Referral programs are the most powerful form of advertising and attract the best customers. They encourage customers to spend more, stay longer, and refer others. Referral programs send a marketing message to people in the best way possible – by word of mouth.

Referred customers are 18% more loyal, generate 16% higher revenue, and spend as much as 13% more because they were referred to them by a friend. One happy customer can spread the word about your company to nine more customers. That’s nuts!

This comprehensive guide will help you get more referrals into your business, whether you choose to build your program in-house or use off-the-shelf software. After building and launching more than 1000 referral programs. I hope that it will be useful for you and your company.

Right. Let’s get started!

Follow these 8 steps to building a powerful referral program

1. Plan Your Referral Program
2. Choose the Reward and Incentive
3. Building Your Campaign
4. It’s easy for people to share your campaign
5. Integrate your Referral Campaign into Your Business
6. Start your Referral Program
7. Promote Your Referral Campaign
8. Keep track of your referrals

Step 1: Plan Your Referral Program

A clear plan is a key to building a successful referral program. It starts with setting goals and describing the process. Then, it moves on to the message that will encourage users to share the campaign with their friends.

Setting goals

You can set your campaign goals and objectives to give you a goal line. You can grow your customer base and encourage newsletter subscriptions. A great referral campaign will be successful if you set clear goals.

Plan how the campaign will work

A referral program can be set up in one of two ways: a single-sided campaign or a double-sided campaign. A single-sided campaign will reward one participant. A double-sided campaign will reward both the referrer as well as the person who invited them. Clear campaign goals will determine the best way for your campaign to work and which option will be most effective.

Consider the Message

How will you position your referral program? What message can you use to get customers to refer friends? And what call to action will convert referrals into customers? Strong messages are key to attracting customers to your campaign. To get customers to invite their friends and to persuade friends to join.

Step 2: Choose the Reward or Incentive

You can choose a single or double-sided reward

As we have briefly mentioned, you can either offer one user a reward or give both the referrer and the person being referred a reward or incentive. There are many types of referral campaigns available. Choose the one that best suits your needs.

What is the difference between a reward and an incentive?

To thank users for taking the desired action, rewards are offered as a “gift”. Incentives encourage users to take the desired action. You can give away products, gift cards, or cash as incentives. Keep in mind the campaign goals you set in step 1 and align your rewards with these.

What should your reward or incentive be?

You should aim to give a reward or incentive that is commercially profitable and benefits your business. You can think about discounts, account credits, coupons, etc. It is always best to select the rewards and incentives that will drive customers back into your business. You should also consider how they will be distributed.

Step 3: Building Your Campaign

In-house Referral Campaign Building

If you have your developer, tell them how you would like the campaign to run. Let your developer know how the campaign should work and who will get rewarded. The designer and developer will need to agree on the design and the format of the campaign.

Referral Software

It’s easier to use pre-made referral software. However, it might not be possible to do all you want. These no-code tools can help you create a great referral campaign without the need to hire a developer. This is often the easiest and most efficient way to get started.

Step 4: Make it easy for people to share your campaign

Talk to your customers on the same channels they talk to you

Your customer should be able to easily refer friends via the channels they already use. You know your customers better than anyone. It makes sense for you to know your customers’ preferred channels so that they can refer their friends to those channels.

You can choose from a variety of sharing options

Referring to friends is easier and more people will be able to do it. Your referral campaign should be easy to share via email, instant messaging, social media, or in person. You might also consider offering other ways to share your referral campaigns, such as clickable buttons or QR codes.

Step 5: Integrate your Referral Campaign with your Business

Connect your referral campaign to your internal business systems and reduce your administrative burden. Many integration apps are available that allow you to connect your referral campaign directly to your CRM (such as this one-click referral app that connects with Hubspot) or to your eCommerce store (such as this referral app that connects to Shopify).

You can create your connectors if you don’t find an integration to work with your business tools.

Step 6: Start your Referral Program

Register Now for Your Referral Program!

Now it’s time for you to publish your referral program. It’s important to remember that successful referral programs go to market quickly and then evolve based on customer feedback.

Encourage customers to share your referral campaign

Encourage your customers and friends to sign up for your referral program. It should be easy for your customers to sign up and begin referring friends.

Step 7: Market Your Referral Program

Tell existing customers about your Referral Program

Promote your referral campaign to your active customers through your newsletters or via announcement mailers. You can create the customer’s referral link using your database. Send them via instant messaging, text, or to your electronic statements and invoices.

Target Inactive Customers

Your referral campaign can be used to encourage inactive customers back to your site. You can add a button that is clickable to your website. Market on social media and send targeted messages to customer records.

Step 8: Track your Referrals

Monitoring the performance of your campaign

You should keep an eye on the performance of your referral campaign. Check out who referred you. Which country is the majority of your referrals from? You can see which campaigns are performing well if you have several at once.

Successful reward Referrals

Consolidate referrals that have been successfully referred. You will need to continue to issue rewards and incentives depending on the campaign to users who have successfully referred friends or users who have converted.

In Summary

Referral campaigns that work are built on a great product or service and a loyal customer base. Referring customers to their friends is key to referral marketing. Make it easy for them to do this. Referral marketing campaigns, no matter how popular your product is or how beloved your brand may be, are the best way to increase word-of-mouth referrals and see real customer growth.