Category: Business

Once you have created a referral program, your job is not done but only just started. To maintain the conversion rate at a decent level and to keep profiting from customer referrals, you need to take care of the referral rate. You can answer several questions about your program’s performance by analyzing this metric.

What is the referral rate and how to keep it at the right level? What is the average referral rate and how to increase yours?

Although these things are challenging, they are not impossible tasks. We have your back by providing some tips.

In this article, you will learn how to manage this aspect of a referral marketing program.

In this topic, we will discuss the issue of referral rates and best practices to maintain them at a high level. 

Play it again, Sam: what is a referral program?

A referral program can help increase your brand awareness, as long as it is designed well and with a dose of creativity. This marketing channel can bring many new users and increase the visibility of your company.

But before we get to creating one we should step back and address the main issue of referral marketing. This way, it will be easier to understand the key metrics concerning online referral marketing and how to keep them at decent levels.

Such programs work as follows: your current customers share a referral link with their friends or family. One of these referees clicks on the links and makes a purchase through it with a discount. This is how your website gains referral leads.

All in all, referral sales help you remain in the minds of your clients as a valuable source of savings, and thanks to this they may make repeat purchases.

According to this report, the average rate of converting referral leads into customers is 13%. Compared to other marketing types – email (8.41%), influencer (2.55%), or affiliate (0.5%-1%) – referrals score highly.

In other words, customer referral programs work. It is also important to add that they bring customers regardless of whether you operate on the B2B or B2C markets. 

A very important issue here is the quantity and quality of referrals. Both aspects depend on your referral methods, but let’s explain what they mean. 

• Quality referrals are based on mutual understandings – you can perceive a lead as high-quality if they maintain a connection with your brand, are able to acquire more clients, and are willing to do business with your company.

• The quantity of referrals is easy to explain – it is just the number of people who recommend you to others who become your potential customers.

Referral decisions are not very long processes, but you can make them even shorter thanks to offering good incentives.

For example, if you provide tempting rewards to your active customers then they will work harder.

Also, if you offer them to potential customers too then they will click on links with even more enthusiasm. 

What is the referral rate?

There are many referral marketing statistics that present referral marketing as a very successful and cost-effective strategy.

Thus, how to check if your customer referral programs are effective?

How to measure the referral rate?

There is a formula for calculating the referral rate, which is the number of referred purchases divided by the total number of purchases. You can switch purchases to subscriptions or sign-ups, etc. The formula is as follows:

Referral marketing stats say that the perfect referral rate is 2.3% which means that about 2 in 100 purchases are made via a referral URL. Even though this may not sound like much, it is not so easy to achieve. 

In other words, if you want to check your program’s referral rate then you should grab a calculator and go for it. It would be good if you reach a score of about 2%.

But that’s easier to say than do. That’s why it is time to discuss how to increase the success of your customer referral programs.

So how to track a referral program performance?

You can create a referral program and follow its performance with the help of the right software. With EarlyParrot creating a program will take you minutes and the tool will assist you at each step. You can integrate it with your website in a flash.

If you can not find the provider that you use, contact us and we will find a solution.

With our tool, you can customize the whole of each campaign, every client-facing page, email, and even link.

Furthermore, there’s no EarlyParrot branding to potentially confuse the user as to whose campaign it is.

Feel free to try it out!

For a complete understanding of rates in a referral customer referral program, there is one more issue to cover – the desired actions of referees. This concerns whether or not a client meets the referral requirements, such as signing up, subscribing to a newsletter, or making a purchase via a referral link. 

Now that we’ve covered the basics, it is time to focus on numbers and the rates themselves. 

Best practices to improve your referral rate

Staying at the forefront of your customers’ minds is not easy.

Additionally, gaining quality leads and maintaining high referral rates can be challenging too.

However, there is no need to worry. Thanks to the tips below you will be able to boost your referral rate like never before.

Tip #1. Spread the word

Yes, making a buzz about your business is one of the program’s main tasks. But to keep the number of referrals high, you should take care of your program awareness.

First, invite ALL of your customers, both current and past. With EarlyParrot you can do this right after you design your program.

Next, you can send an invitation to your whole customer base, which means everyone who has ever purchased from your site will receive an email. This will increase the volume of referrals and remind past clients about you.

Maybe they will feel encouraged by the incentives and decide to return along with a bunch of referred friends?

As you probably know, one referral leading to another is how the word spreads, not only about your brand but also about your referral campaigns. 

Tip #2. Send a referral newsletter

You likely use emails as a part of your marketing strategy.

If so, this is a very good decision, since more than 70% of Millennials choose this channel as their preferred method of communication with brands. 

If you deliver newsletters about upcoming releases or promotions, why not transfer this practice to referrals. It would be an excellent way to present the terms of your program, rewards, future updates.

And maybe the top referrer of the week or month?

For this person, a special reward should be to provide extra motivation for all of your customers to make some additional referrals.

To send such a referral newsletter you can use email marketing providers such as MailChimp or AWeber and check which works best by using EarlyParrot. You can track the performance of links straight from your account, allowing you to see everything clear as day. 

It’s worth mentioning that EarlyParrot can be integrated with most of the popular email campaign providers, which makes creating referral newsletters and fully automating the process even easier with this tool.

Tip #3. Cross-promote

Make use of all the channels you have at your disposal.

For example, advertise your referral program on your website, social media profiles, and anywhere else that makes sense to you.

To ensure your program is a success, you need to communicate every detail. Your website should include all of the necessary information.

So create a separate page with the terms, incentives, and deadlines. Describe and explain the whole referral process.

Keep your dedicated subpage up-to-date once it is created. Remember to note changes if they occur.

Likewise, you should use social media to promote your program. Be consistent and mention it frequently.

Alternatively, you can offer some competitions only for referrers and offer prizes directly to the winners, thereby generating more referral leads. 

Tip #4. Stay on top with reminders

It is necessary to maintain people’s interests, and you can accomplish this by sending reminders. Make use of social media platforms, emails, or even push notifications if your app offers them.

Also, you can even use SMS marketing to reach your audience. Remind your recipients about your program and encourage them to participate.

