So, you’ve taken the plunge and decided the time is right to create a referral program. You’ve made a wise decision. Referral programs are the lowest cost means to acquire new customers. Customers who come to you as a result of a referral are proven to have a 16% higher customer lifetime value than customers who arrive via other means. In case you’re curious, Buyapowa’s clients have added over $1 billion dollars (that’s billion with a b) in new revenue from their referral programs, so you’re in good company.
An automated referral marketing system is just like any other marketing tool that you leverage today. The system is designed to help you convert your existing customers into referrers: your customers who refer their friends and family to become your new customers.
Before You Begin
So, you understand how to create a referral program, but where to from here? Before you launch the program there are a number of measures you should take to take to ensure the success of your referral program.
Step 1: Set Your Goals
Before you officially launch your automated referral marketing program, you should set some goals for you and your team. Think this through carefully. You won’t know if your program is succeeding unless you can measure its success (and don’t worry, even if you’ve kicked off already, it’s never too late to set or update your goals). Here are some examples of some of the goals our customers have set when considering how to create a referral program:
- Increase the overall number of customers at a lower customer acquisition cost (CAC)
- Attract higher lifetime value customers
- Increase the average purchase value each customer makes
- Increase customer loyalty
For goals to make sense, you need to be able to measure the results, and some careful planning will help you do so.
Step 2: Get Ready to Measure
Learn how the analytics work in your automated referral marketing software to make sure you know how to extract the data you need. Set up your web analytics (like Google Analytics or Adobe Experience Cloud) to make sure that you can track the people who are hitting your key landing pages for your referral marketing program. You’ll want to know where they are coming from so that you can boost efforts to attract people to your most successful channels.
Step 3: Make Your Referral Program Easy to Find
Your customers will make referrals if they can find your referral marketing program easily and have a great referral marketing user experience. Make sure you have a solid landing page in place for your program, to which you can direct prospects in your outbound campaigns, and set up your existing websites to make it easy to find that landing page. This includes site footer links, the top navigation bar, the customer’s secure account page, checkout pages, social media pages and every other digital entry point for your brand. Make sure your SEO is in place to ensure high matches on the search terms your customers use.
Step 4: Prepare Your Digital Marketing Team
Ensure your social media teams are educated on how to create a referral program social media campaign. Agree on a schedule for promoting referrals, and make sure they’re aware of the appropriate time and place to share. It’s always good to leverage positive comments about your product or brand on social media as opportunities to encourage referrals. Plan on at least one post a month on your Facebook page. Leverage Twitter more often, based on your tone and personality. Make sure your bloggers are prepped with customer stories to share along with a reminder of where to find the referral program.
Step 5: Train Your Front Line Troops
Our most successful customers grow their referral marketing programs through effective and regular training of their own staff. A team that is well educated on your referral program – and the rewards that customers can earn – will be just as effective at growing the program as your outbound marketing initiatives. Any team member who is customer-facing, such as in-store staff or call center reps, should understand the program, its rules and its perks. Train them close to the launch date. Make sure all new staff-onboarding programs include a brief overview. Staff should all know the program inside and out. It’s going to be the most inexpensive way for you to find new customers, so everyone should know.
Step 6: Quality Assurance
This is a good time to triple-check your creative and content. Make sure your message is clear, (and without typos or grammatical errors). Go through your referral program from start to finish so you understand exactly what a customer goes through when using the program. If something is unclear, be sure to have a program FAQ that customers can reference. A customer who has a poor referral experience will not refer again.
With everyone on your internal teams ready to go, your program designed and tested, and your systems in place, this week is straightforward. You pretty much have a single goal.
This week, you and your team should be focused on driving traffic to your referral program. Leveraging your outbound marketing tools, you’re going to educate your customers that the program is in place, what they can earn, and how they refer their friends. Your email and social campaigns will have one call-to-action: Make a referral.
It may take a few weeks for a referral to generate a new customer. The referral actions taken now will turn into positive outcomes in the weeks to come. Therefore it’s important to get started without delay.
15 – 30 Days In
At this point, your outbound email marketing program analytics will show you how many people are opening and clicking through on their emails, and how many are hitting your landing pages from other links. Your referral marketing program will show you how many people are joining the program and making referrals.
These are the numbers that are going to matter to you moving forward:
- How many visitors you can drive to your referral program landing page?
- How many visitors register to become a referrer?
- How many referrers make a referral?
- How many referrals (referees) turn into new customers?
- How many referees become referrers themselves?
This is also a good time to get early initial feedback about your referral program from customers and front-line team members. You can use this early feedback to shape how your referral program will look moving forward.
30 – 60 Days In
By now your program is in full swing. Your referees (the new prospects who have received referrals from your existing customers) are becoming paid customers of your business.
In this time frame you’re starting your re-marketing efforts:
- All your outbound email marketing targets who have not converted to referrers are being hit with reminders.
- Your social team is making sure to remind your customers about the program.
- Referrers who have signed up but not made a referral are hearing from you.
- Prospects (referees) who have not become customers yet are hearing from you as well.
You’re starting to subtly but consistently promote the referral program through your existing marketing communications and at each point where your customers interact with your brand: self-service online and mobile portals, e-newsletters and announcements, and physical mailouts like receipts or bills; any interaction that can potentially generate additional visitors to your referral program and through the funnel.
You’re also checking to see how the profiles of your referrers (the existing customers who are referring their friends) match up with the referees – the customers who eventually sign up. Are the new customers spending the same as the person who referred them? Does it look like there’s going to be a correlation between high lifetime value referrers and high lifetime value referees? If so, make sure your outbound marketing initiatives are hitting the right customers.
In this time frame, you also have enough data to start projecting other metrics, like program profitability and cost-per-acquisition. These metrics will provide you with a conversion benchmark for your future program performance.
This is a good time to begin to review and analyze the type of customer support requests you’re receiving as a result of the referral program. The types of requests you get will help identify areas in the referral program that can be optimized for a better customer experience
The 90 Day Mark
Congratulations! You’re three months in. Now’s the time to tune your program to make sure it’s performing the way you expected. There are many things to review at this point to help improve your program:
- Are all your customers aware of the program?
- Is your landing page converting customers to become referrers at an optimal rate?
- Are you seeing activity from the right segments amongst your customer base?
- Are you seeing positive repeat behavior amongst your referrers?
- Is the program easy to understand?
- Are the rewards attracting the right kind of customer, and encouraging the right kind of behavior?
- Are the program rules simple, so that enough new customers can qualify for rewards?
At the 90-day mark, we ensure our customers go through a quarterly business review that we call a “Health Check”. We review all the metrics coming in from the system to help answer the questions above. We check all aspects of the program, from how you’re performing against benchmarks in your industry segment, to verifying that there’s no “gaming” of the system going on. We help you learn which referral methods are most effective, and suggest ways to tune the program for success. The Health Check will also help you evaluate the goals you set out at the beginning of your referral program and allow you to maintain or update your goals for the next 90 days.
In our upcoming posts, we’ll talk to you in more detail about helping you increase conversions throughout this new marketing funnel. However, if you would like more information on how to create a referral program, then contact us today and discover how our refer-a-friend software can help your business.
What are you doing to ensure the health of your referral program? We’d love to hear your comments. And please share this post if you’ve enjoyed it.