REFERRAL MARKETING STRATEGY

How to Run Referral Contests That Increase Revenue

by Emma Kimmerly

November 29, 2022


Referral contests marry the two worlds of referral marketing and sweepstakes marketing for results that are unparalleled in any other type of marketing campaign. 

Think: double the incentive to share and triple the brand exposure.

Not only do they bring new customers to your business, but they also increase engagement with your brand. As you can imagine, this kind of marketing campaign can significantly impact your business.

Referral contests are easy to set up alongside your existing referral programs and only take minutes to publish. And if you don’t have any referral programs set up, then contact our referral experts, and we can help you with that, too 😉

Here, we’ll look at the ins and outs of referral contests and how to set one up for your business.

Jump ahead:

What is a Referral Contest?

A referral contest is one of the best referral program ideas because brand advocates can win rewards for every referral they make. It relies on people's love of competition. 

An Advocate, aka existing customers, has to invite even more of their Friends to try or purchase your product. The more referrals the Advocate invites, the greater their chances of winning a special gift. And as a reward, the Advocate is entered into a prize draw or receives a gift card, gift bundle, or shopping spree to your site. Remember that a referral contest's special prize must be good enough for the participants to compete for in the first place. 

Everyone wants to be at the top of the leaderboard, so referral contests are terrific for gaining new leads and rewarding customers simultaneously. 

Recommendations given by friends and family influence 74% of people, and nowadays, that has extended to the internet, with consumers sharing comments and reviews online. You can tap into some of that influence by doubling down on the incentive to spread the word about your business. 

 

How Do Referral Contests, Sweepstakes and Giveaways Work? 

This type of marketing strategy has a special prize and is held within a specific time period, making it a contest. And people love contests. Referral contests incentivize Advocates to tap into their network of friends and family for a chance to win the contest prize. 

The unique gift that Advocates could win in a referral contest is available to only the top referrer or just a handful of loyal customers, such as swag or a free product bundle

The reward must have a limited supply and be exclusive to the contest to make it appealing. Consider who your audience is and what reward would most influence them to share.

Often referral contests have a set time limit. So, aside from making new referrals and the chance of receiving a special gift, the Advocate with the most referrals within a specific time frame wins the bonus gift. 

The strict time period creates a sense of urgency, pushing Advocates to invite as many Friends as possible. It can be a double-edged sword, too - the quality of the leads may not be that great. It is best to base winners on successful conversions, like the Friend has to make a purchase or sign up for a subscription. 

This type of refer-a-friend program can be part of your seasonal referral campaigns and tied to a holiday. Think of it as one of those referral marketing ideas that are super flexible. 

Key takeaways:

  • The reward must have a limited supply and be exclusive to the contest to make it appealing.
  • The strict time period creates a sense of urgency.
  • It is best to base winners on successful conversions.
  • This type of referral campaign can be held periodically throughout the year, during the holidays, or other events.

 

How to Launch a Referral Contest

Now that you better understand what a referral contest is, let's get into the nitty-gritty details of the different parts of a contest and how to launch it successfully. Below are the steps to help you establish a referral contest. If you have any questions, don't hesitate to contact our team for more guidance on what would work best for your brand. 

 

Set referral contest goals 

There are many ways to reach more customers and increase your ROI, but first, you need to figure out your goals for the referral contest. What is the outcome you want to achieve? This will help you identify the type of contest to run, what rewards and incentives will work, and how long the contest will last. 

In general, the three main goals of a referral contest are:

  • Create greater brand awareness. Advocates will refer their Friends, thereby promoting your brand. 
  • Attract more customers. The incentive that Friends can receive will encourage them to make a purchase. 
  • Engage with current customers. Advocates who join the contest will likely make a repeat purchase.

Referral contests goals could also be to:

  • Grow newsletter subscribers or sms lists
  • Promote referral programs
  • Increase social media followers
  • Promote a new service or product
  • Attract more website traffic

It is also good to think about how you will reach your customers. With Friendbuy, you can add a call to action button on your website, a social widget, a post-purchase overlay, or include a button in your app or your newsletter. The point is to make it easy for Advocates to share it with their Friends. 