By doing so, they will feel motivated to share links.

Additionally, your brand will continue to stick in their minds for much longer so that whenever someone asks about a great company in your field, they will think of you first. Such recommendations may positively affect your high referral rate.

Tip #5. Be present offline

Referral marketing works online, but who says it can’t be promoted via offline channels? An expanded audience and a few additional referrals will result from such advertising. 

Provide some offline promotions; distribute leaflets, stickers, and some digital out-of-home advertisements.

All in all, if you want to promote your program this way and encourage people to visit your website, you should take care of making your links shorter. This way, they will be easier to remember and paste into browsers.

Moreover, such promotion will be a great support to your brand awareness, since you will show up both in online and offline channels. This will make it hard for clients to forget about you, hence it is an excellent way to raise your referral rate.

Tip #6. Offer proper incentives

At least at the beginning, you should choose two-sided incentives instead of one-sided ones if you aim to increase your referral rate. This will likely be a more engaging way of motivating your customers. It increases the chances of referrals reappearing if you reward both the referrer and the referee. The former will be motivated to make further recommendations, while the latter will be more motivated to join the program and then make their referrals. 

Increasing your referral rate requires an incentive system.

A full article on choosing the best rewards is available to you here. The topics covered include reward systems and types of rewards.

Boost your referral rate!

The success of your referral program depends on the referral rate you achieve and how many referral-driven actions your customers take. You will drive more sales and achieve higher conversion rates as more referrals lead to actions. That’s the main goal of business, isn’t it?

Hopefully, our tips have helped you understand what a referral rate is and how it works.

By following the guidelines above, you should be able to improve your program’s referral rate.

So the main takeaways are:

• remember what referrals are and how they work
• focus on communication across various channels – the more people know about your program, the greater the chances of successful referrals
• try to stay at the forefront of your customers’ minds – keep reminding them that your program is rewarding and it is worth being part of it

These aspects, along with the tips listed above, will help you build referral programs that help you earn more than ever before. Let’s hope for the best!

The market is a little crowded these days. Every day new providers are popping up, and it is harder to reach your target market. But if you run a customer referral program, it shouldn’t be a big problem. Thanks to this type of marketing, your loyal customers can spread the word about you and help you reach potential customers. 

Unfortunately, there is one catch. It is not so easy to encourage clients to participate in your referral marketing program. Although it is not a piece of cake, we have some ideas about how to inspire your current clients to act and make your customer referrals efficient.

What is a referral program?

Providing a referral program can be part of your marketing strategy. The main goal here is to let your customers make your brand recognizable. When you create a program and your customers join it, let the sharing begin. Every customer receives a referral link that will indicate how active a given customer is and how many potential customers reach your site via that URL. Thanks to referral software, you can track how many new customers come to your web via the given link. 

A referral program can be a great help with your marketing efforts, especially if you are at the beginning of your journey. It is a very cost-effective method that does not require much experience, so it is a perfect option for new companies. If you want to learn more about referral marketing, check the best practices or what are the most common mistakes, you can read about it on our blog.

Top ways to encourage your customers to participate in a referral program

Nowadays people are very busy, so it might be hard to encourage them to join one more program and be active in it. Nevertheless, with our tips, you will be able to provide a successful referral program and keep your customers motivated. Below you can find some guidelines about how to encourage your client to join.

Social proof

Steps connected with referral program promotions are not an easy task to handle. It is hard to promote a form of marketing since the purpose of marketing is promotion. Before you arrange a whole marketing strategy, you can use what you already have, i.e. customer reviews and opinions. Such content is social proof and people trust it. Almost 90% of consumers rely on user reviews as much as on personal referrals. In content marketing, social proof is a crucial aspect, but what is it in particular? The most popular types of this relevant content are:

• social media shares,
• user reviews, or comments on your website
• business testimonials
• expert recommendations
• influencer marketing

There are more types of social proof, but the above are a good start. You can gain trust by publishing this type of content and potential clients can see that real people are using your products and enjoying them. This is the first step towards encouraging people to join your program. 

Email campaigns

First, you have to inform people about the upcoming referral marketing program. Send invitations to your current customers. Even if your business is new on the market and you don’t have a huge audience, invitations will still work. A few satisfied customers sharing referrals would make a difference. Encourage them to join, present all the referral incentives to them, and describe all the rules. Don’t forget about CTAs and the link to sign up. 

After a while, you can send a gentle reminder to your client base. In such emails, you should be polite and kind. The recipient should not feel that you are imposing your program on them. It is a good idea to add a survey and ask why the client has decided not to participate. Your clients can give you a hint of what will work better if you include a referral incentive-related question in your form, and you can gain feedback to improve your referral campaign this way. To improve the conversion rate of such emails, you may offer an extra reward for completing the survey.

If you need support with your email campaigns, try EarlyParrot . It supports referral campaigns that you can design them with this tool, and manage referral emails with it too. Thanks to this software, each new customer will receive an invitation at the moment when they are the most convinced about your brand, i.e. right after subscribing or signing up. It is worth automating this aspect of your strategy in order to increase efficiency. EarlyParrot works with most of the popular email providers such as MailChimp, AWeber, and ConvertKit, so it won’t be a problem to implement this tool. 

Email signature

If you communicate with your customers via email frequently, you should take advantage of it to the fullest. Nowadays, most companies have and use their own email signatures. Why not add a referral code or link right next to it? At the bottom of each marketing email, you should place a referral message and encourage the recipients to participate. Remember that a referee can become a referrer later too, so keeping this info in your signature and using it in each email can increase the chances of that happening. 

That way, if a client chooses to join, they will find the link in each of your messages rather than just the direct invitation. 

Design a referral landing page 

Referral incentives are not everything that you should keep your customers posted about. If you have loyal customers, it is likely that they visit your website quite often. Moreover, if new clients visit your website, they tend to scroll through a lot of it. Therefore, it would be beneficial to provide all the referral information in one place which is where a specific landing page comes in handy. 

