7 Steps to Referral Marketing Success

by Grace Miller |

7 Steps to Referral Marketing Success

In this age of information overload, 82% of customers are making purchase decisions based on recommendations from their friends and family. While brands and retailers have many different ways of earning these recommendations, many are finding the benefits of referral marketing by tapping into their customers’ networks. By offering customers incentives for referring your brand and products to their friends, you’re able to create better brand awareness.

Referral marketing is a great way to increase average order value, boost conversions, and build a community of advocates. Whether you’re considering starting a referral marketing program or are a seasoned referral marketing pro, here are some concepts you should consider:

Referral Marketing Program Design

Choosing the best design for your referral program depends largely on your customer base, your goals, and the type of products you offer. Some of the most popular referral programs include incentive matching. With incentive matching, the referring/existing customer receives an incentive or bonus such as money off their next order, a free gift, or other product when he or she refers another customer. The referral customers are equally incentivized with the same bonus.

Referred customers
Customers referred through email campaigns

Referral Actions

It may seem obvious that the referral action should be a purchase, right? Above all, sales conversions help you grow your business. However, depending on your company’s goals and the products it offers, it may be more valuable to incentivize awareness. If you are marketing to millennials or young people, consider that 81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts. Additionally, it’s important to consider the preference your target demographic may have for different channels such as email, social media and Amazon before surfacing your chosen referral action.

Referral Rewards

Another important decision to make is choosing the right incentives for a successful referral. Though many choose incentive matching, it highly depends on your products. If you’re a mattress retailer for example, it’s unlikely that a recent customer will require another mattress purchase anytime soon. But of course you want to nurture that relationship and create loyalty, right? In these instances, complimentary products such as pillows, sheet sets, or third-party gift cards could be great options.

Avoid Referral Fraud

For our purposes, fraud refers to one of three things: a customer attempting to refer him/herself in order to get rewards, using bots to get rewards, or an existing user attempting to get a discount meant for first-time customers only. There are a number of ways you can minimize the risk of fraud in your referral programs.

With Annex Cloud’s cookie policy, you can block any attempts to redeem a referral that happens on the same computer within the same session. When requesting information from your referral, such as a name, email address, and phone number; make sure to procure enough user info to build a trackable profile. This way, any duplicated profile will set off a flag that can alert you to potential fraud.

Tracking IP addresses will also allow you to flag multiple referral attempts that derive from the same device. Any abnormally large number of referrals within a given time frame should raise a red flag in your system. Be aware, and flag these attempts. If the referrals reach a certain threshold, block the user.

Omni-Channel Referrals

Having a strong omni-channel referral strategy helps you consistently connect to your customers, no matter where they are. It is now easier for customers to use multiple devices at different stages during the purchase lifecycle. Therefore, choosing a referral program that can communicate with and track your customers through the purchase lifecycle is your best chance to increase conversions. Whether your business operates online, brick-and-mortar, or some combination of both, there is an omni-channel referral program that will meet your needs.

Pre-Purchase & Post-Purchase Referrals

No matter where a customer is in the purchase lifecycle, a referral could be the key to conversion. Prior to the purchase, you can engage with customers, get them excited about a product, and increase conversion rate by offering them referral incentives. With pre-purchase referrals, customers can earn cash off their purchase by sharing on social media, email, or through referral links. On the other hand, customers are never as excited about a brand as they are immediately following a purchase. Post-purchase sharing gives your customers an easy way to share what they just bought. And capitalizing on the timing increases the likelihood that they will share.

A/B testing

Measuring Success

Once you’ve hammered out the design, referral action, type of reward, and channel, you need to find out what’s working and what’s not working. Here, A/B testing is your friend. Perform A/B or split testing on each component of your referral program to see what works best.

Are you getting more conversions with a CTA at the top or the bottom of the page? Do bigger rewards really work better than smaller ones? Does personalization have an effect on your ROI? Remember to split test different combinations of copy and design as well as the referral components themselves. Annex Cloud offers comprehensive split testing for all types of referral programs.

When it comes to implementing a referral marketing solution, asking yourself these questions is pivotal to your process. What are my goals for this program? How can I ensure I’m leveraging my program to the best of my ability? And which referral actions are right for my business? Annex Cloud is here to guide you.

We don’t just assist you increase referrals; we help you build a community and create true loyalty between you and your customers. If you have any questions about referral marketing, user generated content, or customer loyalty; contact us today and we’ll be sure to match you with the right program specifically catered to your business!

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