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All you need to know about a referral program
Have you ever thought about how much money you could make by rewarding your existing customers for spreading the word about your brand? You know that word of mouth is the best way to grow your business. But what does that mean?
It means that you must ensure you are offering customers a wonderful experience and product. But it also means you need to make sure your customers are spreading the word about your product or service with family, friends, and colleagues. And with a referral program, you can do both—and make more sales at the same time!
Definition of a referral program
A referral program is like an incentive program for existing customers: instead of just giving them rewards for buying something from you (like coupons or discounts), the rewards are for referring other people to buy things from you! It is like having an army of happy customers working for you behind the scenes—and they will keep coming back because they know they’ll get rewarded when their friends or family use their link to buy something.
The best part about a referral program: it is simple to implement, easy to track, and makes your business more profitable.
The importance of referral programs
A referral program is a perfect solution for businesses that want to track the success of their word-of-mouth marketing strategies without having to invest in expensive tools or programs.
A referral program makes it easy for customers to share their experiences with friends and family members who are looking for similar services as yours. This encourages more people to visit your website or store and buy from you, which means more customers overall—and more word-of-mouth marketing opportunities!
With a referral program, word-of-mouth has the potential to skyrocket and be tracked. This is because a referral program encourages sharing and makes it easy for customers to share their experiences with others.
It also makes it easy for customers to share their experiences with other customers and professionals in their network: Word-of-mouth can spread from person to person, business to business, and industry to industry—and it is great for building brand awareness!
When you are running a business, word-of-mouth marketing is critical to your success. It is an effortless way to get people talking about what you do, and it’s a terrific way to build relationships with customers.
Get to know how a referral program work
Let’s face it: influencers and loyal customers are not always the most reliable ways to promote a brand.
That is why you need a referral program that goes beyond incentivizing customers to refer your product or service—you also want to give them something they can use in return.
If you have ever been in a position where you’ve had to ask a friend to refer you, you know that it’s a lot more than just saying “hey, tell my friends about this place I’m going to.” You must make it worth their while. Referral programs are a fantastic way to drive more business, but they can be hard to set up. It is important that your referral program is easy to use and makes sense to your customers.
You will want to make sure your referral program collaborates with your company culture and values, so you don’t feel like you’re sending people on a wild goose chase. It is also important that the rewards for referrals are relevant and motivating—you do not want customers who don’t know what they’re supposed to do in order to get a reward!
Get started with a referral program:
<span class="text-600-20px">1. Define your expectations from your customers:</span>
What kind of behavior do you want from them? Is it something specific (like buying something), or does it have more of an emotional component (like telling their friends about the experience)? Once you have determined what you’re looking for, think about how you can incentivize that behavior in order to increase the chances that people will recommend your business.
<span class="text-600-20px">2. Have a referral reward plan:</span>
Create a referral incentives plan defining the referral process based on the outcomes you want from your customer base as well as the referred customers.
– Are there multiple ways to earn rewards?
– Do they have to go through specific referral links?
– Do several types of referrals receive different rewards?
– What is the conversion rate for the referrals?
There are many different ways that companies use referrals: by giving out reward cards, store credits, unique referral links, and more.
The most important thing is that they motivate their customers (i.e., their existing customer base) to refer other people who may not know about the product or service yet may want it in the future because of something they have heard about through word-of-mouth marketing or an email blast campaign, or so on.
How to set up a referral program?
Whether you are looking to create customer referral programs or just want to know how to set up one, there are a few key steps that need to be followed. To set up a successful referral program, start by making sure your products and services are great. It is important to choose a reward structure that makes sense and works for both the customers and you—you do not want the referred person to be penalized because they didn’t immediately buy something, after all!
<span class="text-600-20px">• Conducting competitor analysis</span> to know where you are standing aa compared to your competitors is an effective way to start. In fact, even if you have a great referral program, it will not be sustainable for longer durations if you offer average products or services. That is why conducting a competitor analysis will make your offerings stand out.
• Next, <span class="text-600-20px">creating a positive customer experience</span> by taking the time to build good relationships with customers from the get-go and having them provide feedback periodically really is fruitful. This way, you can understand where your brand stands in your customer’s minds.
<span class="text-600-20px">• Setting clearly understandable referral program objectives </span>helps to drive sales and create brand awareness among existing customers as well as boosts new customer acquisitions. Setting these objectives early on will help measure the results better throughout the program’s lifetime.