Such pages should include information about:

• referral rewards
• time frames
• referral process mechanics
• CTAs
• links to sign up
• and any other details you might consider useful for your potential users

Such a page should be coherent with the rest of your website, with the same design, colors, and font as other subpages. Content marketing works as long as you don’t deliver one long paragraph of text – you need to differentiate it to make it user-friendly. Add some graphic materials; maybe a video guide on how the program works would be a good idea? 

Stay in the loop

You should keep in touch with your loyal customers. They are the best source of referrals and feedback. In this case, you should focus on various marketing channels. Email communication has already been covered, so let’s move on to social media.

Your social media posts have great power, so be sure to use it. Via these platforms, you can stay in touch with your clients, ask for feedback, and present new solutions or products. Your social media channels’ target audience is similar to your website’s, so it is definitely worth presenting your referral program, asking about opinions, and reminding participants to be active there. They may then also help you with improving your program. 

You can also start rewarding the most engaged social media users with extra incentives. For example, instead of a 10% discount for a successful referral, you can offer an additional 10% for being active on one of your social media profiles. Establish one condition – such rewards can only be received by referral program participants. This can be a massive trigger to sign up.

Speaking of social media, promote yourself via these channels. Set up social media ads and keep encouraging users to join your program. Making noise about it is worthwhile.

Remind referred clients to become referrers

In most cases, when it comes to referral marketing, it is your loyal customers who become referrers. What about new ones? They can become referrers too. 

If you don’t send referral invitations immediately after a sign-up or subscription then you might miss this opportunity, but what if a client buys your product without signing up? You can use a referral link in your signature or start an email campaign, but if a given user does not become your subscriber then they won’t receive these messages. In cases like this, you should take advantage of thank you messages. After each transaction, send emails saying thank you for your purchase and include a message like the example below in the referral invitation:

Thank you for choosing our store. We are more than happy that you used a referral link. Do you want to give your friends a discount, too? Feel free to join us!

Just include the registration link in the email and the job is done! Start sending such messages and you’ll soon see that registrations and referrals will increase!

Choose the right incentives

You may think it’s obvious, but it is not so easy to do. After all, incentives are the biggest motivation. Your target audience’s preferences can change over time, and a free mug with your logo or discount coupon may not be enough after a while. To avoid such situations when the incentives are not a great enough motivation, you have to track your program’s performance. If you see that referral traffic is decreasing, this is a trigger to make some changes. A friendly reminder – with EarlyParrot, you can follow your programs from the dashboard and make any adjustments you need. 

When choosing referral incentives, it can be hard to read people’s minds; you cannot guess what they think or would prefer to receive. That’s the reason why communication with your users is so important. No matter which marketing channel you use, it is worth asking customers what their preferences are in this case and hear them out.

It is worth adding that even if everything goes according to your marketing plan, it is still sometimes worth changing your program’s rewards or terms every so often. If you stick with one solution for too long, people can get bored and uninterested. 

Ask your customers to join!

A successful referral program does not mean that your whole customer base has to participate in it. Of course, the more that, do the better – but take it easy. 

However, you need new referrers in order to keep your program running. It’s not a full-time job. One month your referrers may be very active, and the next month could be quite unprofitable. Finding new, happy customers should therefore be your daily duty.

The most important key takeaway from this article is to keep rewarding your clients and stay in touch with them. The customer experience is extremely crucial if you want to keep your customer base engaged. They must feel that they have an impact on the program and that their voices count. Your clients can become your referral partners, so treat them accordingly. They can be a huge help with obtaining new referrers.

Are you about to start referral marketing? It is a very good choice, since providing a referral program allows you to incorporate satisfied customers into your marketing strategy. There is a reason why referrals are often called word of mouth marketing: people talk, and you gain potential customers. Essentially, it helps to increase conversions, revenue, customer retention rates, and many other business-related metrics, making it a helpful tool for any successful business.

The decision to choose the best referral marketing software at the start of your referral marketing journey is essential, as you may struggle without the proper tools. In order to make the best decision, you should consider all the pros and cons of each available option. Ultimately, every business decision must be supported by adequate research and analysis. 

Below you will find a few tips that will certainly help you select the right tool. What features should a good referral software have? Let’s find out!

Referral and affiliate marketing – what is the difference?

Many people get confused when it comes to these two types of marketing, so here is a quick comparison between referral and affiliate marketing to be sure that we are on the same page. It is important to understand the difference, since using affiliate program software for tracking referrals might not be the best idea.

To help clear it up in your head, below you can find the major differences between affiliate marketing and referral marking:

• Referral marketing relies on happy customers and their relationships, while affiliate programs involve people with significant reach across the internet.
• Affiliates are usually paid commission, whereas a free product that is typically gifted through a referral program would not be ideal for everyone.
• An affiliate program is a business arrangement, so you usually need to provide a contract and both sides have to agree on the terms. With a marketing program for referrals, you only have to provide the terms of use and the client should always be able to unsubscribe from it at any time.
• An affiliate marketing program is more product-oriented. In most cases, affiliates provide a product review or present a service, so affiliate links mostly lead to product pages. Referral marketing can be related to many activities, such as registering on a website or signing up for a newsletter.

There are a lot of similarities between the two types of marketing as well, but let’s focus on the differences for the moment in order to cover the referral marketing topic without any confusion. First, we’ll talk about referral software.

What is referral marketing software?

A referral marketing platform allows you to create a campaign, name it as you wish, and choose your goals for starters. Then you can establish the incentives, their targets for earning them, and design the communication through the channels you prefer. Finally, you can create referral links and invite your customers to join the program. That is how any referral program software works in a nutshell.

Referral campaigns should be analyzed, and there is no need for additional marketing tools if you can monitor performance and referral traffic constantly using referral marketing software. All of the best providers offer such options, so their tools are essential not only for the creation of referral marketing programs but also for monitoring them and optimizing their performance on the go.

Who would benefit from referral marketing?

There is no set list of industries that may profit more or less than others from a referral program. This solution is for everyone – eCommerce platforms, SaaS businesses, and many more. There are also no limits when it comes to market sectors – clothing, households products, car accessories, or computer software, etc. – anything can be recommended through referrals. The only common theme that applies is a desire to have a successful business and gain more customers. 

