ave you been wondering why referral marketing works so well? Why a referral program is good? Why is it better than digital Marketing? It’s because customers trust people they know and love over anyone else. That’s why referral marketing with referral programs is such a powerful tool for your business! In this article, we will explore the complete guide to referral marketing and how it can help grow your business. Let's find a new customer.

What is Referral Marketing?

Referral marketing is a form of referral process advertising where new customers are encouraged to refer your business to their friends and family members. Your store can get started with referral marketing and social media by encouraging them in word-of-mouth instead!

Referral marketing can be an effective and successful tool for any organization. However, to reap the rewards of this strategy it is important you understand its benefits and limitations.

• Research suggests that 92% of customers would rather follow their friends and family members for a recommendation.

•Recommendations or word-of-mouth marketing leads to 20% - 50% of the purchase decisions.

• New Customers who joined after a referral have a 16% higher lifetime value.

• When it comes to marketing your business, you know that customers are much more trusting of the recommendations of their friends and family members than they are with marketing campaigns. In other words, while customers might not trust what your advertising campaigns say or do, they will believe those recommendations from someone they already care about - which is how referral marketing works so well! That is how you get loyal customers.

At its core, referral marketing,  referral programs, relies on the power of customer recommendations.

It’s Effective It’s Cheap, customers are trusting traditional marketing less and less. A recent study by Hubspot found that trust for marketers was at a stunning 0%.

Although customers might not trust our marketing department, they do feel more inclined to trust recommendations from friends or family. Referral marketing is when businesses enable and encourage customers to tell their friends and family about products the business offers.

Unlike other forms of marketing, referral marketing doesn’t require much spending on your part. After all, it doesn’t cost money for a friend to tell a friend about a great business.

First of all, referral marketing is a great way to motivate your customers to introduce your products and services. It's not that difficult either; you just need to figure out the best ways for your business to develop a successful referral marketing program. The first thing on this list would be designing a clear and compelling strategy for building customer referrals.  As a small business owner, you may be wondering how to find time for referral marketing in your jam-packed schedule. Well, stop wondering and start doing-- it could work for any size of the company.

We'll learn about customer referral marketing through an example.

Suppose there is a company HouseHelper.page that sells GMB Optimization Services. HouseHelper.page launched a referral program in which they will give $50 as a reward to the referrer for every conversion, and his friends will get a 10% discount on his first order.

Now, Let's see how it works.

Step 1:  HouseHelper.page encourages their customers to participate in a referral program via email. The customer shares the message and gets a special offer in return for recommending them.

Step 2: The customer accepts the invitation and gets a referral link to share with his or her friends.

Step 3: The customer has the option to send invites to all of his friends, but he only needs a few trusted people for the campaign to be successful.

Step 4: A customer accepts the invitation and registers their details.

Step5: his friend orders a Google My Business service and gets a 10% discount.

Step 6: Then, the customer will receive a message that his friend has successfully converted and he will get a $50 reward for that conversion.

You now understand what referral marketing is and how it works.

Despite its potential for boosting a company's marketing, relatively few businesses have adopted effective referral marketing strategies.

Don't worry, we'll learn about it together but before that let's explore the benefits of referral marketing.

The importance of referrals in your marketing strategy

Not sold on the value of referral marketing? Here are a few numbers that may sway you.

  • Customers who have the recommendation of a friend are four times more likely to buy
  • From customer referrals, you can expect an additional 16% in profit.
  • Customer referral marketing harnesses the power of word-of-mouth marketing - but only 6% of executives say that their company has mastered this technique.

Connect with the right audience.

Helping customers refer your business to family and friends will require you to invest a sizable amount of time. Your budget has to be set in accordance with the number of customers, which means that time is always an investment - which should be taken very seriously!

This is where marketing through referrals becomes paramount. Referral campaigns allow you to connect with the right customers and increase engagements.

