Refresh Your Customer Referral Program for the New Year
With 2019 in full swing, you may be thinking about new ways to boost sales in the new year. Taking a fresh look at your customer referral program is an excellent way to start. Your happy customers are some of your best advocates, and you’ll want to leverage them to attract new customers and grow your business.
First, think about how you’re currently promoting your customer referral program and make a list of concrete goals you’d like to achieve with the program. Even if you’ve been promoting your referral program for several years, your goals may change from year to year, so it’s important to update them accordingly.
What works for one company may not work for another, and no two companies will share the exact same set of challenges with and goals for their customer referral programs. However, you can borrow ideas from some companies with successful referral programs and adapt their strategies to fit your own needs. Here are some ideas:
1. Give points that customers can use toward upgrades or future purchases.
Evernote is a great example of a company using this referral program strategy. For the first three friends they refer, Evernote users earn 10 points, and they earn five points for each friend who purchases Evernote Premium for the first time. Users can redeem these points for Evernote Premium subscriptions.
[Image Source: Evernote]
The reward structure is a great way to keep existing customers happy and engaged, both critical ingredients for success in sales.
2. Give a discount for every new friend who makes a first purchase.
Ecommerce fashion retailer ModCloth offers a 20% discount to customers who refer friends who then make their first purchase from the site. In addition, the referred friend also gets the 20% off discount! We really like this double incentive and think it’s a great way for two friends to connect over their mutual appreciation of a product or service.
[Image Source: ModCloth]
The value of a customer referral can be enormous. While it varies across companies, many teams see direct links between realized referrals and an uptick in their marketing ROI. According to an Extole study on the beauty company Ulta, for example, referrals spent 50% more on Ulta’s site than organic traffic. And according to a Wharton School of Business study, a referred customer will leave a company at an 18 percent slower rate than the average customer. Whether it’s helping to reduce customer churn or increase new customer acquisition, tactics like friend discounts can go a long way.
3. Earn a free *something* for every friend you refer.
In select cities, rideshare company Lyft offers ride credit to any passenger who refers a friend to the service. Passengers can either invite friends to Lyft directly through the app by choosing “Free Rides” from the left side menu or by giving out a unique referral code.
A giveaway can help your brand spread through word-of-mouth, and interest could snowball.
But before you start giving away free goods and services, do the math. You want the value received from a realized referred customer to be more than what you’re offering them. If you have too many unknowns to develop a clear calculation, try testing your giveaway on a small sample of users. If it works for specific segments of your customers, chances are it’s safe to expand at a gradual pace.
Design the customer referral program that’s right for you.
Now that you know about some unique referral program examples, you’ll need to decide what you are willing to give away and if the potential ROI will be worth it. Furthermore, you’ll want to remember that customer referral programs don’t advertise themselves, and you’ll have to put in the effort promoting your referral program via email marketing, through a call to action that features prominently on your website, through social media marketing, or via shareable widgets or referral codes.
You may need to experiment with different campaigns before you find the one that works best for your brand, but a consistent and robust referral engine could end up being your best source of new business in 2019 and beyond.