 

Design contest entry requirements 

Any referral contest should have contest rules and precise requirements for Advocates and Friends to follow. This makes the contest fair and gives participants all the necessary information. (Contest rules also help protect you legally.)

Some of the rules to include in a contest are:

  • What the Advocate has to do to join the contest 
  • What has to happen before the Advocate can receive a reward
  • What the Friend has to do (make a minimum purchase, start a subscription, etc.)
  • When the contest starts
  • When the contest ends
  • How Advocates can enter the contest raffle
  • How will winners be chosen
  • If the contest has location limits 

 

Choose rewards for Advocates and Friends

In Friendbuy's dashboard, Advocates are current customers who refer Friends or new customers. If it is a successful referral with the Friend converting and becoming a customer, the Advocate receives a reward, and the Friend gets an incentive. 

The type of reward and incentive is central to the success of a referral contest - it has to be better than any referral campaigns offered by your brand. 

You can choose to run a referral contest with a one-sided incentive, but it is better if both the Advocate and the Friend get rewards. 

PRO TIP: Remember that the reward and incentive should be within your budget and ultimately increase your ROI. Speak to our team about what offerings make the most sense for your business. 

Choose an eye-catching incentive 

In the Friendbuy dashboard, the referred Friend receives an incentive: a discount, gift card, free subscription, swag, or free products. 

If there is an existing referral program, the referral contest incentive should be better than what is offered in your current referral program. So, if the referral program offers a percentage discount, the contest incentive could be a dollar amount, discount, or free products.

Referral incentives are essential as it drives new customer acquisition. The incentive is an extra push for the referred Friend to take action and make a purchase. These are the types of incentives to offer:

  • Dollar amount discounts
  • Percentage discounts
  • Free subscription months
  • Free trial periods
  • Free shipping
  • Free products or samples
  • Gift cards
  • Branded merchandise

Learn more: Setting Up a Friend Incentive - Friendbuy Help Docs 

 

Choose enticing rewards 

A referral contest is an opportunity to identify "super" Advocates, those customers who will refer as many friends as possible to win a reward. You can reward Advocates for various triggers, such as the number of Friends who bought products or shared the most on social media. A contest raffle is also another way to appeal to Advocates. For every referral, they get a ticket and enter into a raffle to win a prize. 

The types of referral rewards that work well in referral contests are:

  • Branded swag
  • Store credit
  • Third-party gift cards
  • Cash prizes
  • Free products or services 

But we’re not talking about the usual 20% off discounts. We’re talkin’ head-turning, jaw-dropping rewards that they haven’t seen in your referral program before (or maybe ever will again).

If you want the referral contest to appeal even more to Advocates, consider offering secondary prizes or a consolation prize. If Advocates cannot get the top prize, they are still in the running for a prize to reward them for all their effort in referring friends. 

For example, you could give a tiered reward like Burt’s Bees Baby. The grand prize could be $500 worth of products, while the second place receives $250 in products and $100 worth of products goes to third place.

 

Learn more: Setting Up an Advocate Reward - Friendbuy Help Docs 

 

Create a dedicated landing page 

One of the most critical parts of a referral contest is the referral landing page. It is a webpage where all the details of the referral contest live. Advocate share rates can be as high as 45 percent for customers reaching this asset, and the Friend conversion rates can be up to 10 percent

The landing page should include these details:

  • Rules of the referral contest
  • Rewards 
  • Social sharing options
  • The form to join the contest or the form to refer people

These are Friendbuy's rules for an effective landing page:

  1. Identify the Goals Of A Referral Page. The page should expand a referral program's email list, boost customer referrals, improve customer retention, and increase sales or revenue.
  2. Use Good, Clear Copy. The referral messaging copy should be clear, concise, and encourage people. 
  3. Make It Easy To Promote. The page should be easy to get to and share the referral program.
  4. Use Conversion Optimization Tactics. The page has to load quickly, look good, and be easy to use.
  5. Use A/B Testing. One of the best features of Friendbuy is how easy it is to do A/B testing and figure out the best copy and images for your referral contest.