If they're compared, an ad campaign will only show a new customer joining your product or service, but referral marketing increases this number by encouraging those who know about your product already to refer it to their friends and family members

Here are 11 ways to design a great referral program

  1. How to design a successful referral program - so what does successful referral marketing seem like to you? What are you hoping for from this referral marketing campaign? Are you trying to grow your audience base, increase revenue, or create loyalty? Designing the perfect plan is likely easier if you have specific goals in mind. It’s important that your business is seeing a return on the time, effort, and money you are investing into your referral program. Design your own referral marketing funnel and monitor its progress.
  2. To take advantage of customer referral marketing, it is important for businesses to make their requests clear. Customers may be willing to refer a business but they often are not aware that the company has this option or they are not motivated enough to do so on their own. Think about how many customers are willing to give referrals. 83% of people will tell their friends and family about businesses they like. But only 29% of people do it. That is why you need to ask customers for a referral when they are happy with what you've done for them. When you ask, the customer is much more likely Introduce us to your friends and family! Share the love with your loved ones, introduce us to them today. Share as Text message, Share on Facebook, Share as Facebook Message, Share as Email.
  3. Give Rewards - Referral reward and promotions are usually the most effective method for encouraging referrals. One way to reinforce referral marketing efforts is by giving rewards to customers who refer a business. Referral reward can make the customer more inclined to share information about your company with friends and family members. If you are worried about the potential loss of revenue, don’t be! Offering a discount through a referral program may seem like you’d lose out on money--but in fact the opposite is true. Customer acquisitions through referrals spend 200% more than average customers. Customers that find your business through referrals are likely to reap even greater.
  4. Create a promotion strategy for your referral program that will enable you to reach as many people as possible. Customer referral marketing programs are more successful when they are an integral part of your company’s communications strategy. Instead of sending out random, one-off emails that may have no impact on customer sales or loyalty, work to nurture a program that will help customers tell friends and family members about your products and services. Add CTAs, or call-to-actions, to all your customer communications. This can be a simple banner with something like “Refer a friend and get $10 off your next order, and they do too!” This CTA should be clickable so that the customer can send a referral within seconds. Add these referral CTAs to your emails, newsletters, and post about your referral program often on social media. Be sure to mention your referral program on your website as well if you have one. The more people know about this company's offer the sooner they will engage it.
  5. Make it easy for customers to refer their friends and family members. Make it easy for them! The easier you make your referral program, the more likely a customer is going to refer others. You want your referral marketing campaign to be as simple as possible so that people are drawn in and not turned off by excessive steps or complicated processes.
  6. Say thank you. One of the most important referrals marketing tactics to get more happy customers is to thank your customers. Be sure to show your gratitude to each customer who gives you a referral. If the customer was given an incentive, be sure the reward is sent to them right away. Virtual gift cards and discount codes make this easy for anyone on either end of referrals. There are lots of fun ways to thank your customers. One way is to track how many referrals they generate for the company and publicly thank them when it reaches a milestone. This will show appreciation and encourage other customers to refer their friends and family members.
  7. Invest in your referral marketing program - Successful customer referral marketing is achieved through implementing an established process. In order to avoid missing the opportunity, be sure to send out a donation request after your customer's experience concludes and keep diligent records of completed transactions
  8. If customer service is your top priority, you will need to leverage word-of-mouth recommendations. Your customers and clients will refer you if you consistently do a stellar job. Your performance is what'll keep your company top of mind when they are asked for recommendations. As far as how to do this, you can put your own spin on what you offer to be over the top in your service, but having top-of-the-line customer
  9. Customer referral marketing is a cost-effective promotional strategy. Referral marketing is a good way to advertise your business. There are not many employees that you need for this since there are many different platforms where people can find your business. You can track every activity of the people who come from these platforms and see whether they become customers or not. This allows you to decide what is best for your needs.
  10. The reliability is high. The main factor in referral marketing is reliability. Businesses engage customers by encouraging them to refer a product or service that they know and trust. There's a fact that when we like any product or service, we strongly recommend it to others. So the referral system provides them an opportunity to be your advocate while they earn rewards in return.
  11. It creates multiple lines of customers. Fostering customer loyalty through a referral program is key for any company. Once your customers are hooked, they will continue to market your products to their friends and family members. Once a customer has made at least one purchase from your business and likes and trusts it, they will be willing to share this information with their friends. During each new campaign or product launch, you can count on them contributing to improving your growth by becoming an advocate of your brand as well.

One of the key components needed for successful referral marketing is an authentic product or service.