<span class="text-600-20px">• Deciding what rewards would be appropriate for customers</span> before they refer someone else to your business (this includes incentives such as discounts, freebies, coupons, and more) also making sure they are incentivized enough to send their friends and family over is crucial. Offering them the right incentive is key to building a successful referral program. Common referral incentives include discounts, giveaways, coupons, store credits, freebies, service upgrades, or free subscriptions for subscribers.
<span class="text-600-20px">• Planning the types of referral rewards</span> such as you can have one-sided incentives, where you choose a reward that encourages the referrer but does not reward the referred customers.
For example: your business provides discounts for referring new customers but does not offer any rewards for existing customers who refer new customers… it’s a one-sided program!
However, you can also have two-sided incentives (reward both the new AND existing customer), then you might consider offering something like: “if you refer someone who refers someone else and so on…” This way both parties get rewarded!
<span class="text-600-20px">• Having a planned referral structure</span> plays a vital role too. When we say that every referral such as referring a friend or referring a family member and so on should be rewarded, it is the standard reward structure. There can also be a tired reward structure where your customers can receive a referral code and can have different rewards based on how many customers, they refer in a certain amount of time.
<span class="text-600-20px">• Setting clear messaging</span> with a compelling referral program design and process details helps your customers to understand the program better and make optimum use out of it. Let’s not forget that your customers will be more inclined to spread the word when they are confident about how and how much they are going to be rewarded.
<span class="text-600-20px">• Encouraging your customers to give their feedback</span> is almost as essential as the referral program itself as that is how you know where you stand as a brand and how to modify or improve or tweak the rewards in order to get better customer response.
Let us tell you why your business needs a referral program
It turns out that referral marketing is one of the most effective tactics you can use to grow your business. The primary benefit of having a referral program is that it allows you to build trust with your existing customers, which will help you grow your business. The more trust they have in your business, the more likely they are to refer others.
Did you know that referrals are one of the most credible forms of advertising?
– A study by Nielsen shows that 92% of consumers trust recommendations from friends, families and colleagues over traditional forms of advertising.
– In fact, a recent study shows that 18% of Gen X consumers say they use word of mouth as their main source of brand discovery. It beats newspapers, web surfing, blogs, and magazines.
It does not take a genius to understand that if you want to make something happen, you must talk about it. And if you want your customers to talk about it—if you want them to tell their friends, and then those friends tell their friends, and so on—you need a referral program.
It is a simple concept that people are more likely to refer a product or service to people if they believe in them, and they are more likely to believe in something when they’ve heard about it from someone who’s already trusted in your brand. So, if you want new customers, you need a referral program.
But referrals are not just going to come from friends and family! You can also build relationships with influencers and other industry leaders by creating a referral program on their websites or social media channels. This will give you access to networks of potential customers who may not know about your business yet and could be interested in learning more about it once they have been exposed through the influencer’s website or social media posts.
How are customer loyalty programs different from customer referral programs?
Customer loyalty programs and customer referral programs have become more popular than ever, as businesses try to encourage repeat purchases and word-of-mouth recommendations. But what are the differences between a customer loyalty program and a customer referral program?
First let’s talk about how they are similar, shall we? Technically speaking, they are 2 sides of the same coin, in the sense that they both reward customers for making repeat purchases. The difference is that a loyalty program is based on customers’ behavior and their direct frequent interactions with your brand, while a referral program is based on customers’ recommendations to others and in turn having frequent interactions but by different customers.
Both types of programs are an amazing way to increase your customer base, but they have somewhat different goals. Given that at Giift, we pride ourselves on our next-gen, innovative loyalty technology facilitating brands to have the best end-to-end reward programs which can be modified and customized for all your business needs.
Our rewards technology used with a loyalty program can be used to reward your customers for their repeat purchases. On the other hand, the technology can be used with referral programs to reward your customers for recommending your business to their friends and family.
The end results. Either way, you are trying to increase your customer base and total sales!
How to choose between loyalty and referral programs?
So far, we have gone over a lot of information about loyalty and referral programs. But how do you know whether you should run a loyalty program, a referral program, or both? In our professional experience we would suggest going for both for optimum exposure.
If you are in business, you know how important it is to connect with your customers on a personal level. But sometimes, the best way to do that is through rewards programs and might we just quickly give a shout out to our GiiftBox that helps you create engaging offers for your customers digitally in 3 simple steps –create, publish and validate!
Coming to the topic at hand, there are quite a few factors to consider in deciding on the perfect rewards program and our exquisite team of incredibly talented loyalty experts are here to guide you all the way. So, give a call and let us get the ball rolling, shall we?
