9 Referral Program Wins

We regularly get advice from our friends, family, colleagues, hell even strangers shouting in the streets, on what to buy, what to watch, what to eat, and what to wear. But before we execute that purchase, we tend to look at what others have said about that product or service (even the stranger shouting), in hopes to avoid the dreaded buyer’s remorse. Once we do make that purchase, we then feel the burning desire to share this buyer-experience through social media posts, conversations, emails, and the occasional shouting of our own.

We all have that lovely lady or gent on our Facebook feed that’s constantly spewing (er, stating) their personal reviews of various products. Love it or hate it, when wondering whether to purchase certain items, that friend’s list finds its way into your head.

So, what does any of this have to do with referral marketing programs, you ask? Well, in the most basic form, we trust our friends, families, and sometimes our coworkers when they suggest products to us. Any savvy marketer knows that a key incentive for people to refer their friends (now commonly known as a friend invite) to their business is by handing out rewards, premium content, or free access in exchange for those referrals.

In this post, we’ll talk about why you would want to create referral programs for your business,what drives their success, and highlight 9 brands as examples that have executed excellent referral programs—all for your inspiration purposes.

So, why would you want to use referral programs for your business?

For new businesses especially, before you can start spending thousands of dollars on advertising, you first need to acquire trust from your audience and potential customers. According to Nielsen’sTrust in Advertising Report, referrals are the most trustworthy form of advertising. Customers are4x more likely to make a purchase (we told you) from a referral over any other form of advertising ie: social media ads, billboards, tv ads, and radio ads.

Customers who are referred are 18% more loyal than customers who are acquired through any other form of marketing. Having loyal customers and brand ambassadors can impact a business in many positive ways but, the most important thing loyal customers can affect is decreasing your churn-rate, which is the number of people who leave or cancel during a set period of time.

On top of that, referred customers have a 16% higher lifetime value than customers who weren’t referred. Which means that offering referral programs will provide your company a huge opportunity to increase profit.

How to make sure your referral program succeeds

Just like any marketing tactic, there are key elements to include in your referral program in order for it to succeed. Below are 4 ways you can ensure your referral traffic keeps increasing:

• Provide valueThis might seem obvious but by providing your referrers with an incentive that they can’t resist adds value for them. Doing this will increase trust and credibility.
• Engage your audienceAh, the power of keeping someone’s attention for more than 2.5 seconds (how are we doing by the way?). Getting your audience to ‘do something’ for their benefit drives them to engage with your brand or product, and this will enhance their user experience with your referral program.
• Make it a choiceOne major turn-off for customers is the feeling that they are being pressured or aggressively pushed into making the “right” choice. When creating a referral program make sure you allow people to choose to opt in. Doing so relieves the pressure of using your product or service.
• Keep it simple and above all, easyDon’t make it take more than 5 minutes to complete the referral process. That’s all we have to say at this time (keeping it basic).

Got it? Cool, now check out the brands we chose to showcase their successful referral programs.

#1 – Paypal

PayPal has inspired many companies to use referral programs to drive profit and increase their user base. David Sacks, the original COO of PayPal said that they, “literally paid people to invite their friends.” This initiative helped PayPal achieve 7 to 10% daily growth. Daily! When they achieved their goals, they dropped the Refer-A-Friend bonus, however kept it for Merchants, which they later dropped again after they reached their goals. This kind of referral program is a way for companies to achieve customer acquisition goals quickly and effectively.