A referral marketing campaign isn’t sustainable if it doesn’t have the goodwill of that product among the customer base. Without already high trustworthiness, customers won't feel incentivized to recommend products or services they don't believe in.

Referral marketing is a systematic method of encouraging customers to tell friends and family members about products or services. The most crucial part of referral marketing, which you need to keep in mind, is that customers must have trust in your products.

The Viral Nature of  Referral Marketing

With social media, new ideas, referral marketing software,  referral programs can spread quickly. It only takes one person to share a link and then many people will see it. And they might tell their friends, too. Pretty soon your business will grow!

With word of mouth one of your customers shares their referral code to social media, where followers may click and become a customer. The new customer continues the cycle by sharing with their friends on social media, becoming new customers, and so on.

In international travel, parents traveling internationally face an even greater challenge from others in that they have small children along for the ride.

Create loyal customers.

You might not know the extent to which your customers are loyal, but a referral program can measure it. Encourage customers to refer a friend to your business so they become evangelists for you and our brand. They’re like cheerleaders rooting for you in the referral marketing program.

A well-structured referral marketing program provides customers with incentives. This is the way to keep them motivated and ensure they come back. Once you give them a reason for the customer to come back, they automatically become loyal.

Marketing examples

#1. Influencer Marketing If you're looking for a word-of-mouth advertising strategy that is under your control, influencer marketing should work best.

Influencer marketing is a growing trend among businesses because many of them view this as an affordable way to promote their products.

To put every referral at your disposal, engage with prospective customers in marketing channels by offering them incentives to tell their friends about your product or service. Word of mouth advertising is the cheapest and most effective kind-- especially when it comes from a person you know.

Upside referral? You can get a lot of sales quickly. The downside is that it feels inorganic, especially when you have to pay your own customers to rave about what they bought from you.

#2. Hashtag Everything.

Whenever I start a new Instagram for my business, I always make up a hashtag. It is not anything fancy usually, just the name of my store after the hashtag like #businessname.

Businesses usually maintain social media posts by promoting their products and services through a variety of potential customer touchpoints, including website, email campaigns, online advertisements such as on Facebook or Instagram ads. Yet not every business proactively recruits customers to post about the business’s products. Companies that do this are using word-of-mouth advertising which utilizes

So far, the hashtag has generated sales and increased awareness of our company. Although it may not always be easy to track where the sale came from, these tactics help build a stronger brand awareness.

The hashtag is your brand name and it’s likely the first things people will start typing when they search for you on Instagram. Whenever you upload a post, make sure to use that # in your caption so the content gets found.

#3. Curated Content

As your referral programs grows, customers will share information about how they use your products. What does that mean? It means that they create posts on Instagram with pictures of them wearing or using your product. They might also write a blog post where they share their thoughts about the product.

To encourage word-of-mouth, be sure to post customer photos on your social media or product pages and give credit to the posts.

Offer incentives and provide support for your customers. You might have a referral program or affiliate program where you offer perks or points for various types of content customers create.

Make a contest where people send pictures of them with your product. They can win a free prize. You can also ask them to get their friends to vote for them to help the person win.

#4. Get 5 Star Reviews

Reviews work as an effective referral strategy for referral marketing. Customers can leave a product review on the product page for the product they purchased and customers who are browsing that same product will then see those reviews which may end up influencing them to purchase the item based on what real customer opinions say. You will see value in the company with more reviews.

#5. Get on Social Media

As you build your referral program, you’re going to have countless interactions with your customers. If you can be positive, playful and active with them all, you may have a home run one day. It might not be as big as ‘the most retweeted tweet’ but it could still help boost your referral program success.

Integrating a referral program into your business can help strengthen customer relationships.

Understand: The success of referral marketing relies upon customers trusting what their friends tell them.

A customer referral program is a great way to find qualified leads, but how do you integrate a customer referral program into your sales process?

You first have to come up with an offer that will work for your business.

Customers are more likely to trust the recommendations made by friends or family members than from your marketing team. What’s needed for effective referral marketing is:

Determining what your customers want (e.g., discounts, a chance at free prize or bragging rights). Completion rules and eligibility requirements;

When people shop in a store, they want deals. HouseHelper.page used this idea to get customers with their referral program. They would give the customer $50 when they referred someone to our GMB service.

