Referral marketing is a powerful tool that can help businesses increase their customer base, drive sales, and boost revenue.
A well-designed referral program can incentivize your current customers to refer their friends and family to your business, increasing brand exposure and a larger pool of potential customers.
You might have already begun and are at the stage to exponentially grow your consumer base but without spending fortune on marketing.
And hence, if you are looking towards referral marketing or programs to make that happen.
You are at the right place! And you are not alone.
Raising millions of dollars for small businesses isn’t a practical way to go. They don’t have this flowing river of cash to back their business.
Bringing customers becomes a huge challenge without spending a lot on customer acquisition and marketing.
Referral marketing is the most effective, reliable and sure-shot solution for bringing customers without larger investment.
What is a Referral Program?
Before we move on, let’s get a quick overview of exactly what a referral program is and how it is important for small businesses.
Referral program is the protagonist of your referral marketing strategy. Referral marketing is basically a marketing strategy where business uses their customer base as their brand advocates to gain more potential customers.
Referral program is a process in which you reward your customers for spreading the world about your product or services and bringing in potential customers.
Referral programs is an ideal marketing strategy for small businesses because for following reasons :
- Referral programs encourage customers to promote your product through word-of-mouth which is one of the most powerful marketing strategies ever.
- Word-of-mouth becomes limited without creating a reward system within, so the referral program helps you to bring the greatest potential of word-of-mouth marketing for your small business.
- It is best for the small business who don’t have a lot of cash flow in their business or huge budget to influx cash for marketing.
- Referral programs make your word-of-mouth trackable and manageable. You can optimize it to make it better for you.
- Referral programs help in generating great brand awareness if not anything which is the best marketing strategy gives you.
- Referral programs also help you drive repeat business. It also retains customers for the longest time as you are benefiting the customers with your product as well as the rewards.
Best Referral Program Examples And What To Learn From Them
Airbnb
Airbnb brings a unique referral program that took the concept of social proof to another level.
They create a referral program to help both people who want to rent their properties and people who are looking for a place to stay.
Their referral program encourages both the host and guests to invite their friends to use Airbnb services.
Airbnb has integrated the code into the user’s account. Whenever a user refers a friend to Airbnb, they get this option to invite them through email.
The referrers also can share the links encouraging their followers to use the Airbnb services. So, Airbnb tries to generate their sales through offering benefits to referrers and referees.
Airbnb has one of the best successful referral programs in the market that generously benefits all the parties involved when they seal a deal.
What To Learn
- Create a referral program that benefits both the referral and referee.
- Consider offering various rewards for different sets of actions to encourage users to do more.
- Prioritize the actions which are most important and associate generous awards for it.
- Utilize the social proof factor in optimizing referral programs.
Scribe Writing
Scribe Wiring is a book publishing company that makes it quite direct with their referral program. They offer $2,000 for every referral.
The company targets the authors who want to publish their book. So any author who has published his book can further refer to other authors.
If they go for their services, referrers get $2,000 in cash or get credit of the same amount to their Scribe writing account.
The company also gave a third option to their referrers where their referral money will be donated to a charity.
Using this referral program, they encourage authors to get another. Basically, they are leveraging the network of customers to get more authors to publish with their publication house.
The referral reward money here is quite significant to push boundaries for.
It also works great because if an author gets their book published, and they recommend the services to others yet to become an author.
It is more likely that they are going to consider their suggestion seriously due to the trust they have on other experienced authors.
What To Learn
- The idea of getting real cash with a referral reward program is compelling enough, so use it, if you can.
- Leverage customer’s close network to sell your product, especially when it is a profession or skill-related business.
Paypal
Paypal offers a refer-a-friend program literally giving out free cash to the referral and the referee as well.
Not just that, they also offered their core products to them for free to use. It is again, one of the most popular referral programs in the market to learn.
Their referral program gained them dramatic success over time. The daily growth rate increases 7 to 10% with boosting their user base to over 100 million.
