More often than not, businesses focus their efforts on acquiring new customers instead of investing in a referral program to drive repeat business and a steady stream of referrals. Word of mouth is a determining factor for 20-50% of purchasing decisions. B2B companies with referrals have a 70% higher conversion rate, and record 69% faster close time on sales. People are 4 times more likely to purchase if they are referred by a friend they trust, and referred customers bring 16% more in profits. Customers that come through referrals have a 37% higher retention rate and 18% lower churn. A great referral program increases retention, CLV, gives your brand a competitive edge and drives higher conversion rates leading to improved bottom line. The best referral programs incentivize existing customers to recommend the brand to their inner circle. This enables them to actively reach out to their peers who are essentially potential new customers. When your brand advocates do the talking for you, the results are far more effective.
Here’s how to create the best referral program:
- Identify the right kind of customers who qualify to be a part of your referral program. Also, your referral program should be easy to understand and simple to execute.
- Selecting the right and relevant rewards is essential. These can be perks, added value, bonus points, discounts or credit. As a brand, you must give enough reasons for your customers to refer your business to their peers. You also need to identify if you want to offer single or double rewards. In the single incentive program, only the one who refers gets the reward, but in the double reward structure, both the parties get incentivized. You can also consider a tiered referral program. Harry’s Shave Club has a successful tiered referral program; based on the number of referrals, their subscribers accrue credit toward their own purchases, the more, the better.
- Engage with your target audience through effective emails, newsletters on how it works, landing page explaining benefits of the program and site pop ups etc.
- Promote your program across customer touchpoints, specially through social media.
- Invest in the right software. Annex Cloud’s Referral Marketing suite offers a gamut of referral action options from sharing via social media, to email referrals, referral rewards delivered upon click or purchase, or post purchase referral calls to action. Whether you want your sharing solution to reward delayed grati?cation, offer a quick win, or give an extra treat to those who just bought, we’ve got you covered with our ?exible solution. You can run multiple referral campaigns with different actions and varying audiences at the same time to tackle multiple goals.
- Track your progress and impact by tracking the program.
Here are examples of some of the best referral programs:
- Dropbox’s popular referral program offers the referrer and referee 500MB of additional free storage space, up to 16GB total.
- One of the most lucrative programs, PayPal’s referral program would give users and their peers free cash to use their core product for free.
- With Uber’s referral program, you can give your friends discounted first rides. They also offered major discounts toward future rides to new users. In addition, they gave away cash perks to driver referrals.
- Amazon Prime’s referral program is yet another example. They guided users to their Prime membership quietly and organically. Though they only offered $5 toward the referrer, this was enough to encourage users to spread the word.
- Evernote’s referral program rewards points to customers every time they make a referral. They can then redeem these points for free access to the software’s premium features. When a customer’s referred lead switches to Evernote Premium, the customer who submitted the referral receives additional points.