How to Create an Amazing Customer Referral Program

Customer referral programs are known to reduce CAC, keep your high-value customers engaged, and boost customer retention. In this blog, learn the best practices and get started with a referral program from scratch.

What is a Customer Referral Program and Why do you need it?

Every business ought to consider having a referral program. Customer referral programs offer several benefits such as reducing the cost of acquisition for a new lead, keeping your high-value customers happy, improving customer retention, and serving as an excellent word-of-mouth strategy.

Interesting stats that reveal why referral marketing is the best bet:

According to Forbes, referral marketing drives one of the highest conversion rates among all marketing channels.

90% of prospects say word-of-mouth influences their purchase decision. When a customer refers a friend, colleague, acquaintance, or family member to your product/service, they explain why purchasing from your business is an excellent option, thus leading to a much higher chance of a conversion.

Deloitte says that customers who refer other customers tend to have at least a 37% higher retention rate.

➼ According to Neilsen, 84% of people rely on and trust recommendations coming from people that they know, making them one of the most influential forms of advertising.

➼ A study report from Marketo revealed that B2B marketers saw an 11% average conversion rate for referrals. This is way higher than any other marketing channel in terms of margins and by far the highest and most important acquisition channel.


People influence people! One of the most effective ways to get prospects to convert into long-term customers is by nudging existing people to influence new ones.

And it isn’t wrong to say that trusted referral is the holy grail of marketing. But how do you get people to speak about your brand? The answer is simple—a great product!

Have a product that’s so good that your consumers will want to boast about it or recommend it to their colleagues or friends. Believe it or not, referrals are one of the cheapest customers you will ever acquire. These are important to supercharge your business growth.

It’s vital to have proper strategies in place to facilitate those endorsements. For any referral scheme to work, simplicity is the key. The value proposition has to be clear for the ‘referrer’ as well as the ‘referee’ to take the intended action.

What are your Goals, and What are you planning to achieve with the Referral Program?

While increasing the overall business revenue is a common and worthy goal, it doesn’t always have to be the sole goal of a referral program. Think beyond your revenue growth and look into different facets that you want to accomplish from your marketing plan.

Are you trying to get into a newer market? Or trying to leverage referral connections to explore additional industries to show how your products or services can benefit them? Is it about increasing brand awareness? Or perhaps, remind your target audience with a questionnaire that you exist, and then use surveys to incentivize your referrals?

The possibilities of referral program goals are just endless. So, ask yourself, where or how are you heading with your plan?

If you’re still finding it hard, then here’s the trick. Check with your team what are your current measures for referrals, as this helps you understand how and where to execute your plan realistically.

Come up with a plan that’s measurable and realistic. Use the concept of ‘SMART’ to help outline a strategy.

SMART abbreviates to:

  • S = Specific (The audience you are trying to target)
  • M = Measurable (How many “As” do your need to achieve “B?”)
  • A = Achievable (The realistic number of referrals you can expect)
  • R = Relevant (The best way to achieve the goals)
  • T = Time-bound (The time frame required to achieve our referral program goals)

The objective of any referral marketing is straightforward: To harness the power of genuine word-of-mouth recommendations to increase a steady stream of qualified referrals to increase brand loyalty and boost business revenue as a result.

Best Practices for Referral Programs

Now that you know the importance of referral marketing and how it can help you find qualified prospects, the next big question is how to go about integrating a referral program effectively?

Here are a few things to keep in mind before implementing the strategy for your business:

1. Decide what you want to offer

There’s no getting without giving. Keeping that in mind, the first step is to brainstorm and decide what offers can work for your brand.

Wear your ‘customer hat’ and think for a while. What can delight your customers? What type of incentive can get them to show off your products to their friends? Is it freebies? Cashback? Doubling down on rewards points? Or maybe, Steep discounts?

While some brands create contests, others just announce that if a customer refers to a friend, he/she gets a flat payment. This is entirely up to you and your business nature on how you want to go about it.

Incentives don’t have to be expensive! Don’t believe us? Here’s the proof then. According to AMA (American Marketing Association), while offering a reward increases the likelihood of referrals, the size of it doesn’t matter. Whether it's a $5 or $20 coupon, it’s still worth trying!

2. Make things easy for your customers

If you’re running a business already, you know the mantra already—Don’t make things hard for your customers. This statement not only holds for purchases but also for referrals.

The idea is to make the ‘referring process’ seamless and hassle-free for your new customers and help them earn rewards as quickly as possible.

