Any business owner knows that referral programs are the best way to gain more customers. The traditional ‘word of mouth marketing’ built the system after all.
Regardless of the type of business, referral programs help you acquire more customers along with other benefits.
In my years as a business owner, I have seen that referrals help you close a deal faster, build trust, and rapidly increase your conversions.
We have explained 13 of the best referral program ideas that you can use to improve your customer base. Before we launch into the ideas, let’s make sure we are clear on what a referral program is.
A referral program is a systematic reward system used to get people to recommend your business to other people. It is like traditional word of mouth marketing, but a referral program is more effective as the customers making the referrals gain something from the referrals made.
The rewards you give to your customers for helping you acquire new customers are called referral incentives.
These incentives come in different forms, ranging from discounts on subsequent purchases to free cash.
Referral programs are great. You not only gain new customers, but you also foster trust and loyalty in your existing customers. Your old customers keep coming back for the incentives, creating another avenue for long term revenue.
Now, you know the benefits of an excellent referral program. However, you don’t have any referral program ideas for your business. We are here to help you out of that dilemma!
These referral program ideas, selected from some of the best referral programs in 2019 and 2020, will help you get yours going.
Summary: What Is A Referral Program?
A referral program is a rewards system where brands reward customers for recommending and referring people to them. It is like a structured and incentivized form of traditional word-of-mouth marketing, where the person spreading the word is rewarded for doing so.
Let’s take a look at some referral program statistics:
Referral programs are not one size fits all. What works for SaaS might not work for a small goods store.
Therefore, we have taken the liberty of explaining the type of businesses for which each referral program idea listed below could work well.
So, lets jump right in!
Social gifting involves rewarding the referred friend instead of the referrer. Rewards do not always move people. But, gifting their friends with something thoughtful can push your referral program faster than any other idea.
Try the World used this idea for their anniversary celebration. The advocate gets to send a free box to three friends of their choice. The referrer does not get anything from this action other than the satisfaction of giving a friend a gift.
This idea will work well for a company that just wants to build awareness. If you know customers will buy your products once they know of it, you can make use of the social gifting referral program. It also strengthens the loyalty of your existing customers.
You can give out free cash to your customers for referring your brand. PayPal used this idea in their referral program. They experienced a 7-10% growth daily, which increased their customer base to over 100 million users.
While this idea worked perfectly for PayPal, you might want to take some time to think it out before using it in your referral program. Since this idea costs money, you might not want to do it for long. PayPal stopped the Refer-A-Friend bonus once they reached their target users.
If you are giving out money, you must ensure that you are using a secure referral program software. Good software will protect you from hackers. You will also be assured that you are getting good profits for the money spent.
You must understand the type of customers that your products attract before you start a referral program. While some customers will like to know what they are getting for referring your products, some customers wouldn’t mind some mystery.
MeUndies offer their customers a mystery gift when they refer the brand to their friends. The beautiful thing about this idea is its convenience. Since it is a mystery, you can give your customers anything you have at hand that you are willing to give. This referral program is one of the best referral programs for small businesses.
Discounts on subsequent orders are an excellent referral program idea for products that you know your customers will keep coming back. This idea works well for brands in the fashion industry and other industries that cater to necessities.
Amuze, an exclusive fashion store, implemented this strategy by giving its advocates and their referred friends 25% off their next flash sales purchase. You can use the approach if you want to increase the rate at which your customers come back for return purchases.
Everyone loves to do good and look good. Instead of making your referral program about your advocate and the referrals they make, you can give a gift to a charity on their behalf. This idea not only looks good for your brand, but your advocates also feel great about contributing to a good cause.
However, ensure the charity aligns with the goals and values of your brand and customers. For instance, if you sell gifts and toys for children, you can donate to a children’s charity.
Making your referral program into a bit of a game is one of the best strategies for making it work. This program involves dividing the rewards into tiers that customers try to reach. The awards get bigger as they climb the scale pushing them to do more for your brand.
As the tasks keep increasing, so does your reach. However, this idea is one of those short term referral program ideas. You might soon run out of tasks or reach your target customers limits.
