Customer Experience

11 ways to improve your customer referral programs

Word of mouth marketing is critical to lasting and meaningful success. Take a look at these 11 tips and tricks to optimize your customer referral program and grow your business in the experience economy.

Word of mouth marketing is one of a business’ most important and powerful tools.

It drives $6 trillion of annual consumer spending, accounts for 13% of consumer sales, and people are 90% more likely to trust and buy from a brand recommended by a friend.

With new technologies and platforms coming to market, organizations have an unprecedented opportunity to leverage word of mouth marketing - sometimes known as referral programs.

To help you capitalize on this opportunity, Chanty outlines the DOs and DON’Ts so that you can make the most of your referral program.

1. Cash Rewards vs. Discount Incentives

When rewarding advocates, it can be tricky to decide between offering cash or discounts.

If customers are more likely to make repeat purchases, go for discounts since it will motivate them to buy more.

If your advocates aren’t likely to make another purchase then offer a cash reward instead so that they actually take interest in the referral program.

Some companies that take pre-orders offer discounts on the existing preorder. This can be a great way to bring customers into the program and motivate them into making referrals.

Whichever you pick, ensure it’s the appropriate reward for your target advocate.

2. Flat Discounts vs. Percentages

The debate on whether to offer discounts in a flat number form versus a percentage has been going on for as long as anyone can remember.

Ultimately, it comes down to the price of the item that you’re discounting. If it’s an expensive item, such as a laptop that costs $2,000, then offering a flat discount like $200 would sound better than saying 10%.

The inverse becomes true with cheaper items. If you’re selling a hoodie for $50 then it would be more attractive to pitch a 20% discount rather than saying $10 off — which would look like a trivial amount to someone who’s buying a hoodie at that price point.

3. Target Past Customers

Existing customers are far more likely to become an advocate, and they’ll stay in the program longer than someone who was unfamiliar with your brand prior to stumbling upon the various referral incentives. Why? Because they already like your business.

4. Make Referring Easy

Customers will be more willing to refer people to your brand if the actual act of referring is straightforward and easy.

Start by ensuring your referral program supports multiple sharing methods. Emails and social media marketing activities, such as consistently publishing posts, are two of the most common forms of referring Make sure you’ve also the ability to track offline referrals - this gives advocates the means and incentive to pursue more customers.

5. Find an MVP

If you have a CRM use it to find your most valuable customer. Once you pinpoint that special someone, reach out and build a relationship with them. Bear in mind the person you’re speaking to is your top customer for a reason.

People who have stuck with your brand for years and are a consistent buyer will have the passion required to pitch the company in a way that will really hit home with new customers. Lastly, the final piece to the puzzle is an incentive that will push them into advocacy.

6. Don’t Be Too Assertive

No one wants to see a brand that prioritizes referrals and sales above consumer relationships. It may seem counterintuitive, but less pressure can actually yield more results.

7. Ask At The Right Time

When you ask is just as important as how you ask. The best time to convert a customer into advocacy is after they’ve already checked out since it ensures that they won’t cancel the purchase.

People are also in a good mood after they’ve just bought something due to the phenomenon known as “purchase high”, which will make them more agreeable and willing to be an advocate for your brand.

It makes sense since if your funnel was good enough to convert a site visitor into a customer, they should already be in the mindset needed to become an advocate as well.

Putting your referral program’s CTA in the email receipt and thank you page will yield the best results.

8. Start Soft

One of the easiest ways to boost signups to your referral program is to start things off with a questionnaire. Ask questions like how positive their experience with the brand was and whether or not they’d be likely to refer your company to a friend.

Once they’re in the mindset of “I like this brand” you can share a referral form. All customers need to do at this point is enter the email address of one of their friends and voila, you have a new advocate who’s just made their first referral.

9. Reward The People They Refer To

You should also provide incentives to those that have been referred. For instance, you could give a discount coupon to both the advocate and the friend that they invited.

This will also take out the element of shame people feel when sending referral codes to their friends since it’s actually a mutually beneficial endeavor at this point. Finally, it will increase the odds that the person they refer to your brand will end up as an advocate down the road.

10. Analytics

One of the best ways to keep your advocates motivated in their hunt to find new customers for the brand is by showing them how good they’ve been doing over the past few months or years. You can do this by setting up an official referral dashboard that tracks their milestones.

Some of the key metrics you should display are how many referral emails they’ve sent out, how many people actually signed up after their referral, and finally, the total amount of money or discounts that they’ve earned through the program.

11. Get Feedback

The best way to optimize your referral program is by getting feedback from your advocates using feedback tools. Those on the front lines are the ones who’ll be able to give you the valuable insight needed to get the best bang for your buck when it comes to obtaining more customers.

Growing through referrals

Setting up a referral program helps customers become a means of lead generation for your business. If you put some of the tips that we’ve covered in this article into practice then you’ll be set in no time.

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