Because the concept of referral marketing is still somewhat new to many companies, some marketers and growth strategists opt to start small — launching a referral program, but testing it with just a few dozen (smaller companies) or a few thousand (larger enterprise brands) customers before unveiling it to their full database of contacts.
While that “pilot” approach might make sense on the surface, it almost always fails.
Here’s why: Just like converting web traffic into actual customers (and converting those customers into repeat buyers) requires volume, referral marketing is also a numbers game. It’s a funnel that, frankly, requires a scientific blend of quantity (participants) and relevance (messaging and incentives).
Another problem with the test approach is that it’s incredibly difficult to know who your biggest fans and ambassadors are until you execute a referral marketing program at scale. In fact, we’ve consistently seen B2B and B2C companies assume they know who their “best” customers are, only to see disappointing referral results from that base of contacts.
However, when these companies open up their programs to everyone — customers, partners, vendors, fans, etc. — activity spikes and the referral funnel begins to take formidable shape. Once you add the benefit of time (more on that later), businesses begin to see trends and generate intelligence that informs their entire marketing strategy.
So, what can you do to optimize your referral program to engineer those results?
1. Auto-enroll your entire database (and consider opening your program to non-customers)
You can’t know who your best ambassadors will be without giving them the chance to refer and promote your brand. By auto-enrolling your database and opening your program to non-customers, you’ll gain the critical mass of contacts you need to scale referrals and gather important customer intelligence.
2. Add a refer-a-friend widget to all of your high-traffic pages
For B2B companies, this might include your home, pricing, and features pages (and your native app). For B2C companies, this means featuring the widget on your homepage, post-purchase page, and mobile app. Doing this improves the visibility of your referral program and increases the likelihood that more people will participate in it.
3. Segment your program for specific groups of ambassadors
It’s important to point out that auto-enrolling doesn’t mean opening the gates to the masses and blasting them with the same, generic messaging. Allowing everyone to access your program is one thing. Creating custom referral programs for a variety of customer segments within that pool is quite another. With the latter, the idea is to personalize campaigns, messaging, and incentives to the specific interests and motivations of each type of ambassador.
The More Brand Ambassadors, The Merrier
While it might seem natural to test first with a small group and scale later, that approach typically results in “test and fail.” A better strategy is to start with two programs — one that’s public facing and incentivizes new shoppers to make their first purchase, and a second one that’s tailored specifically to all of your existing customers.
This will ensure that your referral funnel has enough contacts in it to generate meaningful analytics and drive a high volume of conversions. As researchers from the Harvard Business Review put it: If you’re not proactively seeking ways to generate referrals, you’re likely ignoring opportunities to drive “stunning profits.”
Posted July 13, 2017 in Referral Marketing