Referral marketing is an excellent option for starters, since programs can be implemented very cost-effectively. There is no need for a separate marketing team to implement the strategy nor for IT staff to install the software, so they can be done inexpensively by the business itself. The user base does not have to be huge, it will grow by people referring to others. With a successful referral program you can drive more traffic and increase customer lifetime value by up to 25%.

How to choose the best referral marketing software?

Let’s be honest; there is no ready-made checklist for every business. Each company has different needs, audiences, and preferences. However, there are some common points that will help you choose the best option from the wide range of referral marketing tools available today.

Easy integration

Referral marketing solutions should be easy to implement and integrate with all of the apps you already use on a daily basis, like your CRM and email marketing provider. Moreover, the referral platform should be compliant with your landing page, so keep this in mind when searching for your solution. For example, EarlyParrot can be integrated with most of the popular programs and platforms, such as WordPress, Joomla, Magento, and MailChimp. It’s important to remember that the more seamless experience you provide your users, the more likely they are to make successful referrals. Connecting your apps allows you to do this and help your business run like a well-oiled machine.

It would also be a nice bonus if your chosen referral marketing software supported email list building. That way, you would be able to take care of your communication with new and loyal customers. EarlyParrot can do this, of course. 

A wide range of referral rewards

Since incentives are your choice, you can decide whether your customers receive gift cards, free products, or discount coupons, just to name a few possibilities. 

However, there cannot be any limitations in your referral program. An important factor in determining the successfulness of a referral is the type of incentive. 

Users should be encouraged and intrigued enough to share links. It is your job to pick the best possible reward for your target audience. This aspect should offer as much variety as you can so that everyone will find something for themselves. This will support not only your marketing efforts but also improve the sales cycle. 

The types and amounts of referrals are crucial, so your referral software should allow you to set up various kinds. For example, a welcome gift for new clients should be different from a successful referral gift for current customers. Although a referral campaign is very similar to a loyalty program, they are not the same. Offering one type of reward, as loyalty programs do, will not work with customer referrals. You need to vary the types of your referrals and the corresponding rewards otherwise you may not run the most effective marketing campaign.

Time to try 

Most marketing tools offer free trials, and this is the case with referral marketing software as well. You need to try out any tool before you commit to purchasing it. For example, EarlyParrot offers a free demo that you can use as many times as you wish, with the number of campaigns being the only limitation. 

So, when searching for referral tools, you may want to focus on free trials. There are often catchy headlines like 14-day free trial! or first week for free on providers’ websites. Check out their offers and evaluate them. Based on your testing, you will be able to choose which one will be the best match for your referral marketing strategy.

Remember that during such a free trial, you need to test the tool inside out. Take advantage of the trial period! Use a referral widget and try its integrations, for instance, all to make the most of that referral marketing software solution. After you have completed your test, you will be able to choose the one that best suits your business needs, and this will result in greater profits in the future. 

Data safety

There is no need to mention that the security of data is a priority for any online activity. In order to provide an effective referral program, you need to take care of safety first. When choosing software, you have to be sure that all user data is protected. Moreover, referral marketing software should provide you with fraud detection to block suspicious emails or traffic on your marketing channels. If you operate on the EU market then your referral tool must be GDPR compliant too. 

The whole process has to be secure – from clicking a referral link to joining the program. Putting clients’ privacy and security first helps to build up trust and in your business. Nobody will recommend a company to a friend or family member if it is not regarded as being reliable.

Intuitive to use 

Sometimes providers overdo with business language and their design to seem professional, but that may not actually be the case for their service. From your point of view as a user, it is very important to see the next steps clearly and know what you should type into a given text box. 

Using an intuitive tool can help save time by eliminating the need for constant rechecking. 

EarlyParrot is one such tool that provides you with support and suggestions step by step as you develop your program. Additionally, this platform will not let you click the next button until you have entered all the necessary information. Besides that, branding is another one of its great features. All your communication pages and links can be easily customized, and EarlyParrot does not display its own logo anywhere so people will know that your brand is running the referral program. Additionally, you have the opportunity to import your existing customers to the client base and invite them to join your campaign very quickly and easily. You can do this by importing them via CSV and start the marketing process immediately!

EarlyParrot ticks all the boxes! 

This tool may have the solutions to all of your problems. It covers all of the aspects mentioned above and even more below:

• seamless integration with most popular platforms and programs 
• a free demo
• fraud detection and GDPR compliance
• intuitive and user-friendly dashboard
• a wide range of referral options
• support and tips throughout the program creation process
• …and many more!

Maybe this tool is the one for you?

Choose your referral software!

We hope that by following this short yet comprehensive guide, you will be able to choose the best tool and create a campaign that caters to your customers’ needs. 

No matter if you run an eCommerce business, SaaS enterprise, or you are another service provider, a referral marketing campaign could be a gamechanger for you. But only with the right tools and some knowledge, of course. Our blog has many excellent articles, so take a look if you want to broaden your horizons on this topic!

It is common for people to recommend things to each other. It is good to hear a bit of advice from a reliable friend, especially if there is a serious dilemma. Why not make the most of this habit?

Referral marketing is a solution where you take advantage of people’s tendency to share their experiences or opinions with others. Customer referrals can bring many new clients and expand your customer base. Moreover, referral marketing campaigns are very easy to create and relatively low-cost. Below you can find out about the basics of referral marketing – what it is, how it works, and how to create a referral marketing program. You will also find here some examples of industries where the power of referral has the most potential. Shall we start?

What is referral marketing?

Some people call referral marketing word-of-mouth marketing since people are encouraged to spread the word about your product or service. A good referral marketing strategy is fundamental to make the most of your campaign. 

The referral mechanism is about building a network of loyal customers and encouraging them to share good reviews about you with their friends and referral links at the same time. What is a referral link? It could be a unique URL or code that every current customer who has joined your program has. They can share it with their friends or family, and once those potential customers use the referral links both parties can earn rewards. These may be discount coupons or free products, for example. The referral terms are up to the business provider. 

