Stick or Twist: should you upgrade or replace your current referral program?

Tug of war between upgrade or replace
 
If you’ve already built your own referral program in-house, or had one built for you by an agency, there’ll likely be a moment when you realise that it’s no longer fit for purpose. Perhaps your needs changed since you launched it, as your business scaled, you internationalized or launched new products and services? Or maybe customer user experience expectations, social network use and sharing behaviors have evolved since then? Or it may no longer comply with new laws and regulations? Or it could be simply that you realize that it could just be more efficient, generate more referrals and require less manual effort.

Whatever the reason, the question you’ll face is whether you should upgrade or replace your existing referral marketing software. Of course, if your in-house referral didn’t work very well, the question is whether you should give it another go.

Having replaced or rescued dozens of in-house or agency-built programs over the years, we’ve found that there are typically three main cases:

  1. You tried to build in-house, or via your agency, but the program never materialized.
  2. You did launch an in-house built program, perhaps with a limited POC, but the results were very poor.
  3. You built and launched a referral program and it worked satisfactorily, or even very well, maybe for several years.

Looking at each of these in turn:

Your in-house referral program never launched

In this case, we really wish you’d read and acted on our advice to outsource, but the reason that you probably failed to launch was that you, or your agency, underestimated the work, time and costs involved to create a first class referral platform with advanced features like gamification, data and analytics, A/B testing and back-end integrations.

But that doesn’t mean you should give up. For example, we’ve clients, like one of the largest providers of fixed line, broadband and mobile telecom services in its home country, that tried unsuccessfully to build its own referral program over several years. Another global telecoms brand invested a lot of time and money with an agency that ultimately never delivered. In both cases, these brands decided to look to Buyapowa’s best-in-class referral platform, which was able to get them live with a high performing program in a relatively short period of time.

Your in-house program didn’t work

In cases where you did actually launch a referral program, or a POC, but didn’t get convincing results, this is actually a better reason to talk with a leading provider like Buyapowa.

This is because the key to success in referral marketing is more than just the software. In fact, the single biggest reason for failure is the lack of marketing to ensure that your customers are aware you’ve a referral program in the first place. And then to ensure that it can be easily found when they look for it, and that it naturally surfaces at moments in the user journey when customer satisfaction is at its highest, like after giving a high NPS, leaving a positive review, renewing or getting an upgrade.

We’ve summarised how you can market your program in our activation and discovery document here. A lot of this is common sense, but failing to prepare for this and execute will likely condemn your program to failure. However, success is also more than just marketing and you need access to advanced data and analytics so you can see the performance of your program in real time and understand what’s working and what isn’t, and fix it.

But as well as data, you’ll also need context to know if your numbers are excellent, good, average or poor for your industry, or across comparable programs elsewhere. This is one of the reasons why Buyapowa provides a managed service to share what we’ve learned working with over 150 leading brands and retailers globally. Without this input, you may be satisficing rather than maximizing, and leaving a lot of money on the table.

Another reason your in-house program probably failed was that your referral proposition wasn’t right for your customer base. Maybe the rewards and incentives weren’t enticing, or they weren’t presented well enough or better rewards were available via another channel etc. In any event, you should be able to test and learn until you get it right for your audience, otherwise you could miss finding the recipe to the secret sauce

And finally, a common reason for giving up on referral is thinking that your in-house POC proved that referrals won’t work for your business. Perhaps your target customers are locked into contracts with other providers and can’t take advantage of your offer right now. But, rather than assume this is insurmountable, all you need to do is understand that it’s a considered purchase and set your program to trigger reminder messages to the referred-in friend that the incentive is still waiting for them when the time is right.

At least you should consider talking with a leading provider like Buyapowa who has experience of getting programs in your industry to work.

Your current referral program is working….or at least somewhat

Here’s where we often find the ‘if it ain’t broke, don’t fix it’ mentality. Perhaps you are perfectly happy with the results, unaware of just how much you are leaving on the table by not migrating to a best in class provider? Maybe you think it’s more efficient to just patch up what you’ve already and focus on other priorities? Or maybe your experience with referral has led you to believe that you’ll never get more than you currently do?

Here are some of the common objections we hear and why you should rethink them:

  1. Referrals won’t scale for your business
  2.  
    Often the results from your in-house referral program will’ve convinced you that referrals will never be more than a sideshow for your business and, while driving some useful conversions, won’t ever get its own line on your Income Statement (or P&L). Which means you won’t spend much time thinking about it. This is a big mistake, as with the right software, the right marketing and expert support paired with advanced psychological tools, we’ve seen some of our clients, like two of the biggest pre-paid SIM providers in the UK, achieve nearly 30% of all new customers from referrals.

    Why not challenge us to show you how much more customer acquisition we could drive from referrals than your legacy program?