The referral program helped them achieve over 100 millions users just within 2 years of launching their services.
David Sacks, COO of Paypal said that their company is literally paying their users to invite their friends to use Paypal.
Another great example of cash reward in a referral program, and that too so successful that it gave better ROI than any traditional marketing methods.
What To Learn
- Free cash is one of the best referral rewards to offer your users.
- Use a refer-a-friend program with an attractive direct reward and it might work to gain you more consumers quickly.
- PayPal managed to throw cash on their users to make them refer their friend because they have cash flow in their business. So it only works if you have enough money to spend or if it is part of your business as it is for banking and finance companies.
Tomlinson Bomberger
Tomlinson Bomberger is a company that offers services like lawn care, landscaping and pest control to Lancaster.
Their referral program starts with telling people that their business has grown so much with the referral their customer brought.
So that’s a positive and community-focussed attitude to address the potential referral program members.
They create an image of how referring your friends will be your friends only, developing a sentimental value to the referral program.
Everytime a user refers to their friend, and they qualify the purchase, the referrer is rewarded with $50. And it goes with every time their referral makes a purchase.
They also offer a form to fill making it easy to refer asking your information along with your friends’.
What To Learn
- They made their referral program easy to understand and execute for their customers.
- Their rewards were tempting enough to motivate their customers to bring referrals for their brand.
Google’s referral program focussed on their G Suite programs which targets business professions.
They have various applications with this G Suite program. Their G suit program includes Gmail, Google Drive, Google Sheet, Google Sliders and many others.
This program helps business professionals to help their business scale on a larger level. It helps in administration, management and other aspects of business.
Google wanted this G-suite program to get to the online businesses.
So they created a referral program to attract businesses to recommend G suit to their fellow businessmen.
It is again to leverage a network of a professional as their recommendations are more credible and more likely to convert.
Businesses get their own referral link when they sign up which they can further share to refer about the services.
This referral program gets the benefit immediately to the sender as they receive reward money for bringing new customers.
The amount varies depending upon what type of business program they have opted.
For example, A referrers can earn $15 for every successful recommendation for their G suite Basic program whereas for their G Suite Business plan, they can earn $30 per person.
Google allows a maximum amount of $3,000 to get off with their referral money. So businesses can refer to around 100 to 200 businesses.
What To Learn
- You have to make your rewards interesting for consumers to participate in the referral program. They must see some direct benefit to them.
- Make sure you do your research about what your customers truly value and are interested in. Offer them something they want as rewards.
Riff Raff & Co
If you think referral programs have to be complicated or something layered to make profits, you’re fortunately wrong.
Referral programs can be as simple and easy as Riff Raff & Co offered to their customers, and yet be successful.
They are a toy company that decided to run a Facebook referral contest. They were giving away customized sleep toys to all the lucky winners amongst participants.
Contest asked the participants to share their post integrated with their unique referral code and if any person makes five successful referrals, they would get a free customized toy cost $80.
Participants just have to share it on their Facebook, Instagram and other social media platforms. They can also directly email to their friends and family.
They have created a referral program where the task for people is so easy and convenient to do for their target customers i.e parents as it was to share about adorable baby toys on their social media.
Also, their target customers were parents and they leverage the network of parents to get more sales.
Parents of young children are more connected to other parents and they talk more to share information, so if they share something like this, it is reaching to potential customers.
What To Learn
- Create a task so easy and fun for your target customer that do not hesitate to do it too for a reward.
- You don’t have to create complicated referral programs. You can go for as simple as referral content on social media just like Riff Raff & co.
- Understand the motivations of your customers, their online habits and how their network or group works. Leverage it to get referrals.
GREATS
Greats is a Brooklyn-based company that sells designer sneakers at reasonable prices.
They have started a referral program which they mentioned at every page of their website in order to make it very easy to find and join.
Their referral program offers the referral and referee both $10 off on their next order with Greats.
They have a great product with a dedicated fan base. Customized sneakers are also something that someone surely wants to share with their friends.