How does this form of marketing help your business? A successful referral can bring you many new customers, lower customer acquisition costs, and expand brand awareness. Referrals can bring a 30% higher conversion rate than other marketing channels. They can also increase customer loyalty, since participating in such a program gives a sense of belonging.

It is important to add that a referral marketing program is a great option for both B2C and B2B companies.

What does a successful referral mean?

To perceive a given client as a successful referral, there are a few rules to follow. First, your regular customer has to share a link; otherwise, there is no proof of them making a recommendation. The referral marketing software needs to follow this link and monitor its performance. Secondly, the link has to be used, which means a potential customer has to visit your website via it and take the desired action, e.g., make a purchase or sign up for your newsletter. Your referral link may be a direct link to the registered site or the shopping cart, it is up to you. Wherever the link leads, it should be clearly stated in the communication, since nobody wants to click on a link with no clear destination.

Also, it is essential to mention that a successful referral does not always mean a reward for both sides or either. There are various types of referral marketing programs and incentives models. You can choose:

• One-sided –  one person is rewarded. The gifted side could be either your existing client or the new one who came via link. Rewarding the former will make them more motivated and possibly result in more referrals. Rewarding the new customer will increase the chance that they finish the transaction and come back for more in the future. Nevertheless, such customers might not generate as many referrals as loyal ones.

• Two-sided – both sides are rewarded. Since you reward both the referrer and the new client, this type of incentive will undoubtedly attract the most customers. You can choose the same type of referral reward for both parties or vary this aspect as well, it is all up to you. Needless to say that motivating your clients in this way will earn you more recommendations and solidify your bonds with clients, as well as increase their loyalty.

• There is also the option of no reward, but its effectiveness is doubtful. Though people rarely devote their time completely unselfishly, this does not mean it will not happen every now and then. You can also set a target of, for example, three successful referrals to earn the reward, but it is hard to predict whether people would be willing to participate this way. As you might assume, this model will not drastically increase your brand awareness or gain you many new customers.

What is a referral program?

Loyalty programs and referral programs are similar in many ways. Every user of your website can join them. In the case of referrals, you should establish incentives and highlight a signup option on your site or send it via email to encourage them. 

Suppose you run an eCommerce business. Once your happy customers do some shopping, they will receive a link to share with others. If they share it with friends who use the link, both your customers and friends can receive gifts. To create such a campaign, you would need a referral marketing software solution. For this we have a recommendation – EarlyParrot!

What is a good referral rate?

There are a few different ways to calculate a business’s referral rate. One way is to measure the number of new customers acquired through referrals over a certain period of time. Another way is to measure the amount of revenue generated from referrals over a certain period of time.

No matter which way you measure it, a high referral rate is a good indicator that your business is doing something right. It means that your customers are happy with your product or service and they are willing to recommend you to their friends and family.

How to create a referral program – a step by step guide

Once you choose the referral program software, there are few things to do next. Before you click to create a new program, you need to think about a few aspects. First, establish who your target audience is. Then consider what type of incentive you want to offer, whether it should be a discount for your services or maybe a free product?

After such preparation, you can get down to business and start building your referral campaign. We will guide you through the process using EarlyParrot as an example.

Step one: the goal and incentives

So first you need to establish your goal. There are various options depending on the industry you operate in. Then you should focus on your referral incentives system and decide the type of them – whether they will be referral or welcome ones. You can set as many as you need. What you should do next is describe the incentive in detail and you even add an image. 

Step two: invitations

To let people know about your program you need to tell them about it. How to do so? Using social media sites would be the best option. You customers can share the news with their friends and build a social network. What is your role here? To make this social share positive, type the message they can publish. It would be easier for your users to just click a share button than design their own messages. EarlyParrot offers most of the popular options such as Facebook, Twitter, and WhatsApp.

Step three: communication

Referral campaigns should start with your loyal clients, so make an email list and tell them the news. What about email campaigns? They can be useful for making some noise about your program. You may want to create one campaign to invite guests and another one as a reaction to their participation. EarlyParrot allows you to design the messages from scratch with templates that vary depending on the email types. It is also a good idea to spread the word about your customer referral program by adding some positive reviews from your clients. This would be an additional incentive and make you seem more reliable.

Step four: the referral widget

The referral process should include designing referral widgets. A widget can be designed according to the type of share page. EarlyParrot offers many sharing options, so you are obliged to develop sections like reward widgets or activity widgets. Through these share pages, your customers will be able to spread a positive experience about your business, so each referral widget should be designed carefully.

Step five: integrations

It is a crucial aspect of making your word of mouth marketing useful. You need to integrate the software with your landing page and the platforms you use daily. Early Parrot has a wide range of available integrations, so we are almost sure you will be able to find yours here. It does not require a huge effort, just find the program and EarlyParrot will guide you through the process. It won’t take you longer than 15 minutes.

Step six: campaign monitoring

Tracking your program’s key metrics is crucial for making it successful. You have to know what’s working and what’s not. By having such information, you will be able to adjust the campaign accordingly. 

As a recap of this short guide, it is worth mentioning that the whole referral process is automated. EarlyParrot automatically detects whether new customers buy your products via recommendations from friends or if they come from organic traffic. You can make any adjustments as you need, since thanks to the dashboard you have access to each of your campaigns at any time.

Which industries can make the most of referrals?

Referral marketing is a form of marketing that can be very effective for basically any industry. Additionally, many B2B tech companies admit that referrals from their loyal customers have been one of the most effective tactics during the COVID-19 pandemic period. Few industries benefit more from referrals than others, but it is all determined by their types of consumers.

• For example, it is relatively easy for eCommerce sites to encourage people to be active participants in a referral program, especially if they sell FMCGs, clothes, or accessories. Rewards like discount codes from such industries are more likely to be used and redeemed by clients who often shop for those kinds of goods.   

• But on the other hand, when it comes to more significant expenses, people like to ask for advice and buy from a reliable source. When a discount comes along with that recommendation, it is even better. Such industries like SaaS or tech services can also benefit from referral marketing programs.

