Beneath the surface of any successful referral program is its supporting technology. Word-of-mouth (WOM) marketing has been around for decades, but today’s digital approach to WOM uses innovative marketing tools and real-time analytics to unlock scalability and positive ROI.
Successful referral programs can decrease your cost per acquisition (CPA) to as low as $1, depending on your average order value (AOV), while also doubling your average customer lifetime value (LTV). The ceiling for this success is largely determined by the platform you choose and how you manage your program.
Here’s what to look for in the right referral platform for your brand.
A Proven Track Record
Reputation matters. Has the referral platform in question achieved success for other brands? Has it demonstrated an ability to maintain years-long partnerships with businesses like yours?
Successful referral marketing is a long-term effort. Your brand needs a partner that can continue to support you as your business grows. Look for proven results from businesses that match your profile, both in terms of size and industry. If a platform can offer success stories for brands comparable to yours, it speaks to what they can do for you.
As part of this initial review, you should look for signs that the vendor is tenured in referral marketing and has invested into innovative technology and methods to stay ahead of the curve. Referral marketing is a fast-evolving strategy, and a good referral platform will be constantly rolling out changes to address security and privacy issues, expand platform features, improve ease of use, and deliver better value.
Capabilities that Align with Your Growth Goals
Your business needs a referral platform that can help you achieve your desired results. To identify the right fit, you should determine which KPIs you will be using to drive and track referral marketing success.
Common KPIs include CPA, ROI, customer growth, and LTV. Your ability to achieve your goals and track against these KPIs will depend on the capabilities of your chosen referral platform.
Campaign management is a crucial component of any referral platform. In reviewing campaign management, ask the following questions:
- Does the platform allow for unified campaign management across email capture and referral capabilities?
- Does the platform support unlimited widgets, so you can run evergreen as well as seasonal campaigns?
- Does the platform make it easy to quickly update all the elements of your campaign—the incentive amount and structure (i.e., coupon or account credit), referral emails, widget and email design, and widget placements, in order to stay agile and pursue continual optimization?
The right referral marketing platform will enable and encourage A/B testing—and offer guidance along the way—to help you hone in on what resonates with your customers. No matter how great your initial program launch may be, every day is a new opportunity to iterate and improve upon your original strategy. Over time, A/B testing should lead to increased sharing and conversion rates.
The platform should enable optimization to take place across the advocate and friend conversion funnel. Examples of ways you should be able to optimize through A/B testing include:
- Offer testing for friends and advocates (i.e., $10 vs 10% off)
- Share channel-specific testing—changing subject lines, copy, or imagery across email, social and SMS
- Placement testing of the referral widgets across your customer journey
A critical component of any sophisticated referral platform is its reporting and analytics capabilities. A successful referral program depends on activating and understanding both the referrer (advocate) and the referee (friend).
To understand and optimize both sides of the referral funnel—the advocate and friend activity—you need a referral platform that allows you to report on and optimize this two-sided funnel and drill down to the key metrics on both sides. These metrics include widget impressions by placement as well as share rates, referral clicks, and conversion rates across placements and channels.
When sophisticated campaign management capabilities are combined with A/B testing and robust reporting, a referral platform enables you to drive your desired KPIs and continually optimize your referral program.
Support for International Referral Marketing
If your brand is already multinational or has hopes to expand its customer base globally, your referral platform should offer additional support to enable these international aspirations.
This includes providing support for foreign languages and currencies, as well as widget targeting that can filter audiences by language and geotargeting data. Your business may need a referral platform that offers single sign-on to manage multiple accounts and/or subentities, making it easy to manage multiple international properties within a single account.
As your business grows, your company will face more regulations and compliance demands. Your referral platform should be able to ensure compliance with all major regulations across all of your referral assets and software.
For example, your referral marketing program may be subject to compliance with the American Disabilities Act, as well as consumer data privacy regulations such as GDPR and CCPA. Other regulations, such as the Canada Anti-Spam Law (CASL) and patient privacy laws like HIPAA, may also be relevant, depending on your company’s region of operation and/or its industry.
Operational Efficiency and Cost Savings
A referral platform should not only drive growth but also provide automation that lowers your overall costs. This efficiency provides an enticing referral program to your customers, thus allowing your brand to efficiently scale your referral marketing efforts.
A referral platform should enable sophisticated business rules and fraud prevention tactics to ensure your brand has full control over reward fulfillment. This includes which customers are rewarded, when they are rewarded, and how often and how much they can be rewarded in your program.
Your referral platform should be able to seamlessly automate reward fulfillment for any incentive that your brand wants to provide, such as coupons, account credit, gift cards, or a free gift with purchase. Automated fulfillment further reduces your operational costs of providing a referral program while providing faster service that improves your customer’s experience.
Finally, your referral platform should allow your organization to view the referral activity of every customer in your referral program—and to reject or adjust any incentives when needed. Typically, this part of a platform will be utilized by your Finance or Customer Success teams.
While the referral platform is primarily used by the marketing team to drive growth, don’t overlook the operational costs of a referral program. A sophisticated referral platform will help you minimize these expenses.
Don’t Compromise on Finding a Quality Partner
A well-designed referral program can become your most valuable marketing asset. For more insights into choosing the right referral platform, stay tuned for part two of our series.
Find out how Friendbuy has quickly built scalable success for other leading brands—download our Nuuly case study today.