So, the product itself is a good advocate of making it worthy for sharing and recommending.
According to Ryan, CEO of the company Greats, their referral program was successful because they understand their consumer base.
They know their customers are modern, trendy and tech-savvy youth willing to share a “cool” offer with their friends with ease.
So their referral program is very confident with how it’s working out and indeed they are true.
What To Learn
- This is the classic example of how small businesses should approach their referral program.
- It is essential to understand your consumers, what they want, how they would react with your referral, how the reward adds value to them and most importantly, why would they share your referral.
Skillshare
Skillshare is an online education website that gets the attention of their potential customers through offering them free learning.
They created a referral program for skillshare students as when they refer a friend, their friend gets two month free access to the Skillshare premium program.
And if that friend continues with the paid plan of Skillshare, the referring Skillshare student gets a free month access.
So this is a really interesting referral program as on both referral and referee side, it offers free access to their own program.
It is a great way to hold on to the customer with you for longer until he or she changes their mind to keep it.
And since it is a learning platform, recommending is much easier and in fact gives a high conversion rate for at least signing up, and further for paid extension.
On the brighter side for the users, their referral program is quite generous because either way, students get to use their premium courses for a good amount of time.
What To Learn
- You can offer your own product or services as a trial or limited access as reward. It helps to retain your customers.
- Don’t be afraid to make your referral program beneficial for customers even if you don’t get too much from it. If you provide value, people will stick to it.
Threadbeast
Threadbeast is a curated wardrobe delivery service company offering their bonus packages for both referral and referee under their referral program.
Their goal is to gain new subscribers leveraging their existing user base. Interesting part of their referral program is there is no limit on earning rewards with referrals.
So that means, the referring members will get free bonus packages for every successful referral they bring as much they want and for all the time.
Not to miss, that they are offering the free package for both the parties. It is definitely a quite generous referral program.
However, it is really motivating for customers to act and bring new potential customers for the brand.
Since everyone loves free stuff, this referral program is bound to work very well. The existing customers are the subscribers and buying products already.
And that means, they are loving it and want more. So if you get them a referral program providing opportunity to get free stuff, they would give some effort.
What they did is created this bonus package as a limited edition or collection of their best-selling products.
It makes the offer more special and so it helps the subscriber to approach their friends to offer this more confidently.
What To Learn
- Don’t be afraid to make a generous referral reward offer to encourage people more to go for referrals.
- Giveaway or “free stuff” are the favourites of a buyer. Leverage it to gain more customers through offering free products.
- Make the reward so appealing that people would want to share it with their friends.
Uber
Uber came up with a referral program that gained great momentum in their brand awareness and sales in a limited amount of time.
It is a riding share cab service that offers an integrated referral program into their application through which people book their cabs.
They created referral programs aiming to attract more and more people to use their services. Users get their own personal referral code when signing up for the Uber app.
The referral code gets them to this page where they can see all their referral data such as how many people they referred, earnings they made and referral status.
Users need to give their referral code to whom they are recommending. The referee must use that code in order to proceed with the referral program.
Once the referee uses the code for their rides, both referee and referrer get a free trip for their next ride on Uber.
This is a great example of a well-crafted referral program as it benefits both parties where they co-dependent to profit each other but eventually make sales to the company.
This kind of referral program works great to bring new customers who want to try this new renting ride experience.
The free ride gives them reason to continue with them further. If not, they are already enjoying the benefits as referees.
What To Learn
- Give rewards to both the referrer and referee in order to make your referral program more successful.
- Giving free service, access or trial of your product as a reward helps to get customers easily.
Dropbox
A file sharing service website, Dropbox started their referral program to attract more customers to use their online software.
But in order to do so, their referral program focuses to benefit the existing customers.
So, customers will get more space to store their files in their Dropbox accounts if they get their friends to sign up for Dropbox.
For the existing subscribers, it is really tempting because to get additional storage space, they would have to pay more.