• Niche industries can profit a little more than others. Such businesses do not experience huge popularity, at least at the very beginning, which is why referral marketing comes in handy. No matter how many clients a company has, they can all recommend it to their friends. This is exactly how referral marketing works. The word is spread, and the popularity increases.
  

It is important to say that referral strategies work not only for products but services as well. There is plenty of proof of this, including the following examples of companies. So what are the most popular referral program examples?

1. Clubhouse, the latest flavor of the month. Its popularity grew beyond anybody’s expectations. All thanks to a sense of inclusivity and referrals!
2. Uber, one of the most popular referral programs. It operates in many countries, and referrals allow the app to expand its reach.  
3. Credit Agricole is just one example of how the banking industry uses referral channels to say thank you to devoted customers and reach new ones.
4. PayPal runs a referral campaign, too. This is another example of a financial app using the power of recommendation.s 
5. …and many more. Here is an article about referral programs provided by some key players, feel free to dive in.

From a customer’s perspective, a well-designed program may be a great opportunity to find new providers and save some money. According to MediaVenue, such recommendations work better than TV advertising for almost half of all Millenials. This means that referral channels really work!

How to provide a successful referral program

There is no ready-made recipe for running an effective referral program. Each business manages these issues differently, but we can provide some guidelines that may become handy.

• Focus on the user – they should be your reference point. Step into the customer’s shoes for a minute and consider which type of reward would be the best for increasing their satisfaction. A deep understanding of your target market would make your sales efforts efficient and allow you to see all the benefits of referral marketing at its finest. What else should you do to keep your happy customers around and willing to share links?

• Keep your online reviews visible. They are a powerful form of social proof, which makes your brand seem more reliable. Even if one negative review appears, do not worry. This indicates that real people use your products; you can’t please everyone no matter how much you want to. Highlight positive reviews on your website, and present some comments from social media platforms. This will encourage potential customers to purchase or do another desired action. The more social proof, the better.

• Use referral marketing as part of your whole digital marketing strategy. Create a synergy effect with social media marketing or email campaigns to make a buzz about the entire business. Compare your referral program with a loyalty program and send invitations to the whole user base. Make your strategy a comprehensive whole.

If you are interested in more pieces of advice, feel free to read this article. You will find more ways to make the most of referrals with almost minimal effort here.

Ready, set, refer!

Creating a referral program is not rocket science, but it remains some effort. Hopefully, with our guidelines, you now know what it is, how to use this tactic wisely, and what to do to benefit from this strategy.

We have shown you referral marketing in a nutshell, and it should be a good place to start with a referral campaign. Feel free to share this piece with your marketer friends and come back any time you have any doubts about your campaign!

If you are a business owner running a new marketing strategy for your company you may be interested in a referral marketing idea. We have provided some guidelines for starters that you may be interested in. But if you’re already running or just preparing to launch a program and you are wondering what are the benefits of a referral marketing campaign and how to make the most of it, you’re in the right place.

As you probably already know, referrals are a great way to boost your business. About 90% of people trust recommendations from sources they know, like a friend or family, so it would be beneficial if your users talked positively about you. After all, this form of marketing is often called word of mouth marketing. How to make the most of it?

Right now it’s not so easy to stand out in a crowded market of providers who are trying to outdo each other with their marketing ideas. So it’s definitely hard to draw customers’ attention and get them talking about your brand, but it’s not impossible either. With our tips, you’ll be able to pique users’ interest and make some noise about your brand. In other words, you’ll be able to make the most of your new or existing customer referral program. Thanks to that, you’ll be able to build long term relationships with your clients, expand your customer base, solidify your brand’s market position and increase loyalty among the users.

Ready to learn a great dose of practical knowledge?

Why is it good to have a referral program? 

Thanks to implementing a refer a friend program into your marketing strategy, you can make a huge difference to your conversions and sales. What’s also a big plus is that satisfied customers who come to you thanks to referral campaigns will have a longer lifetime value than those who don’t. In fact, this piece of research found that the CLV for new referral customers is 16% higher than non-referral ones. It allows you to expand your customer base. No need to mention that your brand awareness would be sky-high with such a program then.

When it comes to the numbers, higher revenue and ROI (return on investment) are simple facts. Just take a closer look at the Dropbox famous referral program: thanks to referrals they could have chosen to decrease marketing costs to practically zero. Moreover, there are many examples of successful referral programs that have brought countless profits to the companies, such as Uber, Google and Amazon Prime, just to mention a few. At the same time, it is worth keeping in mind that a successful referral marketing program doesn’t mean a huge investment. Comparing to other marketing channels or forms of advertising, its costs are very low.

So the question here is: what should you do to follow their success?

Put your customers first

In order for your customers to start sharing positive opinions about your company, you must meet certain conditions. First, you need to treat customers well enough for them to be 100% satisfied. Otherwise, the opinions they share may instead turn out to be negative ones. Second, remember to provide the best quality of services or products that you possibly can. Customer service and the response times to resolving any issues are also important. Anyone can make a mistake, so what’s important is to react quickly and compensate for any damage.

As you already know, communication with customers is crucial. Not only via your customer service or subscription newsletter, but also the content of your website. If its appearance doesn’t encourage potential customers to stay, then why would someone recommend you? Use colors that are neither too bright nor too bland, so the text doesn’t blend into the background. Next, it’s all about functionality: a visibly placed menu with logical and clear texture categories. It’s also crucial to have a built-in search engine that is easy to find and works properly since customers might often visit your website to find a particular product.

What’s more, the descriptions and photos of the products themselves should be made professionally: high resolution presenting the products in all their glory, and descriptions that provide real value without being overly long. They should only contain the most important information and technical aspects of the products.

Set the rewards list

If you know your target audience well then you should know what will most encourage them to participate in your program. You can vary the type of referral rewards depending on the thresholds reached by referrers, and the incentive for the new customer should also be different. It’s best to encourage a customer who is getting to know your brand in a different way to one who has been with you for quite some time. For new customers, free stuff for orders – e.g. a bunch of samples of your bestsellers or travel-size testers and other travel gifts– would be a good choice. The rewards might also include free ebooks demonstrating how to make the most of your products, or standard referral discounts codes – after all, everyone likes to save money.

