Referral marketing isn’t easy.
Some companies like to think it’s a solution they can build themselves but the truth is, referral programs are complex.
They take a ton of effort to implement and maintain just like any other marketing platform would need.
At the same time, you know your company needs a referral program. So where do you start?
We’re here to help you out with some best practices that we’ve picked up in our day-to-day so you can start to understand the approach you should take to implement and improve your referral marketing strategy.
1. Tell Your Users
One of the most important factors for successful referral marketing is how you create customer awareness of the program.
Unfortunately, this is an area that many companies don’t dedicate enough time and resources toward. This is an effort that has to be maintained and thought about just like your other marketing efforts.
You wouldn’t create an e-book then not promote it so why would you treat your referral program that way?
- Program Placement: This is one of the core tactics to increase overall referral program participation. If your referral program is easy to find then it will increase its’ performance. Unfortunately, this is an area that many companies fail to consider. They end up burying the program. We recommend making your referral program visible in the root navigation, using banner displays and targeting happy moments.
- Happy Moments: This is when a user is most likely to give you a referral because they have just accomplished a key task within your product.This could be when a user closes a lead in your CRM or has a problem solved by your support team.
- Email Signature: An extension of this happy moment targeting is putting a referral program CTA in your email signature. Especially important for your customer success and support teams since they can reach your users at a moment where they have just had a problem solved. Increasing the likelihood the user will want to make a referral.
- Invoice Reminders: Billing isn’t always a pleasant experience to have with your users. So this is a great time to inform your user-base that they can save $ off of their monthly bill with a referral program. This can help with overall customer satisfaction and program participation metrics.
- Announcement: Take advantage of your owned media like your email list and blog. Sending out an email to tell your email subscribers about your referral program is a great way to start an awareness campaign.
- Blog Post: You can also write a blog post to tell current and prospective users about your referral program. Make sure to optimize the article for search so it can rank when people are looking for *your company* referral program. This will give your users who are looking for the referral program another easy way to find it.
2. Pick Rewards That Matter
The key here is to understand what motivates your users to make a referral then design your program to give out rewards that match their motivations. Not all users are influenced by certain types of reward structures, incentives and prizes.
- Single or Double-sided Rewards – A common practice in referral programs is to only give out a reward to the sender of the referral. We believe that this is not the right way to approach referral marketing. If you don’t reward both parties you are changing the overall motivation a user has to make a referral to their network. Double-sided programs give rewards to both the sender and the recipient. The even reward structure helps motivate users who are not looking to profit off of their personal network.
- Monetary or Non-Monetary Incentives – Choosing the reward for your referral program should not be approached simply. You need to understand what your users are motivated by and then offer prizes designed to reward that behavior. For example, they may be more interested in having access to premium features, getting company swag or even funny things like a dancing cat.
- Reward Variety – The type of rewards you offer your users is a crucial element to the performance of your program. If you can offer multiple types of rewards you can help satisfy different referral behavior. Look at how Istockphoto structures their referral program. They understand that power users have a different motivation to refer than their casual users so they designed their program to satisfy both types of users.
3. Reduce Friction
Getting your users interested in making a referral is only half of the battle. You have to think about conversion optimization, just like you do with your onboarding process.
If you make your user do unnecessary things in your referral program, you’re going to have abandonment issues.
- Auto-Fill Text: Your users aren’t copywriters, they don’t know how to sell your product better than your marketing team. Why don’t you populate some email and social templates for your users so make it easy to share the referral offer.
- Single Sign-On Social Login: Some solutions make your users jump through un-necessary pages in order to share a link on their social accounts. You need to make that process as simple as possible, we recommend using a single sign-on solution. Don’t make your user create a whole new account just to send a referral.
A company validation philosophy that has startups monitor their product adoption rates. Usually done by a qualitative and quantitative analysis of core business metrics to judge if the market is demonstrating a need for the companies’ product.
- Net Promoter Score: A basic survey to understand if your user would recommend your product to their network. Great for understanding if you’re delivering value to your userbase and if you’re ready for a referral program.
- Company health: A referral program isn’t a band-aid for a product that users don’t like. You need to evaluate if your company is growing. What’s your CLTV, MRR, Churn Rate, etc.. You might not be ready for a referral program if you’re having trouble with these core business metrics.
5. Resource Dedication
Referral programs aren’t static. A problem with the approach many companies take to referral programs is that their development team gets behind in their deadline and will skip any analytic features.
Giving marketers no visibility to the success of the program or ability to easily change design/copy and calls to action. I can’t stress this enough, you need to treat your referral program like your other marketing channels.
Your marketing team should be able to easily test different combinations of design/copy and calls to action without using development resources.
We all know development resources are strained and don’t have time to implement changes needed by the marketing team. Leaving your referral program locked away from your marketing team is a crucial design flaw.
To get the most from a referral program you need to dedicate real resources towards it. To build an in-house solution will take a significant amount of ongoing effort from your development, design and marketing team in order to keep the referral program performing month over month.
This is just like the huge effort from your design/marketing team that’s dedicated to optimizing paid ad campaigns and content marketing tactics.
Armed with these best practices above you’ll be able to understand the approach you and your company need to take to implement a high performing referral marketing program.
Image courtesy of bplanet/freedigitalphotos.net