. These depend on who is rewarded. There is a mode where you choose to pay the referrer. There is another mode where you wish to reward a friend or referral. The best style is to reward both. This is where you give a reward to encourage the referrer to promote the system and pay the friend to help him to sign up. It eliminates all friction, so it is the best mode out of the bunch.

PRO TIP: There are three basic rewarding modes. But you can also create your way. If you are selling a unique product or service, you may want to consider using a different approach. Being creative can help you in promoting referral systems, so don’t be afraid to exercise that here as well.

Create Exclusive Referral Programs for Influencers

One of the best ways to promote your referral system is to ask influencers for help. Influencers are people who have gained a significant amount of followers in their field. They have a substantial amount of followers for a reason. This may be because they are considered experts in the niche, or they have established themselves as idols or inspirations. Because of this, they have a massive impact on their followers’ actions and decisions. This is the reason why influencer marketing is highly effective in promoting referral programs. This is provided that you create an exclusive system for each influencer.

Here is the reason why exclusivity is a must. Every influencer has a unique culture that he conveys. You mustn’t only sell or give away a product or reward. It is also vital that you appeal to that unique culture if you want the influencer method to be successful. You need to communicate with the influencer and look for ways on how you can help his target market. From here, you can select a proper reward for your referral system and create an exclusive referral campaign just for the influencer.

Transform Your Program into a Contest

Another way you can make your referral system more interesting is to transform it into a contest. In a conventional referral system, you ask customers or website visitors to promote your brand. This is where they input the names and contact information of their family and friends. However, this model doesn’t have a sense of urgency in it. It also doesn’t have a competitive factor. If you transform your referral system into a contest, you add that competitive and urgent element into your system. This means that your customers and website visitors will not only sign up because of a reward. They will also sign up because they have a chance to win a high ticket product.

PRO TIP: Did you know that you can combine contests with influencer marketing? If your prize is attractive enough, you can also encourage influencers to participate. On Instagram, a travel company launched a campaign where they give away free travel to 10 countries. The reward was so attractive that it encouraged influencers to sign up as well.

Use Referral Software

If you plan to launch a referral system, be sure to use the software. Referral software will allow you to configure and start your referral system in a few clicks. The best part is that there is always software that is compatible with your platform. There are WooCommerce affiliate plugins, Shopify apps, and Bigcommerce software that you can use. You just need to check the platform of your website and choose a referral system that will work for you.

Measure Your Results

Once you have implemented your referral system, you must know how to measure the results. More than the trends in your referral software, you should also link your website with an analytics app. This will help you see and track the incoming traffic and compare it with the numbers of referrals and sales that you are getting. Ultimately, you should measure the percentage of your website traffic that converts into sales, subscribers, and referrers. This will give you an overview of the success of your referral system.

Will Referral Marketing Work For You?

It is easy to become doubtful that referral marketing will work for you. However, you will not be able to see if it is sufficient until you try it. Referral marketing is one of the few methods that can work even for brand new websites. Unicorn brands have used them when they are just launching their products and services. PayPal has used it to get its initial members. Uber used it to get more drivers and riders. It is one of the easiest ways to introduce a brand to the public, and it can work for you too.

As you can see, it doesn’t take a lot for a referral campaign to become successful. The steps included in this article are easy to implement. You can quickly launch a referral system with software. This doesn’t require any coding or designing skills on your part. It is a click-and-go system where you can start a referral program by inputting a few details.