For current customers, as you might expect, cash reward also comes into play. A good option would be for them to collect points, a greater number of which can be exchanged for prizes of increasing value. This would be an extra incentive. In this way, everyone will be able to decide for themselves what they will find most useful. Variety is a good solution when it comes to types of referrals and their rewards.

It’s vitally important that you contact users when they are most convinced about your brand, i.e. right after shopping or setting up an account. Whether they reached your site directly or via a referral link, you should invite them to join your refer a friend program. The more, the merrier, right?

Choose seamless referral program software

The tools you use are crucial to getting 100% out of your work. This rule applies to most activities, including marketing. So how do you choose the best referral platform? Check out EarlyParrot. In order for your plan to run well, your referral program software should be easily integrate with other platforms and tools you use. EarlyParrot has a very long list of available integrations from WordPress, through Shopify, to MailChimp. Moreover, if you do not find your platform on this list then you can contact an EarlyParrot rep who will try to find a solution.

Moreover, the installation process should not be an Enigma. With EarlyParrot, it definitely isn’t, as the whole easy and intuitive process takes less than 15 minutes without any IT knowledge required. Once installed, you can integrate EarlyParrot with your landing page and start creating an effective referral program.

This doesn’t take long either, but you must be clear about what you want to achieve, what incentive you wish to set, and who you wish to reward. Each step is clearly defined, and the referral software won’t let you publish an unfinished program. It checks whether everything is fine and highlights any aspects that need improvement before letting you go live.

What’s more, EarlyParrot supports the whole communication across various channels. You can set up email templates, posts on social media, and all client-facing pages. Plus there’s no EarlyParrot logo, so you can be sure that all users will be able to identify your brand’s referral campaigns.

Present customer feedback well

When users are searching for the right products online, they very often look for reviews about them. Therefore, you must ensure that all loyal customers reviews are well presented on your product pages. You shouldn’t be afraid of negative reviews if you do get any, as positive ones will neutralize the tone. Opinion-forming portals like industry forums are also important. A good solution is to combine the power of recommendations from friends and influencers, i.e. affiliate marketing. 

Imagine a situation when a potential customer is trying to figure out what product to choose from in a given category and from which store to order. The client is looking for information on the Internet and finds a YouTube video about one of the products under consideration. The video is almost enough to convince the customer, but for them it’s still worth asking a friend who can be trusted more than the influencer. The friend also recommends that product and offers a referral link. The only dilemma the customer faces is which link to choose, the affiliate or the referral link. Spoiler alert: the referral would probably be chosen because a relationship with a friend is stronger than that with an influencer. Recommendations from friends are type of social proof, this is one of the advantages of referral marketing over affiliate marketing.

As you can see, synergy effects are crucial not only in sales but also in marketing. Therefore it can be very beneficial to use the power of double recommendations.

Keep testing

When it comes to working with people, remember that there is no such thing as a permanent solution. Preferences change, and so do your target audience or market trends. It’s very easy to track the effectiveness of referral marketing strategy, so it’s definitely advisable to do so. With EarlyParrot you have all of the most important metrics at your fingertips. You can see how many clicks a given link received and whether those clients shared them with the same enthusiasm at all times. You should bear in mind that offering the same referral reward for an extended duration may not prove successful in the long run. Play around with your rewards, perform A / B tests to make comparisons, and ask your clients for feedback via email surveys.

Keep your finger on the pulse and always be willing to check and change. Run end-to-end tests when necessary, too. This is the shortest recipe for success, and it basically always works.

Over to you

Referral marketing is often an underestimated solution, since a well-made program will essentially drive itself as happy customers recommend your products or services to each other and the word continually spreads. Even though it is based at customer relationships, great deal of the scope and effectiveness of these activities depends on you. In order for people to want to share positive opinions about your brand, you must have something to offer them and a USP they can talk about. Whether that will be great discounts for customers, a wide range of available products, or incredibly reliable customer service – standing out is your first assignment. 

The next task is to choose the rewards. Few people are willing to do something for free, which is why they are so important. The referral program software is another aspect that is important for your refer a friend program to run smoothly and for staying in touch with clients. The chosen referral marketing software should also allow you to monitor the performance of your program. Speaking of performance, leverage the magic of synergy and put some effort into presenting client’s recommendations or cooperation with influencers well. Doing so can only boost your referral marketing results.

Last but not least, keep your finger on the pulse. You need to stay up to date if you want to be sure that the referral strategy is working. That’s why you should continually track the performance of your programs and make any necessary changes. Only this way will you be able to maximize the full power of referral marketing strategy.

Referral marketing works. After all, 78% of B2B advertisers say that this form of marketing provides good-quality leads. So it’s worth the effort, even if there may sometimes be bumps along the road. Many new referral marketing enthusiasts believe that all you need to do is offer an appropriate incentive and everything will work out. That may well be so, but unfortunately, in most cases, it’s not enough.

So what should you do when such a seemingly easy marketing strategy isn’t going your way. Take a look at those who are ruling in this regard – it’s best to learn from the masters. But beware, it’s worth keeping in mind that all customers are different depending on the sector or type of products/services you provide. Thus, not all activities may be perfect for your business. It might be worthwhile analyzing the activities of the big players on the market, yet perhaps not worth copying everything one-to-one.

But let’s start from the beginning, why is referral marketing worth considering?

Why is referral marketing such a game-changer?

The main reason is simple. It doesn’t require much input but it provides great benefits. Compared to other channels, referral marketing leads convert up to 30% better and have a 16% higher lifetime value. So if you are searching for a long term solution that will improve your business performance, you should take a closer look at referrals. Besides, referral marketing is quick to implement and very easy to track. Thanks to links or codes that you can give your clients to share, you can follow all statistics and check what works best for your target audience. You can also play around with the rewards. Some may work well but others less so, hence this is also important knowledge to have when running such programs.

So let’s take a closer look at some of those who are masters of referral programs. 