The fewer hoops your customers have to jump through, the better it is because no one will want to sign up for a referral program only to find out that there are 3-5 more steps to complete to collect their referral rewards. Quick reward redemption encourages repeat behaviour from customers.

Make your referral programs prominent on your website and social media channels. Speaking of your website in specific, include a contrasting colour as in such website examples on the prime navigation to highlight the referral program’s info page. You can even add it to your sticky sidebar so that it persists no matter what post or page the reader is at.‍

3. Promote the referral program regularly

There’s no point in creating a referral program and having it sit idle. People don’t have the time to remember. Hence, it's important to remind your customers about your campaigns regularly.

Like any product launch, even your referral campaigns need a dose of promotion to boost some activity and participation. Post about your programs on social media at least one or two times a week. Send newsletters, include them in the emails, add flyers at the store, or keep them as an email signature.

Utilize time-based or triggered email campaigns for this. Whenever customers make a purchase, encourage them to share your referral link to not miss the opportunity to earn discounts.

Running a successful referral program is a lot about distribution

These may include assets like:

  • Newsletters
  • Blogs
  • CTAs
  • Email Signatures
  • Social media

It doesn’t matter if you are a one-person customer referral team or a part of a vast customer outreach group; templates are of enormous help. You can fine-tune these templates to fit your brand voice.

You will need mailers telling your customers about your referral program.

With a referral email, you're asking for customers to refer their friends or acquaintances. This is why it ought to be short and straightforward.

Here are some tips on tailoring a good referral emailer:

  • Create a strong subject line when reaching out to your advocates.
  • Format the email properly and ensure it looks personalized.
  • Get to the point instead of beating around the bush.

5 Email Templates to Use for your Referral Programs

Take advantage of our high converting, fully customizable referral email templates along with useful tips and tricks.

Scenario 1: Asking a current customer if they have anyone in mind to refer to you

📧
Hi [Customer Name],

I hope you’re doing great!

I’m glad to hear that [service/product] has worked well for you and your team. I knew that by working together, we’d be able to drive a lot of impact for [insert their brand’s name].

Given the success you have seen, I wonder if you may know of any [colleagues/friends] who are looking to [insert core value proposition of your product/service -- e.g., “improve their blog’s conversion”]. I would love to help your acquaintances achieve the same results you’ve seen.

Also, as a thank you for your consideration, a $20 Apple gift card from Xoxoday shall come over your way post our email :)

Kind regards,

[Your Name]

Scenario 2: Asking someone to refer you to a friend or colleague using a promo code

📧
Hi [Customer Name],

I hope your week is going great.

In our last call, I was elated to hear that [product/service] has been helping your team achieve its objectives.

My goal is to help firms like you [insert value proposition here - e.g., achieve higher e-commerce conversion rates]. Since you’ve seen what our [product/service] can do for a business, I was hoping you could recommend our [service/product] to a friend/colleague.

While I generally [insert details here - e.g., ‘charge $100 for a 30-minute consultation’], I would be more than happy to [insert details here - e.g. ‘A completely free consultation’] for anyone you refer to me.

When booking a consultation, they have to put this code - [insert code here]. If you do end up passing along the referral code, you’ll also get a $40 Starbucks gift voucher.

Do you have anyone in mind who might want to take advantage of that benefit?

Thanks,

[Your Name]

Scenario 3: Asking a past customer if he/she knows anyone who may be willing to refer to you

📧
Hi [Customer Name],

I hope your last few [weeks/months] have gone well.

I’m so glad to hear that our [work/service/product] has worked so well for you and your team. I knew that by working together, we’d be able to drive significant impact for [insert their brand’s name].

Given the success you have seen, I wonder if you may know of any [colleagues/friends/other companies in the industry] that are looking to [add your service/product’s core value proposition -- e.g., “enhance the blog’s SEO”]. I would love to help them accomplish the same results you have seen.

Also, I knew that you loved Costa Coffee, so I went ahead and bought you a $50 coffee voucher for you.

Kind regards,

[Your Name]

Scenario 4: Thanking a long-time customer for referring a customer in a casual way

📧
Dear [Referrer],

I just wanted to drop you a note to thank you for referring your [colleague/friend] [Referral] to me!

I wanted to say thank you for referring your [friend/colleague] [referral] to me! It means so much because you were happy enough with the work we did together that you shared my name with someone you want to succeed. Thank you for allowing me to help [him/her/them] [insert a phrase about what you help with -- e.g., “improve their overall SEO strategy”], too.

