Good news: You have decided to delve into the realm of referral marketing and launch a customer referral program for your e-commerce site. If you read the first blog of our two-part blog series dedicated to customer referral programs for e-commerce sites, you were enlightened on what referral marketing is, what a referral program looks like for an e-commerce business and how you can identify the program ROI to determine if a customer referral program will work for your e-commerce business. If you haven’t read the first blog, or are still uncertain, please check it out.
Now it’s time to learn more about client referral program best practices so you can launch a program that thrills and excites new and existing customers. In the second blog of our two-part blog series, we will cover client referral program best practices, including common referral rewards, how to determine what will motivate your customers, what rewards will work best for your business and how to promote, monitor and optimize your customer referral program.
How to Create the Offer – Client Referral Program Best Practices
This is ultimately one of the most important steps of a referral program – determining the offer and getting it right. Before you decide on what your reward will be, let’s take a look at the different types of incentives:
(We’ll use a $20 reward for simplicity’s sake)
- No incentive – Please just share with friends!
- Single- sided – Refer a friend and receive $20
- Double- sided – Refer a friend and you both will receive $20
- Fixed rewards – Refer a friend and receive $20
- Variable rewards – Refer a friend and choose your reward – ($20/20% or 20 points)
The type of incentive you use will be dependent on what will work best with your customer base and target market – referrers and referees… more on that later.
We built a program for Mosquito Joe called Share the Mojo. The double-sided referral program rewards both the referee and the referral with $25 when the referee spends a minimum of $39. The referrer will also receive rewards for signing up to 20 friends – earning up to $500 in account credits.
What Kind of Reward is the Most Effective?
This really does depend on your industry, product, and/or service and your demographic – and is entirely up to you, but here is a list of common customer referral rewards:
- Credit – Refer a friend and receive 20% credit to your account
- Cash back – Refer a friend and receive $20 on a future purchase
- Coupons – Refer a friend and receive a voucher for $20 off next online purchase
- Loyalty points – Refer a friend and receive loyalty points that can be saved and used for future purchases
- Gift certificate – Receive a $5 gift card for every friend you refer
- Discounts – Refer a friend and receive a 20% discount
- Access to special features – Refer a friend and be entered into our exclusive club
- Donation special cause – Refer a friend and we will donate $20 to a charity on your behalf
- Premium/free Item – Refer a friend and you will receive a free gift
- Entry to contest – Refer a friend and you will be entered into a draw for a trip for two to Hawaii
- Free shipping – Refer a friend and you will receive free shipping on your next online purchase
- Purchase credit/purchase based rewards – Refer a friend and receive account upgrades, points or storage
Amazon launched a one-sided referral program for their prime members, Amazon Prime. Amazon launched the program after identifying that their prime members spend almost twice as much as other shoppers on Amazon.com and order more times per year. The referral program gives the referee $5 towards an Amazon purchase once the referral joins Amazon Prime and makes a $5 purchase.
Before you decide on what reward will work best for your customers and what will bring in the highest referral conversion rate, it’s a good idea to understand your current and potential customers and what will motivate them. Are they motivated by cash, (who isn’t?) or are they interested in becoming part of an exclusive club where they will receive special offers?
A study found that non-cash incentives are 24% more effective at boosting performance than cash incentives.
Determine Who Your Customers Are and How They Are Motivated
Take a look at who your customers are and what motivates them. If necessary, segment your visitors based on their age group, spending, frequency, geography and identify how they behave to offers and incentives. The more enticing the program is for your customers, the more willing they will be to participate – it’s a no-brainer!
You may think 10% off is an enticing offer, but if you are selling lip balm and charge $3 for your product, a 30-cent savings won’t be worth the time to forward the referral email!
Some tips for determining your offer:
- Study buying behaviors
- Conduct customer surveys
- Contact your ambassador list — pick up the phone and ask them what they want!
If you understand the motivation behind your referrers and referrals, you can match your referral program to their needs and make everyone happy!
At this point, you may already be working with a referral marketing agency, or they may have just come onboard. Regardless, this is where the magic happens and you work together to build a stellar referral marketing strategy and program. It’s important to check the following before launching your referral program:
- Check UX – How easy is it for the referee and the referral to migrate through the customer referral program steps?
- Test design – Is it visually appealing and does it attract both the referee and the referral and does it also mesh with your branding and website?
- KISS – Nothing will kill a program like too many steps. Make sure that both parties aren’t asked too many questions and don’t have to complete too many steps.
- Mobile ready – How well does the referral site work on mobile? Ensure that it is mobile responsive.
- Test with customers – Remember the ambassador list? Test your program with a select few from the list to get feedback.
Promoting the Program
You’ve launched your program, so you are done, right? Wrong! How you promote your program will make all the difference. You need to make sure that your existing and potential customers know about the program. Here are some ideas of how to promote your customer referral program:
- Homepage – Create a “referral” button on your homepage — upper left corner is the most valuable real estate
- Order Confirmation Page – Put a “referral” button on your order confirmation page
- Customer Login – Create a button near the customer login
- Homepage overlay – Consider creating a pop-up for your homepage
- Post purchase – Create a pop-up post-purchase or include it on your “thank you for purchasing” page
- Helpdesk/Support – Include it on high-traffic pages such as customer support or helpdesk
Keep in mind that all of the above should link back to the stand-alone referral page.
- Email blast – Email your customer list and your ambassador list the “refer a friend” offer.
- Blog – Create a blog and link to the offer. Look around for guest blog opportunities and ability to promote program.
- Newsletters – Don’t forget to include program information in any newsletter or company correspondence including receipts, invoices and support tickets.
- Call scripts – Integrate mention of the program into your call center scripts.
- Facebook, Twitter and LinkedIn – Announce program, share and link back to the referral program page.
- PR – Create a press release, issue and promote program in conjunction with a newsworthy item.
And don’t forget to promote this internally! Your employees should be your biggest advocates!
Now What? Monitor and Optimize.
Now that your customer referral program is in full swing, it’s important to work with your referral marketing agency to monitor it closely to ensure that you are in fact achieving the conversions that you had hoped for. The data should be analyzed frequently to adjust and optimize for maximum program performance. If the incentives aren’t achieving the ROI you had hoped for, maybe the program needs to be tweaked to increase conversion rates. Make sure you review your program and keep it current. And as always, if you have any questions about client referral program best practices, referral marketing or creating a customer referral program for your e-commerce site, contact Buyapowa and find out how we’ve helped other e-commerce sites acquire new customers, and increase loyalty with their existing customers.