A common problem customer referral programs make is only rewarding one set of users. In this section we go over the benefits of one-sided and two-sided reward systems.
Hi, Welcome to another session on customer referral programs. Today we’re going to talk about who you should reward in your customer referral program. When lots of people are starting out, looking to build a customer referral program, one of the questions that comes to mind is who should I actually reward, and there’s two major options on the table, you can either reward just the person making the referral, or you can reward both the person who is making the referral, and the person who completes the desired action of yours.
Dropbox Referral Program Example
This is much like the dropbox program you’ve seen, whereas the first is just like the groupon referral program you may have seen. When we’re trying to determine who we’re going to give this prize to, we can look at some data, and one of the commonly referred to studies looked at what reward is more likely to actually get a referral made. What they found was there’s a difference between weak and strong brands.
Weak and Strong Brands
So, if you’re a weak brand, there’s going to be an answer for you that’s a little different than if you were a strong brand, and before we go into the details as to what works for who, is that these charts are going to show us the likelihood of making a referral, they don’t talk about the likelihood of a conversion. If you’re a strong brand, you’re a brand that people are eager to wear on their chest, you’re a brand people are happy to tell their friends about because they associate with your brand, they think your brand adds something to them.
Know Your Brand Equity
If you’re a weak brand, you’re not a bad brand, you’re not a disliked brand, you just aren’t a brand that people are already wearing the t-shirt with pride, you’re a brand that’s a little more quiet and a little more subtle. For strong brands, you’re actually more likely to get referrals made when you reward both parties, so that’s me the referrer, and the referred person, reward both of us in a referral program, and you’re more likely to get me to make a referral.
Who to reward?
However, if you’re one of those weaker brands, you’re actually better off to reward just the individual making the referral. Now, like I said, this is if we’re trying to determine who is going to make the most referrals. The counter to this is though, and unfortunately this comes up to a little bit of your own testing, that while this is going to increase the likelihood of a referral, it doesn’t talk about the conversion. In our personal experience, we see the conversion is higher when there’s a prize being given to the other side as well, to the referred user.
As much as there’s this great data to talk to us, that you’ll probably see all over the web if you start looking, about what’s most likely to get a referral, if you’re looking for conversions, in our experience, we still see the highest way to get conversions is to reward both. That wraps up our session on who should I reward in my referral program.