But just by referring their friends to join Dropbox, they can avoid this expense and get themselves free storage spaces.
Dropbox created simple yet powerful referral programs because they considered what their existing customers wanted the most and offered them it as a reward in exchange for doing something easy.
It encourages users to invite more and more people to get more free space. It is a great way to generate leads and acquire customers with low cost acquisition.
What To Learn
- You can use the extension of your program, additional features, more access to your program or services as a reward for your referral program.
- Figure out what your existing customers want more from this deal, and offer them it as a reward to bring new potential customers.
- A simple referral program but with the right strategy works just perfectly.
Pupsik
Pupsik is an online baby and parenting shop offering one of the best referral programs to learn from.
They promote recurring business through utilizing the point-based referral program.
When a Pupsik customer refers to their friends and that friend makes his or her first purchase, the customer earns 250 points.
The referral here will get 100 points along with a bonus to use further. But, there is more! The referring customer will keep on earning points as the purchase increases by their referrals.
There is no doubt that this would surely attract any existing Pupsik customer.
They will share about the product more and more to their friends to create this line of points to their credit.
However, due to the point system, the customer has to make more than one referral to get enough points so he or she can redeem their rewards.
It benefits the business as customers will try to bring as many referrals as they can. And hence, more leads you will gain.
So if you are a small business with limited budget to spend, this can be a great way to adapt a referral program and get you more customers.
What To Learn
- Create a multi-level reward system for your referral program to get more customers.
- You can also create this succeeding line of reward system where customers can redeem their reward on a certain threshold. This will allow you to get more within your budget to spend in the referral program.
- At one glance, it might appear that it hampers customer experience for the referral program. But on the brighter side, it doesn’t. It is just encouraging the customer to bring more referral where, towards the threshold, he will get a bigger reward.
ConvertKit
ConvertKit is an email marketing service provider which is highly used by bloggers, digital marketers and business influencers.
They created a referral program where their subscriber can share about a webinar conducted by the marketing team of ConvertKit.
In this Webinar, ConvertKit will pitch their services to the attendees and if anyone signs up through the webinar, the referring party gets a cash reward.
You must understand here this webinar is a free training webinar, not just for pitching. So by itself, it is something that anyone wishing to learn will sign up for.
Even if they don’t have any plans to join Convertkit, they will go for the webinar as they are getting valuable content for free.
ConverKit being expert in this industry, sharing this information makes them an authority from whom one might want to learn.
So, this is a great way to use sharing information and knowledge instead of any discount or cash to get to the audience’s attention and trust.
What To Learn
- You can offer free consultation, webinar training or workshops to solve a specific issue in your industry or niche to get referrals from.
- Use valuable content as the reward, especially if you are a solution, skill or software-based company.
Dragon Gym
Dragon Gym is a martial arts training and fitness centre located in Exton, PA.
Their referral program is presented in the form of a personal letter written from the gym’s president to the students of the gym.
The letter focuses on the significance of word-of-mouth for the gym and encourages students to participate.
They address the fact that most of the students are from the referrals and word-of-mouth. The president shows his gratitude to their students to make it happen.
The letter actually thanks the student at the different points of the letter.
Their referral offer is the student will receive $100 off on his next monthly tuition or cash amount just after the referred student joins the course.
The president also encourages students to keep on referring and gain the $100 reward.
And interestingly, there is more to the story! After successfully referring five students in one year, that student will get one year of membership free.
This is also a great way to explain the referral program making it more inclusive amongst the students on a teacher-student note.
What To Learn
- You can find your own way to connect to your consumer community and address referral programs on a more personal note.
- Adding an additional reward or multi-layer reward structure is more successful than a single reward system.
- Communicate with your consumers and show them gratitude. Develop a sense of community so they invest more than just their time and money.
- You can find your own way to connect to your consumer community and address referral programs on a more personal note.
- Adding an additional reward or multi-layer reward structure is more successful than a single reward system.
- Communicate with your consumers and show them gratitude. Develop a sense of community so they invest more than just their time and money.
