What incentive are you going to give your customers, or advocates, when they deliver new customer conversions to you? Most campaigns feature one of two offer structures:
Your existing customer, the advocate, receives a reward for sharing your brand and delivering new customer conversions. This can be in the form of a discount toward future purchases, account credit, a gift, or other incentives such as a third-party gift card.
Your advocate receives their incentive, and their friends are also enticed with an offer to become a new customer. Common examples of this offer structure are promotions such as “Give $10, Get $10,” which reward both the advocates and their friends when new referral conversions occur. This offer structure is more common because it is proven to yield higher ROI.
In practical terms, how will you deploy your referral program and manage it on an ongoing basis? The referral program itself must be highly accessible and super easy for your customers to use. But it must also allow your marketing team to manage offers and analyze performance, and allow your support team to address customer support inquiries.
And then there’s the need for automation, particularly if you want your program to scale. A scalable referral program must automate reward fulfillment, facilitate business rules such as minimum purchase requirements, distinguish new customers from repeat buyers, and incorporate waiting periods for returns and cancellations. These are just a few of the back office considerations you need to address to achieve sustainable success with referrals.
A comprehensive referral platform is your best bet for implementing professional, engaging referral assets that facilitate referrals between your advocates and their friends, while also providing the technologies to support your business operations requirements.
Let’s start with sharing enablement:
Email is one of the two highest-converting channels for referral programs. When customers refer via email, we see open rates as high as 80 percent. Our data across thousands of clients validates that your advocates love to share via email and that referred friends who receive these emails are highly captive and very likely to engage with these referral invitations.
When you activate referrals via email, here are a few technologies you will need: the ability to customize and A/B test subject lines and the email body, analytics specific to this referral channel, a high domain authority for deliverability, and CAN-SPAM compliance technology. A big bonus would be an automated reminder email for friends who do not convert; this reminder can boost the performance of the email channel by 30 percent.
Personalized URLs (PURLs)
Another high-performing channel is the personalized URL, or PURL, which is a personalized referral link that your customers can copy and paste when referring. The power of personalized referral links is that advocates will share them in many different ways—via text, in Slack, or even in a post on their personal blog. In fact, PURLs and emails usually occupy the No. 1 and 2 spots for highest-performing referral channels. PURLs should be short and preferably easy to read. The ideal PURL has a vanity component, meaning it contains the name of the advocate in the link itself.
One of the easiest share actions is to share via text/SMS. Your referral widgets should allow the user a one-click option that launches SMS on their phone and pre-populates the SMS message with compelling copy plus the advocate’s referral link. All the user should have to do is choose their recipients and send. Ideally, your widgets should be responsive to know when a user is visiting on a mobile device versus their desktop and therefore display the SMS option only when on mobile.
Your sharing widgets should cleanly present the different sharing channels that are right for your brand, be they Facebook, Messenger, WhatsApp, and/or Twitter. Most social networks have APIs to facilitate friendly sharing experiences, where copy and imagery can be customized to entice viewers to click through.
An effective referral program should take advantage of these interfaces to garner high-quality referral traffic. Over time, with robust analytics across each social channel, you can optimize which social networks are best for your customer base.
Desktop and mobile widgets
Your referral widgets are the center of referral activity for your customers. As such, they should be elegant yet highly sophisticated apps unto themselves. Widgets should be placed at different locations on your site and mobile app, in line with referral marketing best practices
: a primary CTA, a post-purchase page, a landing page, and an account page. Each placement will have its own considerations for real estate and display behavior (e.g., embedded versus overlay).
Widgets should combine clean design and imagery with compelling copy, while making it easy for your customers to share quickly into their desired channel or copy their personal referral link to share wherever they choose. And without a doubt, your widgets must be mobile-responsive. Ideally, your marketer can update copy and imagery through a simple UI and make the widgets render perfectly on desktop and mobile. Furthermore, referral widgets should display the appropriate sharing channels in a mobile-responsive state, such as SMS and WhatsApp.
Analytics are essential for optimizing your referral program over time. As a top-line measure, you want to monitor advocate sharing rates, total referral clicks, and referral conversions. But to truly maximize performance, you need to understand the performance of each sharing channel: email, personal URLs, SMS, social, and so on. Doing so allows you to get the most out of each channel while also allowing you to spot anomalies in a specific channel when the reason may not be obvious.
Business rules, reward validation, and fraud prevention
At Friendbuy, we often say, “Make your offer compelling, but make it a high bar.” Your referral program should know the difference between a new customer and a repeat buyer, but that’s just the beginning. Should your offer be combined with a minimum purchase requirement to make it profitable? Do you need to account for returns and cancellations? Is there a free trial that must convert into a paid plan before issuing the advocate reward? How will you handle bad actors who try to game the system through a variety of means such as fake email addresses and manipulation of cookies? Good, core technology will allow you to address these concerns and many more at scale.
As your business scales, your referral program will as well, generating thousands of shares and referral purchases. Automation is key to handling the increased volume. Without it, your business operations may suffer under the weight of a successful referral program. Here are a few examples of automation in action for referral programs:
- Triggered emails to advocates and friends reminding them to take advantage of offers and fulfill rewards
- Automatic session-based discounts for referred friends
- Automatic deposits of account credit for advocates who’ve earned them (with full validation of business rules)
- Maximum rewards earned in a month or a year, with triggered messaging to reduce support inquiries.
Once your program hits an inflection point, you may find yourself in a catch-22 struggling to address these concerns, so it’s best to build with automation in mind from the beginning.