You should create a referral program system where the customer has more power.

If you have learned anything in your business, it is to make the customer happy. This should be true for purchases and for referrals. Your goal is to make the process of referring new customers and earning their rewards as easy as possible.

It is worth mentioning a couple of tools for making implementing this easy before we move on.

Get social. Social media is around us all the time, so make sure your referral program and marketing campaign revolve around it. We make it easy for customers to refer their friends by including a social sharing widget right in the dashboard.

The simpler, the better. Customers will be more likely to participate in your referral program if they can sign-up and get their reward immediately without jumping through hoops.

Promote Your Referral Marketing Program

One issue is that customers may not trust the marketing team. However, they do trust the recommendations of their friends and family members. To address this issue, businesses should create a referral marketing program that allows customers to spread the word about products and services via brief email campaigns triggered after someone has made a purchase.

The referral marketing software recommended at the end of this post will feature some ways to do this, including creating contests through social media, posting directly to social media, or creating emails so you can announce to your list that the referral program is in place.

To increase the effectiveness of the referral program, make sure to include your referral program on the post-purchase confirmation page. This is an ideal time to capture a customer when they are feeling good about their purchase and want to help promote it.

Tools for a referral program software Marketing platform

If you are not a web developer and do not have a marketing strategy, it can be difficult. But there are tools that make this easier to get a referral. Please check out the tools below.

  • GetAmbassador.com  is a good way to get referrals. You can track and reward the people you get referrals from very easily from a nice dashboard on their website.
  • Referral Rock - Here you can create, track, and expand your referral programs to boost word-of-mouth sales. Referral Rock is perfect for creating a customized “friend offer” to share with others, with links directly from the site that will help you find friends on social media sites such as Facebook and Twitter.
  • WishPond.com  is a leading provider of social media engagement and automation tools to help you launch landing pages, contests, promotions, and more on the world’s most popular social networks.
  • Extole.com is an easy, simple and intuitive program that provides a straightforward method to encourage customers to refer your business to their friends and family members while also leveraging a simple insight: Customers will trust the recommendations of their friends and family as much as they are willing to trust you.
  • Referral Factory provides you with hundreds of easy-to-build templates that will provide a referral program for your business. It is as simple as selecting the new template and then customizing it to meet your needs.
  • Advocately is a company that leverages a simple insight marketing strategy: while customers might not trust your marketing team, they do trust the recommendations of their friends and family members. Together, we can automate customer review generation campaigns so you get reviews on G2 Crowd, Capterra, Facebook, Google and various industry specific sites relevant to your business.
  • Friendbuy's referral program helps customers easily and quickly share what they purchased with their friends. It can be activated in just a few seconds on your website or mobile app and is lightweight and easy to use. It can be set up for any reward type--coupons, account credit, loyalty points, gift cards--and rewards quality referrals rather
  • InviteReferrals is an innovative and powerful referral program software that will help you to grow your business by acquiring new customers through referral marketing. It enables integration with multiple eCommerce platforms - including WooCommerce, Shopify, Magento, and MailChimp amongst others. The InviteReferrals mobile application allows the customer to refer friends automatically.
  • InviteBox enables you to add a referral program to your site in minutes. Their platform includes all the technology you need in one package and does it easily for anyone unfamiliar with coding. Just set the rules of your referral program, copy and paste your widget code into your website pages, and their software takes care of the rest!
  • Mention Me provides a referral platform tailored to your business which helps your brand be more visible and easily shared. It enables you to run word-of-mouth campaigns, which, on average sees an increase of 3-7x in sales for the first six months. The Mention Me protocol rewards both new customers and the friends who introduced them.
  • Genius Referrals makes it easy to create and operate a referral program. To get a free program, first sign up for the Genius Referrals platform. You can customize your campaign with settings like how many referrals you want and what restrictions should be on the referrals. For example, you can set it so that only customers who purchase $500.
  • Amplifinity is a performance-driven marketing innovation agency that specializes in customer referral marketing. We provide app integration with Salesforce to put customer acquisition at the center of your referral program.
  • Ambassador offers a complete suite of referral marketing software features, including eCommerce integrations with JavaScript API for developers.
  • Referral Rock referral programs software that helps businesses set up word-of-mouth on autopilot. It enables you to customize the look and feel of your referral program to match your brand and customer experience.
  • Referral SaaSquatch is a referral programs software that creates referral and partner programs. It was designed specifically for digital businesses to acquire customers and increase lifetime value via referrals, special offers, and incentives for brands to use in the referral strategies.
  • Yotpo's is Mastering the craft of customer referral marketing is more than just a matter of finding people who'll give you a personal endorsement. It also requires that you have an effective system for collecting and using data, so it's worth considering your dedication to less formal forms of user feedback such as those delivered via email comments or social media.
  • TapMango, a referral marketing software program for breadcrumbs to invest in? The tools fully automated POS integration lets you start selling with the push of a button. TapMango, integrates with major POS systems including Toast, Lightspeed, Square, and more. A comprehensive marketing portal to manage your campaigns, customers.** A customer-facing referral software to provide an out-of-this world customer experience that will have your competitors seeing green. **Located in the line of site for customers, it’s the perfect spot for important information about discounts and offers. *Your own branded mobile app for customers to keep track of their points, offers and deals.

