Sitting around hoping that customers will refer your business to their family, friends, and online network isn’t an effective digital marketing strategy
— but setting up a referral marketing program is! When you have a product or service that impresses customers, they’re willing to spread the word (especially when given the right motivation).
Jump into our beginner's guide for starting a referral marketing program to increase brand awareness and grow your business.
How to Set Up a Referral Marketing Program
Referral marketing is a cost-effective way to acquire new customers, as your existing customers are doing the marketing for you. While referral programs look different for every business, here are essential components to generate successful results:
1. Define Your Goals
Before you start setting up your referral program, you need to define your goals. What do you want to achieve with your referral program? Do you want to increase your customer base, boost sales, or improve customer loyalty
? Defining your goals will help you design a program that is aligned with your business objectives.
2. Offer an Enticing Reward
Your referral program needs to give rewards that are enticing to customers and match their motivations. Brainstorm rewards that customers would benefit the most from.
Examples of rewards:
- Free product or sample
- Discount or coupon
- Account credit
- Free access to a paid feature
- Exclusive access to new products/services
There are a variety of rewards, so make sure you select the type that is right for your business. Additionally, keep in mind that different rewards work for different customers — this is where A/B testing helps to figure out which rewards resonate best with your customers.
3. Determine Your Referral Process
How will your customers refer their friends and family to your business? You need to decide on a referral process that makes the most sense for your business. Some companies use referral codes, while others use referral links or email invitations.
4. Make Sure It's Easy
Customers shouldn't feel like they have to jump through hoops. Make it easy for them to sign up, share, and promote your product or service via social media
, email, SMS, etc. The referral program should be as seamless as possible so customers are not only more likely to complete the process but do it again and again.
5. Have Compelling Messaging
The next thing you’ll need to do is nail down the messaging. This will inform all aspects of your content strategy, from the website
and email marketing campaign to social media posts and PPC advertising. Compelling messaging is crucial for getting your audience's attention and driving participation.
6. Create Your Program Landing Page
Your landing page
is where your customers will go to learn about your referral program and sign up. It should be visually appealing, easy to navigate, and have clear instructions on how to participate in the program. Make sure to highlight the incentives and the benefits of participating in the program.
7. Promote the Referral Program
The next step after you’ve selected an enticing reward and created strong messaging is to share your program with your customers. There are many ways to promote your referral program:
- Post on social media
- Create content (e.g. blogs, videos, graphics)
- Add a website popup
- Send email and text message reminders
- Publish a press release
- Mention it to customers directly online, on the phone, or in-person
- Include a note in all of your delivered packages
Your customers consume information in a variety of places, so it’s important to promote your program through different channels. By increasing awareness of your program, the more referrals you’ll receive.
8. Leverage Your CRM
Using a customer relationship management
(CRM) system allows you to set up automated emails so customers and referrals get their reward in a reasonable timeframe. When they have a positive experience, they’re more likely to participate in the referral program again in the future.
9. Analyze Results
After you’ve launched the referral program, analyze the results to see if there are any issues that need to be fixed. Run tests, analyze data, and smooth out any kinks to improve the program’s effectiveness.
When you don’t take the time to do some testing and analyze the results, you can miss insights like which incentives work better than others, messages that got higher response rates, etc.
10. Optimize the Program
Simple changes can significantly increase referrals. However, not optimizing your program can cause a negative experience, which isn’t something you want to happen. In addition to optimizing the referral process so you don’t frustrate customers, it’s important that you respond in a timely manner and follow through on your offers.
Supercharge Referrals for Your Business
Referral marketing is a powerful tool for any business looking to grow their customer base. To set up a successful referral marketing program, you need to have a product or service that your customers are happy with, followed by a clear process and desirable incentives like discounts, free products, or other rewards.
Editor's Note: This post was originally published in June 2020 and has been updated for accuracy and comprehensiveness.