The landing page is the welcome mat for new customers. These are the tactics to use to increase referral landing page conversions:

  • Direct referred Friends to the homepage
  • Present referred visitors with a welcome widget
  • Generate a dynamic message in your referral landing page
  • Personalize the welcome experience

Don't worry; Friendbuy makes it super easy to create a custom landing page. If you have five minutes to spare, you can create one in four steps:

  1. Create a page on your site like yoursite.com/referral-page.
  2. Pick a referral template and edit the widget on your Friendbuy account.
  3. Configure the widget settings to "embed."
  4. Paste the corresponding widget snippet into the unique page you just created. 

Learn more: How to Set Up a Friend Landing Page - Friendbuy Help Docs 

 

Promote the referral contest far and wide

Once your referral contest is set up, it is time to get the word out about it. Instead of spamming customers, a more nuanced promotional plan is worth the effort. Below are the best practices when it comes to promoting a referral contest.

Referral Emails

Referral emails are our bread and butter over here, and an email blast is the first step to promoting your referral contest. You can also promote the contest in a post-purchase referral email or after they leave a positive review. 

Using email marketing to promote your short-lived referral contest is a no-brainer since your customer emails are ready and waiting. Here are the ways to optimize an email blast:

Reaching customers through their email box is one of the easiest ways to get them to join a referral contest. All they have to do is add their Friend's email addresses and hit the send button, and they are on their way to earning a prize!

Referral Widgets

A referral contest gives away products and services, but not all contests successfully increase a brand's customer base, even with all that free stuff. One of the reasons is the "friction" it takes for Friends to convert to a customer. 

The process has to be smooth and referral widgets are a great tool to make it as smooth as butter. 

A referral widget is a form that customers fill out to sign up for the referral contest. It also allows them to share the referral contest with their Friends. Think of it as the gateway for the Advocate to join the referral contest, so it should be easy to understand and use. 

Unbounce's widget design is straightforward and offers different options for Advocates to share the contest with their Friends.

Learn more: 16 Sweet Ecommerce Referral Programs: Awesome Widget Designs 

Post-purchase overlay

Why not reach out to customers while they are still on their "shopping high"? Since they just bought something from you, they like your products and will likely join a referral contest. 

A post-purchase overlay is a window that opens once a transaction is completed and encourages the Advocate to join a referral program. These overlays drive high share volume and program awareness while delivering average referral conversion rates of 8 percent.

Friendbuy makes it easy to create effective post-purchase overlays for your campaign. 

Referral ribbon

A Friendbuy Ribbon is another way to display a referral widget so that you can promote a referral contest or any referral program. It is a small button placed along the border of a webpage across your site with promotional text about the referral contest. 

Because the referral ribbon can be seen on any page a customer visits, there is high visibility and a likelier chance that a website visitor will find out about the referral contest. In addition, once the ribbon is clicked, an overlay widget with the referral contest information and sign-up is displayed. 

Learn more: How to Set Up a Ribbon - Friendbuy Help Docs 

Social media

Let's face it; we're always on our phones and the computer in one app or another. So creating a targeted campaign on social media to promote a referral contest is an easy way to reach current and potential customers. 

You can use social media by placing ads to reach a target audience and type of customer. Or Advocates can share their personal referral link on their social media accounts to maximize their participation in your referral contest.

Your website is the main home for your brand and any referral campaigns you host. So by casting the widest net and going to where customers are on social media, you’re bringing your customers home. 

Friendbuy makes it simple to include social referrals in sharing widgets so customers can instantly post the referral contest to their social media accounts. But, again, the point is to make things super easy for Advocates to share with their family and friends. 