Referral marketing is a good way to get new customers. You can ask your current customers to tell people they know about your company.

The number of marketing messages you see might make it feel like businesses are more transparent and accessible than ever, but there's no better way to cut through the clutter than by leveraging word-of-mouth referrals.

Despite all the channels available for marketers, some consumers still find that brands fail to make them care about a product or service.

When you set up referral programs, it can be hard to choose what type of offers you should give people. You might want to offer discounts, money or something else. It depends on what you are trying to achieve. We will show you how to figure out which offers will work best in your situation.

Why is choosing referral incentives important?

Referral rewards programs work when customers know the rules and feel confident that their referrer will get rewarded. To choose effective rewards, merchants have 3 categories to consider:

  1. Long-term consequences and customer engagement: The right referral offer will positively influence your clickthrough rate (CTR) and conversion rates in the long-run. Getting the balance just right might be tricky, but trying new incentives can be worth it - both for you, as a merchant, and for your customers.
  2. If you're overwhelmed by options for setting up your referral program's incentives, it can seem like too many. There are different ways to set up a referral campaign - cash or store credit? Flat amount or percentage? To simplify this, retailers should look at the different outcomes for these programs and choose what they like best.
  3. The challenge with referral marketing is that it does incur a cost, either in terms of cash or potential profit. The upside to this, is that the more successful referrals you make, the higher your reward prize becomes - so there's no worse option then not participating when it comes to referral marketing.It is challenging to manage a referral marketing program, especially in terms of attribution and managing the incentives. Let’s talk about how you can get started with customer referral marketing.

How do you reward customers for referrals?

A customer's referral reward is the reward you give to your advocates or happy customers for successfully referring their friends to the store. Rewarding these top tier of consumers should be attractive enough to nudge them into action.

1. Cash Money

Pro: Cash is the reward.  Some people will always prefer cash rewards, and since friends are a lot like customers in that they're not likely to trust your marketing team, you'll need an incentive for referrals.

Con: Cash payout management is a challenge. The best way to simplify the process is using referral program software such as ReferralCandy™ to automate the cash payments.

2. Discount Coupons

Pros: The biggest advantage of store referral discount coupons are customer loyalty and repeat purchases. Store coupons are most valuable when you know the customer is going to make repeat purchases, for example, fashion or pet food, or if you have an extensive store for your brand.

Since the referral reward coupons can only be used in your store, they should be pretty attractive. And because of how the system works, customers spend more when they get a discount as well. That will create more loyal customers and you'll also have an opportunity to increase sales with that customer too over time if you keep doing it consistently.

If you have a subscription-based store, offering free months is like giving out coupons.

3. Free Subscription

Retailers have a number of ways to incentivize new product sales by leveraging referral marketing. In particular, Millennials are drawn in while popular subscription services like Goods have offer rewards for both free months and successful recommendations.

How Can You Get Started With Customer Referral Marketing?

Customer referral marketing- when a business enables and encourages customers to tell friends and family about its products or services, is a systematic method of encouraging customers to refer that business to their friends and family members.

You now have the tools, know-how, and examples at your disposal to create an epic referral program that incentivizes users. What’s next? Implement!

May 11, 2021
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