Does an Automated Referral Program Make Sense for Your Brand?

automated referral program


When I first joined Buyapowa, I admit I was little confused about how automated referral programs worked. I didn’t quite understand what it meant to automate a process that humans do naturally. I’d seen referral programs run in the past, and it seemed pretty simple. Reach out to your customers, tell them you’ll reward them when they refer their friends, and wait for those friends to show up and make a purchase. It seemed like a pretty organic process, based on the natural relationship between people.

Throughout the course of our daily lives, we are constantly referring our friends and families, and being referred by them: from products and services to ideas and experiences. It’s a commendable human trait, to share our positive (and negative) experiences with the people closest to us. In fact, when I sit back and think about it, I realize I am constantly benefitting from the knowledge that my peers and loved ones share with me.

All Trust is Made Equal; Some is More Equal Than Others

It’s probably fair to say there’s a certain domain of trustworthiness when it comes to providing accurate and pragmatic advice. Some people are very good at recommending experiences – vacation destinations, hotels, airlines, and so on. Others are experts in certain niches, and can provide assistance when I need very specific advice or guidance. For particularly big decisions, I’ll often solicit the opinions of many people before making my choice.

The interesting thing about this, is that the brands that I’ve been referred to throughout the years have no idea who referred me to them, when they performed the referral, why they did it, or what my affinity is to their brand. They know very little about the person who referred me, their brand affinity or their buying patterns. And what a shame that is.

Wouldn’t it be great if there were a system that would just take care of that? Let’s break it down. Say you are a marketer at a credit union, and one of your primary objectives is to direct your marketing efforts towards signing up new high-value members. Like most marketers today, you understand the power of referrals; if you can get each of your high-value members to refer a few of their friends, you’ll save a lot of money on marketing activities. Which sounds better – an email campaign that generates a return on investment of 15 to 20%, or a referral marketing campaign that beats those results by a factor of 10? So, start calling up your customers and asking them to refer their friends – should be easy, right? Not so much.

The Power of Automation

Would you use Microsoft™ Outlook email to generate and track your outbound marketing campaigns? Of course you wouldn’t. As a one-to-one email tool it’s very powerful, but you need to do more. To import and clean large recipient lists, control content, A/B test the creative, send out hundreds of thousands of emails, provide unsubscribe links to comply with anti-spam legislation, track delivery, open, and click-through rates across all channels, generate analytical reports on progress over time, integrate with your CRM system, track landing page performance, qualify and direct responses to your sales teams, you’d obviously use a marketing automation system, right?

Just like any other marketing program that is supported by an element of your automation infrastructure, there are some important issues to consider when implementing an automated referral program.

Of course, you could use traditional business tools to track who referred someone. It’s possible to use basic point of sale systems to manually track and reward referrers and referrees. It’s not easy, but it’s possible. But manual referral marketing programs offer a poor user experience. They make your brand look bad and discourage program participation, which in turn, delivers poor results.

When an automated system is used to manage referral marketing, participants are tracked through the entire process.

Tracking the Referral Lifecycle

An automated referral program can provide some important benefits over traditional systems. When an automated system is used to manage referral marketing, participants are tracked through the entire process – when they first showed interest in the program, when they signed up to become a referrer, when they sent out referrals and to whom.

They are tracked and monitored to see how often they refer, and are reminded to continue to participate in the program. Their rewards are tracked and delivered automatically. Individuals they refer are also tracked when they receive their invitation to become a customer, nurtured to encourage purchase decision and tracked as they choose to make a purchase, become a customer and receive their reward. It would be near impossible to provide this level of service and tracking without an automated system.

What Gets Measured, Gets Delivered

Throughout the process, automated referral programs ensure the performance of the system is quantified, providing you with the same detailed analytics you’d get from any other marketing automation system. You’ll know how well a program is performing at converting members to referrers, lapsed referrers to active, and – most importantly – referred leads to customers. It’s easy to focus on getting a lot of referrals happening, but the real challenge lies in getting those referred to make their first purchase – in our example, to sign up as members of your credit union.

The automated referral program will highlight opportunities to improve conversion rates as participants begin to interact with your program. It can provide automated ways to run campaigns that drive growth, let you A/B test different digital marketing experiences, ensure timely delivery of rewards and integrate with your back end systems to verify eligibility of all participants.

Most importantly, automated systems can help you understand more about the act of the referral. You can:

  • Watch referrals go out and see which channels most participants choose to share the offer (email, Twitter, Facebook, Instagram, Pinterest) and how quickly their messages are opened, clicked and acted upon.
  • Influence the behavior of your referrers by rewarding them for taking positive action or reminding them when they’ve lapsed, as you watch their referral activity.
  • Engage your program participants and learn what’s important to them about their brand experiences, and why it’s important for them to share those experiences with their friends and family.
  • Spot groups of connectors among your customers and segment them to reward and incentivize them differently.

Without the assistance of an automated referral program to achieve this, you’d burden yourself with a large number of onerous tasks that would be difficult to manage. Additionally, programs that are challenging for participants to engage with are, more often than not, likely to fail. Once members discover that rewards take a long time to come, complicated rules limit their eligibility or new members have to undertake a difficult process to ensure referrer and referree are both rewarded, the program will naturally begin to atrophy. Not only that, but your marketers managing the program are constantly distracted by new initiatives, so process-heavy programs are guaranteed to be the first ones shelved.

An automated referral program can influence the behavior of your referrers by rewarding them for taking positive action.

Learn More About Automated Referral Programs With Buyapowa

Many prospective customers have approached us, having struggled over the years to implement and manage referral programs. Often those programs were cobbled together using disparate systems, none of which were intended to perform the specific task required. We are always delighted to find marketers keen to understand more about their customers’ experiences than can be learned with manually intensive processes. Automated systems are designed to eliminate the roadblocks that manual programs leave in the way.

Now that I have a slightly better understanding of how referral marketing works (though I still have much to learn), I find it fascinating to watch marketers discover what motivates someone to refer an experience to their friends and family. It’s a tragedy when brands have no idea when or why this happens, or how likely it is that it will ever happen again. An automated referral program can help bring this knowledge to the forefront of their integrated marketing analysis.

Is your business missing out on valuable leads because you don’t have a referral marketing system in place? Let Buyapowa help you learn to implement an eCommerce referral marketing program that will consistently deliver new customers without the expense of traditional marketing methods. Learn more when you download our free eBook, Power Your eCommerce Business with Referral Marketing.

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