The Radio Academy
The Radio Academy is a charity service dedicated to development and welfare of Radio.
To get more new members, their primary strategy is to host a regular raffle draw. They encourage their existing members to refer it to their friends and family.
Both the member as well as the friend or family he/she referred to, will get entry in the draw and have chances to win an Amazon Echo.
People get excited when it comes to giveaways and raffle draws, especially when the prize is something they desperately want.
Well, Giveaways already have proven marketing strategies for small businesses. So it is no brainer why this works as a referral program.
The investment here made to get the prize out as upfront cost is quite little as compared to the potential customers and eventually sales you are generating.
All you have to make sure to choose an awesome prize that pulls everyone’s attention and really lure them in to participate.
What To Learn
- Giveaways can be a great strategy to utilize it in referral programs where you will be getting numerous leads and potential sales.
- Make sure the prize is compelling enough to make customers take their chances with the small investment they are making.
Amazon Prime
The referral program offered by Amazon Prime came as real surprise as even without offering too much, they were successful with it.
Amazon Prime’s referral program walks you through the different steps subtly guiding their customers towards taking their Prime membership, something like it is natural to go ahead with it.
They offered only $5 to the referrer but it really made some good word-of-mouth spreading about the offer.
Amazon utilized this as their way up to grow their prime membership program at the initial stage.
They actually made it so obvious to choose prime membership as non-prime members are spending twice on their orders as compared to prime ones.
What To Learn
- Be strategic with your offering the referral program. You can reflect on customers how referring can save a lot.
- Make sure your referral program serves the goal you want to achieve.
- Tell customers what they are losing so they can go for what you are offering.
Harry’s
Harry’s is the company more recent today as compared to their competitors.
They are dedicated to offer shaving products that are directly shipped to the doorsteps of their customers.
Harry’s has adopted a referral program before they even launched their brand in the market.
They have utilized their referral program to grow business and become popular amongst their target audience.
It creates a huge buzz and builds anticipation and excitement about the Harry’s products.
This can be a great case study for small businesses if they want to learn how you can leverage referral programs or marketing to promote when you are just starting out.
Their referral program features an incremental awards system to incentivize more and more people to get better rewards.
Hee are their reward structure :
- Refer 5 friends to get free shaving cream
- Refer 10 friends to get a free razor
- Refer 25 friends to get a free premium razor
- Refer 50 friends to get free shaving for a year
The benefits that this reward structure offers is really tempting and worked well to build the hype for company launch.
Addition to this, the referees are also getting 10% off on their first purchase.
The referral program really hooked people and encouraged them to refer more and more friends of their friends.
This campaign killed it! It was a huge success. Harry’s collected 100,000 email subscribers from this initial campaign of them at time of the launch.
After a while as when they achieved the results, they suspended this referral program to make the business grow more.
What To Learn
- Referral programs can be leveraged to initially launch your product or brand to kickstart your sales and to create brand awareness.
- You need to create a tempting referral system with incremental rewards so it will keep encouraging customers to refer more and more.
- If your referral program is braver than it should be for the sake of initial promotion and generating a high number of leads and sales, then you also need to figure out when to suspend it. Otherwise it might hamper your finances.
Sam’s Club
Sam’s Club is an online retail store that encourages their members to refer their friends and family where they will be getting gift cards in exchange.
The gift cards will be given to both new as well as referred members under their referral program.
The members will receive a referral link which they can share to their friends.
Every time a referral joins through that link, a $10 worth gift card will be sent to the existing member as well as to the referral.
Using Gift cards as a reward is a smart strategy as it will make sure that customers keep coming back to make more purchases.
It is just like the credit option to give it as reward, also better than cash incentives as it won’t drain out your cash flow in the business.
Even if the person has no intention to buy a product, with these digital credits, they still might go for the purchase just to simply use it before the expiry date.
Gift cards also work best if your small business hasn’t got much budget to give away cash incentives. These make sure to bring more business to you without sucking your cash flow.