If you haven't already done it, these are the places you should add social referral links to:

  • Homepage
  • Newsletter
  • Order confirmation/post-conversion page
  • All social media bios
  • Twitter (tweet a link to your stand-alone page)
  • Facebook Page (post a link to your stand-alone page)
  • LinkedIn (post a link to your stand-alone page)
  • Product pages
  • Blog pages
  • User account pages
  • Customer service emails
  • Help desk
  • Stand-alone refer a friend page
  • Transactional emails (order confirmation, shipping confirmation, etc.)
  • Trigger emails after positive feedback or post-purchase

By now, you have found some inspiration on what you can do for your referral contest. Just remember that when promoting a referral contest, use all the available marketing channels you have and get the word out to the most people!

 

5 Referral Contest Ideas and Examples

Let's see how Friendbuy's customers run their referral contest with these examples:

1. Week-long referral contest

Spartan, a fitness brand, ran a week-long referral contest where the top three referrers won swag, a Spartan Fit book.

  • Friendbuy customer: Spartan, a fitness brand
  • Referral contest type: the most referrers win swag
  • Referral trigger: Friend needs to sign up
  • Contest length: one week
  • Contest prize: Spartan Fit book

 

2. Collaborative referral contest

Fashion brands Velvet, Norden, Beek, and Chimi, held a collaborative sweepstake where the winner received $1000+ of products.

  1. Friendbuy customer: multiple fashion brands - Velvet, Norden, Beek, Chimi
  2. Referral contest type: collaborative sweepstakes; every referral is one entry to the sweepstakes
  3. Referral trigger: Friend's email is collected 
  4. Contest length: two weeks
  5. Contest prize: $1,000 worth of products

 

3. Referral contest with tiered rewards

Naturebox, a snack food subscription service, had a referral contest with tiered rewards. 

The grand prize was $300 worth of products and a $100 Amazon gift card, while second place received $200 of products plus an Amazon gift card, and $100 worth of products and an Amazon gift card went to third place.

  • Friendbuy customer: Nature Box, a snack food subscription
  • Referral contest type: contest with tiered prizes, the most referrers win products and a gift card
  • Referral trigger: Friend has to try Nature Box
  • Contest length: two weeks
  • Contest prize: $20 for Friend and Advocate, plus the top 3 referrers get special awards - 1st place $300 worth of products + a $100 Amazon gift card, 2nd place $200 worth of products + a $100 Amazon gift card, 3rd place $100 worth of products + a $100 Amazon gift card.

 

4. Voucher has to be used 10 times to receive swag

On Running, a fitness fashion brand, gave referred friends 30% off their purchase and once the Advocate's voucher was used 10 times the Advocate received a beanie.

  • Friendbuy customer: On Running, a fitness fashion brand
  • Referral contest type: voucher has to be used 10 times to receive swag
  • Referral trigger: Friend has to make a purchase
  • Contest length: three weeks
  • Contest prize: an Advocate receives a free beanie once the voucher is used 10 times and 30% off for Friends

 

5. Every referral share = entry to the sweepstakes

Smile Direct Club, a telehealth dental platform, held a referral campaign where each share made by an Advocate was an entry to the sweepstakes. The winning entry won a $500 third-party gift card.

  • Friendbuy customer: Smile Direct Club, a telehealth dental platform
  • Referral contest type: sweepstakes, each share is an entry ticket to get the chance to win a third-party gift card
  • Referral trigger: Advocate has to share the referral code 
  • Contest length: two weeks
  • Contest prize:  $500 third-party gift card for the winner of the sweepstakes, Friend gets $100 off aligners and Advocate receives a $100 Amazon gift card when the aligners ship.

 

Are you ready to launch a referral contest?

When a referral contest is run for a limited time and offers better rewards than an ongoing referral program, it is more likely to be a successful referral contest. But, as we have laid out in this post, it's not just about giving away prizes. The referral campaign should be consistent with your brand and increase your customer base.

After all, a referral contest is another type of word-of-mouth marketing, so the ultimate goal is to increase brand awareness and your bottom line!

A referral contest is like a special event that can drum up interest in your brand and it is worth the extra push to gain new leads and keep loyal customers happy. We know you are fired up to get started, so please contact us so we can help you figure out the best referral contest for your brand.