As a thank-you, I’d love to give you a $50 Apple Voucher.

Thanks again,

[Your Name]

Scenario 5: Thanking a one-time customer

📧
Dear [Referrer],

I wanted to take a moment to thank you for referring [Referral Name] to me. I know you’re incredibly busy, and I’m so happy that you felt strongly enough about [insert phrase about what you did for this customer -- e.g. “the results we drove,” “the leadership workshops we ran”) to take the time out of your schedule to share my name with someone you trust.

I knew you were a coffee aficionado. So as a thank you for helping me out, here is a coffee voucher that I got for you: A shot of hot Belgium roasted coffee beans mixed with Italian punch flavor.

If I can be of service at any point in the future, please don’t hesitate to reach out -- I’d be thrilled to work together again.

Kind regards,

[Your Name]

Importance of Social Media for Executing Successful Referral Programs

Referral marketing programs don’t just happen on their own. Like any other marketing activity, even your referral campaigns need to be promoted through different channels, the most crucial being “Social Media.”

There’s no denying that referrals happen via ‘word of mouth,’ but this is the digital age. Today, word of mouth most often happens through social media. Not only are social media channels powerful but also an easy promotional gateway.

Did you know?

➼ 95% of millennials follow brands on social media, and 28% of the demographic say they won’t try a product without their friends’ approval. (InfusionSoft, Extole)

➼ Of all the social media platforms in the U.S, the majority of referral sales during Q1 2020 happened on Facebook. It outranked other platforms with 42.6%. Interestingly, smartphones were one of the overwhelming drivers of social referrals. (eMarketer)

➼ 75% of Instagram users share information or buy a product inspired by posts that are liked or shared by their friends. (Techcrunch)

➼ 79% of the users on Facebook will like a product or brand page if they receive discounts or some kind of incentives. (MarketForce)

A referral program that works on social media means you can stop marketing on a micro-scale and leverage massive potential customers’ networks.

People are highly likely to engage and share content from social media. This increased exposure also gives an excellent opportunity for your referral programs to go viral.

Setting up the referral workflow from your CRM

If you are using CRM software or similar sales software, you ought to set up workflows that prompt your sales team at the right time to reach out to customers, especially when it comes to referrals.‍

How to Create a Customer Referral Program from Hubspot Step-by-Step

Step 1: Create a referral form in Hubspot and test it.

Step 2: Curate the catalog that you wish to send to the referrer.

Step 3: Create a workflow in Hubspot.

Login to your Hubspot account and navigate to Automation > Workflows. Next, create a fresh workflow by clicking Create workflow from the upper right corner.

Step 4: Select an appropriate trigger for the referral workflow.

Step 5: If the trigger is fulfilled, you can set up a rewarding mechanism from Xoxoday Plum.

Step 6: Congratulations, you have successfully set up a basic referral program from Hubspot.

Scripts your sales and customer success teams can follow when propagating your referral program

Generally speaking, you should ask your customers for referrals when you have proven your value to them. It is not advisable to ask for customer referrals when your relationship is relatively new or if your client isn’t yet satisfied with the work so far.

If and when you decide to start the outreach, your sales and customer success teams need scripts and content to follow up with customers, especially when it comes to convincing them why they should refer to their friends and what is in it for them.

Landing pages that provide a place for your contacts to give you their friend's information

Landing page conversion is a crucial initiative in many marketing campaigns, including a referral campaigns. Data has consistently shown that optimized landing pages are worth the effort. Even if you use professional landing page builders, you can always make changes accordingly. According to Hubspot, customized landing pages targeted at specific accounts generate 12x more leads than those with only 1-5 landing pages.

How do you Design an Awesome Referral Landing Page

Source: GetAmbassador

1. Highlight your value prop in the headline

A good headline should be catchy and convincing enough for a visitor to take action. Your headline is the foremost thing that visitors notice. So keep it compelling enough to make them move down the referral funnel. When crafting a headline, make sure to follow these four tips:

  • Appeal: What is in it for the customer?
  • Relevancy: How relevant is your referral offer to the target group?
  • Clarity: Is the landing page clear enough?
  • Credibility: How credible does the landing page sound?

2. Outline the incentives clearly

How good is your offer? Pie-in-the-sky promises will turn customers off. Communicate the value of your referral reward program clearly to your customers.

