Consumers trust their friends more than brands, so it’s no surprise research shows peer-to-peer recommendations are more powerful than business-to-customer (B2C) relations. This is called Referral Marketing and if you aren’t taking advantage of it, you are missing a huge opportunity to boost sales and gain more customers.
Need more convincing? By implementing a referral campaign, virtual storage site Dropbox grew their userbase 40 times in just 15 months without spending a single dime on extra advertising. But, it didn’t stop there. 35% of Dropbox’s daily signups are from referrals.
While referral campaigns are an important tool that can be used to increase your customer base and sales, not all campaigns are created equal and, like with most marketing strategies, you’ll have to find what works for you and your company. But, let’s just take a look at some of the campaigns currently available:
What they did well: Groupon, a deal-of-the-day website offering discounts for local and national businesses, sets out a clear reward for a specific task: Get $10 when a friend buys their first Groupon. Simple enough. The site then lays out all the ways you can share this deal with friends to start earning your reward.
What needs improvement: The Refer-a-Friend page is pretty hard to find. In fact, I had to run a Google search to just find it. Not so good if the referral campaign is meant to attract more customers.
What they did well: Fabletics, a women’s athletic wear company, also gives users a clear task and reward. But, they take it one step further and give new customers 50% off their first order making the referral beneficial for both the referrer and the referred, called a two sided campaign. Like Groupon, Fabletics also displays a few different options for users to share and refer their friends.
What needs improvement: Also like Groupon, the refer-a-friend page is a little hard to find. The page is linked in the website’s footer, but can also be found by clicking on the ‘Invite Friends’ link under the ‘My Rewards’ tab in ‘My Account.’ Not exactly a simplistic process.
What they did well: Marriott, an international hotel company, again shows exactly what their reward will be for a specific goal. Plus, Marriott offers a reward to referred customers as well, creating a two sided campaign just like Fabletics!
What needs improvement: The campaign only lets customers share the offer via email so the site isn’t taking advantage of the many social avenues available to it.
What they did well: I’m seeing a trend here! MissionCute, a monthly home goods subscription box, also gave their customers a well-defined expectation and reward. Customers are directed to the referral page by clicking ‘Earn a Free Box’ under the ‘Community’ navigation menu, providing a clear and visible campaign. Compared to the above campaigns, MissionCute has offered an abundance of social sharing options for the referrals.
What needs improvement: They could consider running a two sided campaign to entice more referred customers to join, but that’s not entirely necessary.
What Makes a Successful Campaign?
Now that we have seen some campaigns in action, it’s time to figure out the basic components that make up a successful referral marketing strategy.
- Make your referral campaign visible. Running a referral campaign won’t do you any good if your customers can’t find it. Make sure the campaign is easy to see and navigate to. Further, be sure the campaign is easy to understand with a clear task and reward so customers know exactly what they are getting for their efforts.
- Give an adequate reward. Don’t cheat your customers, they will catch on and abandon your brand. It’s better to not offer a referral campaign, then to have a poor reward. That said, the reward doesn’t need to have a monetary value. Instead, you could offer a free product like a t-shirt if desired. However, make sure you do the math on these offers to make sure you aren’t pushing yourself into the red just to gain more customers. A rule of thumb? Don’t give a reward for referrals that only sign-up for a trial or free account, only reward a referral once a purchase is made.
- Set a realistic referral goal. Customers won’t even try if you have unrealistic expectations of their ability to garner referrals to the site. Be realistic in your expectation and make sure that the task is proportionate to the reward provided. The campaign won’t work if no one thinks trying to get referrals is even worth it.
- Give them options. The more avenues for sharing you provide, the more likely people will share and give referrals. If nothing else, be sure to allow sharing to the most popular social networks for your site or product category. Some people love to share on Facebook, while others may only want to tweet or email out their referrals, make sure you are giving them that choice.
Optimize Your Campaign
As usual, be sure you are measuring your program and constantly working to improve it. People aren’t signing up for the referral program? Your campaign probably isn’t visible enough. No one follows through on the campaign? Your incentive might be weak or your expectations set too high. Always be looking at these things to improve your campaign and connect with your customers.
Don't know where to start?
Lucky for you AddShoppers has our very own Refer-a-Friend app! With just one easy to launch code you could have your referral campaign up and in no time. Check it out here.