21 Ways to Improve Your Customer Referral Program
It’s a simple fact - Referrals create successful companies.
Whether it’s a tech enterprise or an accounting practice; referrals have always been an important source of new customers.
The returns generated by referral marketing have been established in notable studies by Wharton, HBR, Forrester and Nielsen. Highlights of the reports show that the use of referral incentives creates additional revenue and extends customer lifetime value. (Research links at bottom of article)
We’ve also seen that automated referral marketing systems have been a key driver of growth for several tech companies like Dropbox, PayPal, Uber and Airbnb. Their investment in building software to promote and manage their customer referrals helped them scale up to the millions of customers they have today.
All of these factors combined to generate demand for software vendors to support referral marketing automation. Over the past 10 years we’ve seen referral marketing emerge as its own software category. With Referral SaaSquatch and a healthy competitive field leading the way to help SMBs and Enterprises unlock new customer revenue with referral marketing practices.
Though I’m not here to educate you on the value of referral marketing. That’s been well established.
My goal for this article is to show you how to improve your existing referral program.
Giving you direct examples of how companies are using In-App Marketing, User Experience and Personalized Onboarding to squeeze more results out of their programs.
Referral Program Discovery
One of the essential elements of a referral marketing program is how you get it in front of your customers. Like your SEM and Inbound campaigns you need to be constantly experimenting and finding new ways to get results. Of course you can spend a lot of time experimenting with program structure like reward types, reward amounts and required actions.
But that structure is only one pillar of a successful program. Experimenting with program discovery like app interstitials, behavioral email and navigation placement are all proven ways you can boost engagement with your referral program.
This is an area that many companies target with their automated referral programs as it focuses on your core customers that are more likely to make a referral. They're going to be signing in and using the product so you can promote your program with a variety of dashboard notifications, interstitial banners and navigation placements to get their attention.
Dashboard Notification - Airbnb
Main Navigation - Hubstaff
Web App Menu - Shoeboxed
Targeted Interstitial Banners
Uber Mobile Interstitial
In this example Uber has geo-targeted and time-based interstitial banners that pop up over the main map experience. They are using different headline copy 'Unlock Free Rides (Up to $20 Off)' versus 'Save up to 20% for a Limited Time' to pique the interest of their customers.
The banner on the right is trying to get users to use their other Uber experiences like uberPOOL, uberX and uberXL as well as using 'For a Limited Time' in the headline to give users a sense of urgency. Where the banner on the left is appealing directly to a users' financial motivations with the 'Up to $20' reward directly in the headline.
Airbnb Web App Interstitial
Mobile App Main Navigation
Uber Menu Referral CTA Experiment
In this example Uber is experimenting with a different text CTA in their main navigation. Rather than using standard 'Share' CTA, Uber is experimenting with a more direct Free Rides CTA to pique their customers' interest and boost initial engagement with their referral program.
'Share' is a strong CTA for different content, but a referral program can appeal directly to the value prop of the program. IE the rewards you're offering. CTAs like 'Earn X' 'Free Rides', 'Give X' are more clear and give the customer an idea of what to expect when they click the button.
Aligning Your Referral Reward With Your Customer Persona
Depending on your target customer they’re going to have different reasons to make a referral. Some will be motivated by cash and some will be motivated by seeing your company succeed regardless of the type/size of the reward.
Appealing to Altruistic Motivations
Where a customer cares about your product and sees an inherent value to share the product with their friends. A personal experience is more valuable than cash. Handwritten letters, company swag and exclusive event invites are some reward types to consider. Examples can be Not-for-Profits, Health and Wellness Industries and Beta Software Products.
Appealing to Self-Driven Motivations
Where a customer cares more about their reward than your company’s overall benefit. Using their close-tie and weak-tie networks to get the most out of the reward program. Examples can be E-Commerce, Telecom and Marketplaces.
Your program will need to have a strong security management layer when trying to appeal to this type of behavior. As a few bad apples will look to find holes in your program's logic in order to earn more rewards. Restricting the required action to further down the funnel IE purchases vs sign-ups is one way to naturally deter this behavior.
Personalizing the onboarding step can unlock more conversions for your referral program. Pulling in the referrer’s profile image and first name gives the friend a personal onboarding experience that improves signups. For example, Airbnb has seen a booking increase of 25% by using personalization in the onboarding step of their referral program.
Referred Customer Landing Page - Airbnb
Referred Customer Landing Page - Postcron
Referred Customer Landing Page - Unblock-us
Once a customer has made a referral there’s an opportunity to increase the amount of referrals they make. Sending behavioral emails based off of actions taken with the referral program can increase the virality/share rate of your program. For example, asking your customer to make another referral after they earn their first reward.
Behavioral Emails from Tile, Snapwire and Ghost.
HBR - Why Customer Referrals Can Drive Stunning Profits
Nielsen - Global Trust in Advertising