How To Create A Referral Rewards Program

When you want to buy a new product, what would push you across the line to actually buy it? Chances are probably not good for a disruptive ad, but what about a referral from a friend?

It's no secret that referrals bring in new customers, but Texas Tech University found that out of the 83% of consumers who were willing to refer a product or service only 29% actually did. Implementing a world-class referral rewards program gives your customers the nudge they need to start recommending your store to their friends.

Here is how the world's best brands are creating a memorable and effective referral program.

Provide Desirable Rewards to Both the Sender and Receiver

In order to build the best referral program, you want to reward both parties for a successful referral. These rewards can take many forms (the more creative, the better!) but we've found the most effective rewards for new customers are fixed discounts, percentage-off coupons, or free products for their first purchase.

Uber's program is extremely successful because it understands the value of rewarding both sides. If you refer a friend to ride with Uber, they will receive a free ride and you will get $5. This concept of rewarding both parties is so effective for two reasons:

New customers have an incentive to try out your brand for the first time
Your existing customers will want to refer as many friends as possible to keep earning rewards.

When both new and returning customers find value in your program, you can also begin cutting down on your customer acquisition costs. Every time one of your customers brings in one of their friends, you are saving on the cost of the ad that you would have otherwise used to get them there, allowing you to invest more into your profitable retention strategy.

Not everyone is comfortable sharing through the same channels, so you need to ensure you're providing a variety of options for your customers .

There are 2 different categories of referral channels: public and private. Public channels like Facebook and Twitter allow you to blast a referral link to your entire network and are great for reaching a wide audience. However, for those that prefer more private channels, email, Facebook Messenger, and WhatsApp offer more of personal experience. In our expert opinion, it's always best to use at least one public and one private channel to maximize your program's accessibility.

This concept of choice is one of the reasons that e.l.f. Cosmetics' referral program is so successful. Facebook is my preferred channel for sharing, and with their program I was able to share my referral link on my profile in just a couple clicks. The branded imagery and wording was already set up for me, and this ease of use ultimately convinced me to share it on Twitter, too. If email was the only option available to me, I wouldn't share my link out because I prefer to refer my friends on social media.

Giving your customers many ways to share will maximize the number of referrals you receive because your customers aren't limited by channel. The most successful programs offer Facebook and Twitter for public sharing, and email, Facebook Messenger, and WhatsApp for a more private referral experience.

To maximize the effectiveness of your referral program, you need to create a compelling message that will actually drive conversions. Branding, imagery, wording, and tone all have a big impact on your referral messaging success.

Creating motivating share messaging can be done in a few basic steps:

Add your logo to the feature image to make sure your brand is getting exposure and customers know where the referral is coming from
Make sure the image you choose shows what you sell
Add a clear description of customers will gain by following the referral link
Make the message personal by using words like "I" and "my"

Topps does a great job of incorporating each of these messaging recommendations into their referrals. With logos, product photography, and customized media captions, they have crafted referral messages that are undoubtedly linked to their brand. This makes it easy for customers to convince their friends that purchasing from Topps is worth it.

With 52% of your traffic coming from mobile devices, your referral program needs to be able to function on both desktop and mobile machines. Not only has mobile browsing grown over the years, but this trend will definitely continue.

Uber has one of the most successful referral programs on the planet because they've set a new standard for how easy it should be to refer a friend while on the go. I could be in the backseat of an Uber with a friend and get him to create an account by the time we reach our destination. Replicating this practice will allow you to generate more referrals than ever before.

Jones Soda's referral program appears the exact same way on mobile as it does on desktop, which means their customers can easily get their friends shopping at your store with either the click of a mouse or the tap of a finger.

The best referral programs allow for easy sharing across all devices because that increases the likelihood of referrals coming to your store. Leaving mobile users out of the equation will simply reduce the effectiveness of your program!

Explain How It Works

If you want new customers to really get excited about your program, they need to understand how it works. A great tactic we've seen in the past is to make the landing page of your referral program one that explains the ins and outs of your referral program. Focused on the why, what, and how of earning rewards with referrals, this page will clear up any confusion new customers may have upon clicking the link.

The Klova Sleep Squad has an outstanding explainer page that clarifies everything about their referral program in a very visual way. At a glance, I know exactly how to use their program and the value it provides me. This increases my desire to participate and engage with other areas of their brand.

Getting someone to click on a referral link is only half the battle, so make sure they actually make a purchase by clearly explaining the value they are receiving. Build an explainer page for your referral program so you can clear up any confusion as quickly as possible and reduce program abandonment.

Use Referrals to Make the Most of Your Existing Customer Base

According to a Nielsen report, 83% of people trust a recommendation from their friends and family, which shows that referral marketing efforts are worth it, as long as they are done properly. To make this even more applicable, 66% of people say they trust consumer opinions posted online, making a referral program one of the most trusted forms of advertising on the planet.

To build a high caliber program that gets the most out of your customer base, make sure you are providing value for both parties, giving customers many ways to share, creating motivating messaging, optimizing for mobile sharing, and explaining how it all works.

If you're not leveraging your current customer base to bring in new customers, you are spending way too much on your acquisition efforts. Adding a referral program will incentivize your best customers who already enjoy your store to get their friends to try it out, too.

At the end of the day, a referral strategy is a triple win: the sender and receiver both earn rewards, while you gain high converting customers at a fraction of the cost of traditional methods.