  3. Referrals helped you scale as a startup but now you’re a mature business and everyone knows your brand
  4.  
    While referral marketing helped brands like Uber, Dropbox, Tesla and Airbnb scale rapidly to become the titans we know today, this doesn’t mean that referral marketing is only for startups or challenger brands. In fact no brand is too big for referrals, as referral marketing can be used surgically to promote new product lines, enter new markets and territories or encourage new behaviours. For example, a bank may want its existing customers to know that it now offers travel and house insurance, or want to convince customers to switch to banking via its app. Referral marketing can be used to achieve these and many more objectives.

    Referral can also be used to win back lost customers, as if customers left you due a previous bad experience, you might find it impossible to convince them you’ve changed, but their friends could. And of course, the technology, techniques and psychology commonly used in referral marketing can now be used to leverage partners across your entire ecosystem as acquisition machines, including employees, affiliates, influencers and partners.

    It’s possible that you are limited by your thinking as to what referral can achieve and again we’d love to explore new avenues with you.

  5. Your legacy program is cost effective
  6.  
    Here we often find that this view comes from not fully appreciating the total costs of ownership of an inhouse platform. This is because there are often hidden costs such as:

    • The costs of in-house support staff (engineers and developers) to directly support, maintain and upgrade the legacy software, and also the opportunity cost of not using those resources on other projects that could deliver higher returns;
    • The costs of third party tools that are used to supplement missing features in the in-house product;
    • Employee time wasted in workarounds, or in manually entering data in spreadsheets and reconciling referrals, when these processes could be automated or streamlined;
    • Inefficiencies due to manual errors, duplicated tasks etc.;
    • The inability to get timely and accurate data to support business decisions leading to sub-optimal resource allocation;
    • The inability to access the referral program backend from anywhere – which can be an issue if staff are WFH, as opposed to using a secure cloud hosted system;
    • The lack of a customer support interface for your referral program that allows frontline call centre staff to review and correct referrals, leading to inefficiencies and, ultimately, customer dissatisfaction.

     
    For example, a leading private medical insurer, which had an in-house referral program that performed relatively well, decided to migrate to Buyapowa to avoid the wasted time and effort in reconciling and paying out referral rewards. Of course, we also significantly increased the number of referrals they achieve, but that wasn’t the main motivation to switch.

    Outside of inefficient employee time costs, there are many other costs which may not be fully appreciated:

    • Fraud and cancelled referrals – often an inhouse built referral program won’t integrate with back end systems to verify that referrals are legitimate and aren’t cancelled during the cooling off period, or are self referrals or other fraud. Due to the lack of such integration, these programs often default to paying out at the first conversion point, such as the order or lead submission. When you consider that many of the referral programs in telecoms, banking and utilities offer US$100 or more in rewards, the cumulative cost of paying out for fraudulent or cancelled referrals can be very high.
    • Paying out the same reward for all referrals, even though not every referral has the same value. For example, a 2 year subscription to a quadruple play Fiber broadband, TV, mobile and streaming package is worth a lot more to your business than a 6 month mobile subscription. Without flexible rewards you risk overpaying for many referrals.

     

  7. Your in-house referral program meets your current needs
  8.  
    That may be the case, but time doesn’t stand still. Technology and regulations change all the time and so do consumer expectations. Your business needs will change as you grow (and we hope you are growing, although you could grow even more if you’d a best in class referral program!), as you launch new products and enter new markets and territories. What worked for you 18 or even 6 months ago may not work for you in 6 or 18 months time. This means that you’ll need a referral program that is constantly evolving and being improved and, which is why we think you should look to invest with a specialist referral program provider now like Buyapowa, rather than constantly trying to patch up the legacy platform.

  9. Your customers haven’t asked for changes
  10.  
    Whether or not you’ve surveyed your customers as to whether they are happy with your referral program, you’ll need to realise that your customers are also customers of other brands that’ve modern referral programs. This leads to an expectation that you’ll also have value added features like:

    • Native sharing allowing them to share from their mobile phones in a couple of clicks;
    • Not having to give you the contact details of their friends for you to then contact them, but allowing them to share in a non-obtrusive way with links and codes from their own emails and messaging apps. The regulators may also have a view on that too given the CCPA and GDPR regulations;
    • Customer dashboards where they can see the progress of their referrals in real time and understand if a referral is pending, accepted, rejected etc.;
    • The ability to choose from a variety of rewards including cash, gift cards, store credit, vouchers, loyalty points or product, and the ability to choose rewards that can be redeemed in their country of residence;
    • Engaging features like tiered rewards, booster campaigns and gamification that make it fun to refer;
    • Your referral program being frequently refreshed with new offers, copy and colour schemes in keeping with your overall branding and ATL marketing so that there is no dissonance when they click through.

We think that, rather than contacting you asking you to implement these features, your customers are simply more likely to not refer you in the first place.

In summary

We understand that no one gives up their legacy solution lightly, especially when a lot of time and money has already been invested. But given that 75% of IT budgets are reportedly consumed by maintaining legacy systems and that your in-house referral program is probably achieving much less than it could and costing you much more than you think, we would welcome the chance to show you how much more you could achieve with a Buyapowa program.

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