3. Showcase social proof

If your referral program is flourishing, why try to obscure it? Sharing success stories adds more credibility to a referral program and further engages your customers to take action.

4. Provide a simple UI-friendly form

The submission form is crucial and can either make or break the deal in turning a visitor into a customer advocate. To convert customers effectively, you need to balance usability while maintaining the overall quality of the data collection.

5. A/B test your landing page

A/B test every element of your reward program to see what works and what doesn’t.

6. Your CTA matters

A landing page’s CTA (Call to Action) is an actionable language that prompts a customer to convert into a brand ambassador. The text of a CTA (most often, a button) must describe the customers’ gain shortly, precisely, and clearly.

Doing this will prompt them to take the action that you intend to. That’s why you will see most brands using CTAs with actionable words such as “Earn Rewards,” “Take Survey,” or “Register Now” to propel a customer down the funnel.

In addition, the design of your CTA should be clean, neat, and must be placed above the fold. Present your CTAs in contrasting colours to grab customer attention.

7. Create a FAQ section

A FAQ section alleviates and helps resolve the queries that your customers might have.

Tips for Creating better Customer Referral Rewards

1. Create a budget and a reward program to incentivize your top customers to refer you

Firms will fail to achieve their customer referral goals if they reward customers in an ad-hoc manner. While expensive unique offerings can be offered as a hook to engage customers, it is neither scalable nor easily manageable logistically if the entire rewarding process is managed manually.

For a rewards program to be successful, marketers and sales leaders should allocate quarterly budgets and explain the significance of customer referral programs in their organization’s bottom line, especially when it comes to reducing CAC significantly.

2. “Moment of Delight” matters

Moment of Delight is the final gratifying step of delivering a great customer referral rewarding experience. While you may do a great job tailoring a customized reward program that suits a company’s cultural needs, there are gaps in implementing a reward program that incorporates your customers’ preferences.

Here are five key things that make a delightfully rewarding experience:

  • Tailored to the needs of your customers.
  • Cover a palette of options.
  • A reward catalog that is updated with new & fresh options.
  • Provides aspirational value.
  • High on Convenience.

Managing an exciting reward catalog is anything but easy. It includes dealing with multiple vendors, getting the best deals, keeping the catalog fresh, and a seamless end-user experience with a robust tech background.

3. Different B2B and B2C Personas may prefer myriad reward categories

A respondent in an executive position would be more willing to give their time in exchange for a $100 charity donation to a Cancer Foundation rather than accept an Amazon Voucher. While the $100 voucher will not compensate for their time, either way, an opportunity to contribute to a cause they care about may nudge them to participate.

A respondent who just attended a research study about vegan products in a forum would gladly choose a voucher that applies specifically to vegan stores. While a cash voucher provides the same value, a vegan coupon serves a better purpose of engaging with the prospects.

With Xoxoday, admins can send rewards across 100+ countries and the currency of their choice. They can surprise and delight customers with custom gifts that make them go wow from various options.

Consumers can access the best pre-negotiated perks & discounts from the best brands and choose from grocery, subscriptions, dining, gadgets, travel, learning, entertainment, fitness, and more.

We use our unmatched buying power and discovery platform at thousands of suppliers to help you build exclusive programs to suit your organizational goals with our discount solution.

4. Measure analytics of your referral program

It doesn’t matter if you are a startup or a large enterprise; having an effective tracking mechanism can help you understand what went right/wrong and course-correct if needed. There are several questions that you need to ask yourself when running a referral program.

  • Who was referred, and who referred them?
  • When were they referred?
  • How effective is your reward program?
  • What is the stage of the funnel the referred prospect is currently in?
  • What is your strategy to nurture and follow up with them?
  • How are you tracking the customer journey and personalizing your outreach to individual accounts? If you are using a CRM already, can you integrate your rewards program with it seamlessly?

5. Choosing the right software

Setting up and executing a referral program with incentives can be a challenging endeavour if done manually. This is why choosing the right software to automate reward distribution can help you set up goals, deliver referral rewards, and analyze the results of your rewards program from the CRM/software you already use.

You should choose software that effectively measures analytics and provides excellent ROI on the money you spend on customer rewards. A customer incentive tool that integrates seamlessly with your existing CRM tools lets you execute your referral program without any hassles.

If you’re looking for a simple, powerful way to set up your referral rewards program software, look no further than Xoxoday. It offers a global reward catalog covering 100+ countries and has everything you need to turn your customers into your brand ambassadors.