“83% of online respondents in 60 countries say they trust the recommendations of friends and family”
A referral contest is not just a fun referral program idea, but you also gain much, much more because there is only one reward for the one winner.
Huckberry used this idea in a popular contest that rewarded the highest referrer with $1,000. You get people to refer your business to as many people as they know with this strategy, increasing the awareness of your business.
You can also increase brand engagement with this type of referral program idea. Ask your customers to tweet about your brand, like photos on Instagram, etc. These actions will keep your brand in mind while increasing your reach to other customers.
Information is power. You can give your advocates free information, in the form of courses or workshops, for referring your brand to someone. However, this concept will only work if the information is worth the action.
If your customers find the information unhelpful and irrelevant to your brand, they might even turn back on you by badmouthing your brand. When using this idea, ensure that your customers don’t go through a lot of hassle to refer you.
GetResponse uses this idea by giving advocates a free digital marketing course. The course is worth up to 200 dollars. Existing customers get this bonus when they refer up to 3 friends.
Subscription credit is a quite popular referral program idea. You don’t lose much when you offer subscription credit to your customers. Your customers also see it as a great incentive. It is one of the best b2b referral program ideas.
This idea reinforces the commitment of your customers to your brand. It also increases the chances of repeat purchasing. Customers use their credit to buy more from your store.
Discounted services work well for a business whose customers will always need subsequent services. It is one of the powerful referral program ideas for hairstylists. Their customers will still need another hairdo.
If the customer knows that they could get a discount by bringing a friend, he/she sees it as a good deal. Your shop gains a new customer, more sales, and almost free publicity.
“Word-of-mouth is the primary factor behind 20 to 50 percent of all purchasing decisions”
Sometimes, it doesn’t have to be a new thing. No one can resist the offer of a better version. If your business, as a SaaS or similar company, has a Premium version, you can make use of this referral program idea. You just give customers who refer a certain number of persons to your brand access to the Premium version.
Dropbox made use of this idea in one of the best referral programs in 2018. They offered customers additional storage space for every referral made. A customer could earn up to 500 MB on successful referral.
Everybody loves freebies. You can give your customers certain goods and services for free every time they make a referral. This concept works well for both small and large businesses.
You just have to carefully select the goods and services you want to give out to your customers. Pick out products and services that would not cost your business much but would be appreciated by your customers.
For instance, if you offer a free clothing item resizing in a clothing store for each referral, it might not cost you much, yet your customers would appreciate it.
Unlike the free cash idea, you instantly get your customers to give you back the money you give them with this idea. Many stores use this idea by giving their customers cash in the form of coupons that they can use to get discounts on certain products.
You can also use this concept if you seek employee referral program ideas. Your employees will be glad to get some of the products they sell while still doing the same thing they do daily. It gives them more incentives, which means better productivity for you.
Summary: Best Referral Program Ideas
Now, you have an array of referral program ideas to choose from for your program. You have to pick a referral program that suits your business and your brand. However, it is not only about picking the right referral program.
Check out this video by Partnership Playbook featuring top digital marketing influencer Kelvin Thompson on Referral Programs:
Several factors determine the success of a referral program. You have to take note of them in the implementation of your referral program ideas. Some of the factors you have to consider are;
Even if you are using an idea for a referral program, you have to align it to fit into your brand’s image.
To create enough traction and increase conversions from your referral program, you must ensure that it is easy for your customers to refer your brand.
This factor concerns more than just incentives. Ensure that your referral program flyer is beautifully designed to draw the attention of your customers.
The right referral software makes the program easy for you to manage and comfortable for your customers to join.
Summary: How To Make Your Referral Program Work?
Start by putting these factors in place, along with the right referral program idea. Are you still wondering whether to use a referral program for your business?
Let me remind you of Mark Zuckerberg’s words:
“People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral is the holy grail of advertising“
Business2Community:8 Highly Effective Refer-A-Friend Campaign Ideas
Invite Referrals: Customer Referral Program Ideas – May the Best Army be Yours
ReferralRock: Absolutely, Positively Best Referral Ideas (by Experts)
Sales Camp: 11 Best Referral Ideas to Acquire More Customers