What To Learn
- Learn to use credit options such as gift cards and credit points as a reward for your referral program to save the cash flow in your business.
- You need to find a way to bring your customers back for more purchases. There are many creative ways to achieve that through referral programs.
Upserve
Upserve offers restaurant management software that includes various features and customizable modules such as point-of-sales, scheduler, reward system and much more.
The company has their loyal set of customers, and known to be popular amongst the small as well as big restaurants.
Upserve brings something new to table when it comes to their referral program. As per their program, when any of their users refer a friend and that friend signs up with them, the company donates $200 to charity named Clean Water Fund.
So, here clearly it is not exactly the referral and referee are getting the benefits. But the motivation to activate the users here is changed.
Since we know that doing good to others gives greater happiness than just self-serving. So giving is better than receiving.
Customers who will be referring to this get the feeling that they have contributed to the community.
It works great because people like to be the part of “giving” or charity. People often choose a company because they believe in what the organization stands for.
So the referral program allows these customers to give their part of contribution back to the community.
What To Learn
- You don’t have to always give the financial rewards to the referral and referees. It can be an opportunity to give it back to the community.
- Use your referral to send out the message to your consumers. Tell them what you stand for so they can even invest in you emotionally.
How to Design and Implement a Referral Program
Here are some steps you can take to design and implement a successful referral program:
Define Your Goals
Before you start designing your referral program, you should define your goals. What do you want to achieve with your referral program?
Do you want to increase sales, boost customer loyalty, or expand your customer base? Defining your goals will help you create a program aligned with your business objectives.
Identify Your Target Audience
Your referral program should be designed with your target audience in mind. Who are your ideal customers, and what motivates them to refer your business to others? Understanding your target audience will help you choose incentives most likely to resonate with them.
Choose Your Incentives
The incentives you offer will play a crucial role in the success of your referral program. Some popular incentives include discounts, free products or services, cash rewards, and loyalty points. Choose incentives that appeal to your target audience and align with your business objectives.
Make it Easy to Refer.
Your referral program should be easy to use and understand. Make it easy for your customers to refer their friends by providing clear instructions and making the referral process as simple as possible.
Consider using referral links or codes to track referrals and ensure that rewards are properly attributed.
Set Clear Guidelines and Rules
You should establish clear guidelines and rules to avoid confusion and ensure that your program is fair to all participants.
Be transparent about the criteria for receiving rewards, the terms and conditions of the program, and any limitations or restrictions.
Promote Your Program
To maximize the success of your referral program, you need to promote it effectively. Use a variety of channels to promote your program, including social media, email marketing, and website banners.
Highlight the benefits of your program and emphasize the incentives that customers can receive by referring their friends.
Measure and Analyze Results
Once your referral program is up and running, measuring and analyzing the results is important.
Use tools such as Google Analytics to track the success of your program, including the number of referrals, the conversion rate, and the overall impact on your business.
FAQs:
How do I know if a referral program is right for my business?
A referral program can be beneficial for any business, regardless of its size or industry. If you are looking to increase customer loyalty and grow your customer base, a referral program may be a good fit for your business.
What incentives should I offer in my referral program?
The incentives you offer should be appealing to your target audience and aligned with your business objectives. Popular incentives include discounts, free products or services, cash rewards, and loyalty points.
How do I promote my referral program effectively?
To promote your referral program effectively, use a variety of channels, including social media, email marketing, and website banners. Highlight the benefits of your program and emphasize the incentives that customers can receive by referring their friends.
How do I track and measure the success of my referral program?
Use tools such as Google Analytics to track the success of your program, including the number of referrals, the conversion rate, and the overall impact on your business. Regularly analyze this data to make adjustments and improvements to your program.
Can a referral program really help me to grow my business?
Yes, a referral program can be a highly effective way to increase customer loyalty and expand your customer base. By incentivizing your customers to refer their friends, you can leverage their networks to reach new potential customers and grow your business.
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