#1 Dropbox

Dropbox is one of those programs that first comes to mind when someone says “referral marketing”. No wonder, since they are killing it. Dropbox is a file storage and transfer service. It has been offering a referral program for a long time, in which the reward is an additional 500 MB storage for both the referrer and the new client. For Plus and Professional users, that amount is 1 GB. 

What has Dropbox gained thanks to the referral program? It increased their number of new user registrations by as much as 60%. And it wasn’t just a one-off increase; it has been a continuing trend. As a result, Dropbox’s marketing costs could basically be reduced to zero. Instead, they offer clients additional storage space for their files. And as we know, you can never have too much of that. As a result, this offer is subsidized by the company, but keep in mind that the customer does not really gain extra space for free as it appears. They bring a new customer who may invest even in the most expensive versions, you never know. So, as you can see, the company is gaining a lot. It has been running this program for a decade, so it definitely pays off for them.

What can you learn from this case? A reward doesn’t always have to be a discount. You can offer your products, part of your service, or even a subscription (e.g. a week of paid subscription for free). It’s important that both parties feel that they benefit from this interaction and that the choice of offer hits the mark.

#2 Uber

Uber is an application that allows users to reach their destinations quickly and safely. From the moment of setting up, each client has their own personalized code that they can share with friends. Each time such a code is used, both parties receive a free or discounted Uber ride.

Uber was in some ways revolutionary for its time. It was perceived as a kind of upgraded taxi that you didn’t have to catch at the roadside, but would be waiting for you outside to take you to your destination. The advantage of Uber over taxis was not only the application, but also the price in most cities. In order to gain popularity and stand out in the minds of customers, it had to offer something extra. And that’s what Uber’s referral program turned out to be. Who wouldn’t like to take advantage of a free ride? They not only gained new customers, but also managed to complete the business model in just a few months.

What the example of Uber shows is that referrals are not only a way to attract new customers, but also for the business to stand out. Currently, Uber is available in 85 countries and serves 5 billion rides worldwide each month. It could be said that some part of this success (possibly quite a lot) is due to their referral program.

#3 Airbnb

Airbnb is definitely one of the largest portals that every vacationer looking for a place to sleep should visit. It was created by people for people, which means that private property owners make their apartments available to personal travellers who want to spend some time in another location. If a place turns out to be worth recommending, why not suggest it to friends who will be going on vacation? Airbnb has recognized this logic. After all, travel and accommodation are important issues that many of us consult with our friends or family about. 

At the outset, Airbnb simply offered a referral reward without any particular rules. However, after some time they noticed that the recommendations were quite profitable. That’s why an entire program architecture was created, and is now used by millions of its registrants. Therefore, a referral email campaign was created via which users could send invitations to their existing contacts.

Currently, each member of the platform can collect Travel Credits. How? New clients register with a referral link, make a successful booking, and stay. Of course, provided that the referrer is not the host of the place where the booking is made. The maximum Travel Credit is $5,000 per user. Such a program pays off for the platform, because more bookings are made with referral links than without.

What does the example of Airbnb teach? First recommendations should be appreciated. Even if you don’t have a program, clients may still recommend you. Second, the program has to evolve over time. Airbnb started with an email campaign, but now each customer can share a referral link. It’s important to test the implemented solutions to be sure that they work without any problems.

#4 Amazon Prime

Amazon is a giant on the eCommerce market. And for all the possibilities it provides, it doesn’t offer very big rewards. Nevertheless, even such a solution brings benefits. How does the Amazon Prime program work? Prime membership is the natural choice for many Amazon members, which was the retailer’s intention. Any Amazon Prime member can invite their friends to create an account, as long as they don’t already have one or belong to Amazon Student. 

How is the whole procedure completed? The new customer has to click on their referral link, create an account, and then make a purchase within 90 days of doing so. In order for the referrers to receive referral credits, the order can’t be cancelled. Referral credits are automatically assigned to the account and can then be used to pay for orders.

Amazon proves that a referral program is also an ideal solution for eCommerce. If you build a brand for yourself and gain loyal customers, they will recommend you further and you will gain recognition. Who knows, maybe you will be as successful as Amazon one day?

#5 Google

Referral marketing is so popular even Google is investing in it. You’re probably wondering how it works. After all, you wouldn’t invite your friend to use a browser that everyone has access to. The referral program applies to Google Apps for Work, i.e. for business customers. After joining, each customer receives a personalized link that they can share to receive $15  for every account that is created using it, and Google will transfer this money immediately to the referrer.

Google shows that business clients also like to share their opinions and recommendations, and Google uses these habits to expand its audience. Although you may wonder whether a giant like Google needs to build loyalty among customers, as you can see it’s worth taking care of such aspects regardless of the company’s size.

What should you learn from the market leaders?

What are the lessons for the future? We’ll add one: before you start thinking about your program’s details, find the right software that will provide you with a fast and error-free development process. EarlyParrot has got it all. 

Installation takes 15 minutes, and the platform itself integrates with most providers, such as Shopify, WordPress, and Joomla. The creation of a program is also very intuitive. EarlyParrot guides you step by step and shows you aspects that still need to be completed. It’s a very good tool for both beginners and advanced marketers. If you’re interested in more of its benefits then read about them here. 

You can also learn a lot from the examples above. First, referral marketing program is a good idea for both online stores and service providers. Regardless of whether you operate in the B2B or B2C market, such a program will work for every type of customer. Second, creating a referral campaign isn’t the end – it’s just the beginning. It has to adapt in order to be a success, otherwise, customers will stop finding the rewards valuable. Remember that competition is growing all the time, so you need to stand out to attract customers and to keep them engaged. 

The last lesson you should learn from this text is that referral marketing allows you not only to expand your customer base, but also to develop your business and push it forward. Perhaps, just like Dropbox, you will save a lot of money on marketing to spend on achieving other strategic goals that you’ve set for yourself. Of course, referrals are all about clients, but remember they are the promise of growth. The more you look after them, the brighter the future will be for you.

Are you encouraged to start your own referral campaign? We have prepared some tips on how to start one. Feel free to be inspired!