Some types of referral incentives will play better with your customer base and business model than others. Rewarding referrers with store credit is probably a better bet for an apparel retailer than a funeral home. What do you think will create excitement for your customers? Here are some referral program ideas to help you think this through.
LegalZoom provides cost-effective legal documents to consumers for routine legal needs. The majority of their customers are not dealing with legal issues every day; they only require occasional access to a service that will help them create a last will, incorporate a business, trademark a name or take care of other common legal matters. For LegalZoom, a cash reward for referrers makes more sense than store credit because their customers simply come back less often. Cash rewards also make sense for insurance companies, student loans and other less frequently purchased products.
Store credit is good referral incentive for businesses that have customers who regularly come back to their store. Store credit is more meaningful if a customer feels that they can spend that reward money in a reasonable time frame. For example, Naturebox offers a $10 reward to referrers. If your business sells products frequently to the same person, store credit is a good fit.
Companies that offer subscriptions such as Dollar Shave Club or Vanity Fair do well by offering a subscription version of ‘store credit,’ namely a free month of service. Premiums (see below) are also tried and true.
Remember those old TIME and Sports Illustrated TV commercials that offered a free watch or commemorative book with your subscription order? The idea of a premium or — physical item — is still alive and well.
Ministry of Supply is a ‘high tech’ clothier. Through advanced materials science and engineering, they are inventing the future of business apparel. MOS offers referrers a free shirt they call a ‘core base layer’ that retails for $28. For a company that is evangelizing a new technology, getting more of it in the hands of your customers is an exceptional proposition.
Upgrades also work well with cloud-based subscription services. If you are a SaaS company, consider offering your referrers a higher account tier with access to special features or other enhancements. Upgrades also work well for non-business (consumer) subscription services like Hulu.
Some companies start their referral program offering no incentives in order to gather baseline sharing and referral conversion metrics. In fact, terrific performance gains have been made – using A/B testing tools – by tweaking share widget copy and images alone.
Align your business model, customers’ sensibilities and referral program incentive to create an effective, high-yielding referral program. Plus, you can always tweak your offer, through A/B testing, to find even higher returns.