Building a Customer Referral Program That Works

Referral marketing is one of the most powerful tools for customer acquisition. Apply these 3 lessons to your to business increase conversions and build a loyal customer base.

Referral Marketing

Getting customers to talk about your business can be one of the most powerful ways to grow your revenue and subscriber base. It’s formally known as “Referral Marketing,” and chances are, you’ve probably already done this yourself few times in life.

Consider your favorite restaurant, preference in computer, or favorite clothing company. Have you ever told your friends, family or coworkers about them? Did you go into detail about what makes them so great?

Check out this awesome sandwich spot. 

This is an example of referral marketing at work. As a customer, you’re referring the business, and because your audience trusts you, they’re likely to take you up on your recommendation. For the business, that means meeting new customers who are already encouraged to prefer your service. This is backed up by several studies, showing that customers who have been referred by another convert better and are more valuable over their lifetime as a customer.

Best of all, creating a healthy ecosystem for customer referrals doesn’t need to be difficult. Consider these three lessons when creating your customer referral program:

Lesson 1: Keep it Simple

When beginning to design your customer referral program, keep one thing in mind at all times: simplicity. Over complicating this environment decreases the likelihood customers will complete the process of sharing and inviting others. Customer referrals need to be easy to understand and simple for the customer to execute. That means you need to make it easy for the customer to quickly refer friends. Consider these strategies:

  • One click email forms: The customer should be able to enter their friends email, then click invite.
  • Easy to Reference Referral Link: A customer’s unique referral link should be clearly highlighted and easy to copy/reference.
  • Straightforward Reward System: Make rewards and their progress clear to the customer. We’ll talk about the type of reward in the next section.

Lesson 2: Choose the Right Reward

When thinking about the type of reward for customers, a number of things may come to mind: points, store credits, or even real money.

While there are many options like these, I suggest closely relating your rewards to your service – a free month or discount on the next delivery. When you connect the reward to the service, you make it easy for the customer to understand and feel compelled by the offering. After all, you’re providing them with an option to save on something you know they want: your service! I also recommend offering a substantial award, don’t be scared to offer a free month – it will convert much better than say “50% off your next month” and even if your customer refers enough friends (I recommend 3), it will still be a profitable marketing strategy!

Lesson 3: Gamify it

Lastly, it’s important to keep your customer referral program exciting, and one way of doing that is by gamifying the process. “Gamification” is when you add game-like elements into the customer experience to encourage engagement and  interaction with your service. In this case, the goal is to increase the likelihood your customers will refer a friend to become a customer. Consider these strategies:

  • Clearly tier prizes or levels that “unlock” the prize
  • Have steps become highlighted or change status when completed. Make it clear when this is done.
  • Use a leaderboard or other social tool to inspire competition and show cases where customers have earned awesome prizes

Remember: The goal is to make it fun without adding any complexity to the actual sharing part of the process. Use these features wisely, and don’t impede the process of sharing by focusing on the result of sharing.

Develop a Healthy Ecosystem with Cratejoy

Fortunately, Cratejoy has taken these very lessons and applied them directly to their own Referral Program. They’ve focused specifically on engaging customers with “free box” style incentives, and have made it easy for customers to track when they’ve referred enough people to redeem their prize. (Learn more about how Cratejoy Referrals Work).

Using this powerful tool, take the lessons above and begin crafting your design and copy that will pitch the program to customers. Soon, your business will be taking advantage of the better converting, more valuable relationships from referred customers.

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About Jameson Morris

Jameson Morris is an entrepreneur and pioneer of Subscription Commerce. As a self proclaimed 'subscription box serial entrepreneur,’ Jameson has founded multiple successful subscription businesses, such as Conscious Box, Escape Monthly and Yogi Surprise.

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