Effective Referral Programs: Data-Driven Strategies for Growth

Effective referral programs are more influential than you may think. In fact, 82% of Americans seek recommendations from friends and family when considering a purchase. Additionally, 67% say they’re at least a little more likely to purchase a product after a friend or family member shared it via social media or email - for example, through a referral program.

“Empowering customers who love your products to help you with your marketing efforts is a strong growth driver.” -Gartner

While this is all very compelling, what types of results are real companies seeing from referral marketing?

Let’s take a look at two very different brands.

A global B2B software and services company in the tech industry faced a challenge most SaaS companies dream of: The business had a large base of loyal customers who were eager to spread the word about the service, but no way to measure and track those referrals. Without that capability, the business was missing out on valuable data and the opportunity to influence, track, incentivize, and scale word-of-mouth.

So they turned to referral marketing technology.

And three years later, the company saw a conversion rate from referrals higher than all other marketing channels combined.

Here’s a closer look at their success.

Another example is a socially-conscious fashion and lifestyle brand with Instagram-worthy products that was generating quite the organic buzz. Given the shareability and viral nature of the brand, the company knew referrals and word-of-mouth would be key components of its growth strategy.

So, early on, the company built a basic referral program in-house.

The problem? While that program delivered some results, it lacked the flexibility and functionality to customize referral incentives and commission structures, and it wasn’t set up to scale.

To address those issues, the brand set out to find a referral marketing solution. And in just four months, the company’s referral program has generated $50,000 in new revenue — a 400% return on its investment.

That’s just the tip of the iceberg.

What can marketers take away from the success of these two very different brands?

Across a variety of industries, referral marketing is the go-to channel for growth. The best kept secret of the most successful referral programs is to treat your campaigns just as you would any other high-value customer acquisition channel — invest in process, expertise, and technology while incorporating it into every aspect of your marketing strategy.

Based on our learnings from both of these companies, here are 3 ways to run an effective referral program:

1. 1. The program needs to be visible

A referral program should be hosted on a high-traffic page on your site, making it highly noticeable and easy to access. Adding a link in your navigation header, sidebar, or even a pop-up in the middle of your page will lead customers to take action and sign-up.

2. 

   2. Understand your audience

The best referral marketing programs operate with a deep understanding of who they’re targeting, where those people are active, and which incentives will drive positive actions. Studying their motivations and preferences before you reach out is critical to success. If you offer the wrong incentive to the wrong audience in the wrong environment, your referral program will fail to generate results. 

3. 3. Customize and automate

Whether it’s email workflows or reward payouts, automate as many parts of your program that you possibly can. For example, keep your program members in the know with clear communication about the referral process. From triggering an email when a new member signs up to sending an email when a commission is approved, having an automated referral program workflow in place can cut down the time and resources your marketing team has to spend on sending out emails.

The most effective referral programs share a common thread

It's the fact that referrals are fully baked into the sales, marketing, and customer support experience. Referral CTAs are included on the company’s home page, in blog posts, weekly newsletters, and social ads. Employee email signatures feature referral messaging. And the referral program is fully integrated with other critical applications and systems used by the entire company. For referrals to consistently deliver bottom-line results, they must be woven into who you are and how you operate.