7 Terms You Should Know Before Setting Up Your First Online Referral Program

7 Terms You Should Know Before Setting Up Your First Online Referral Program


Creating an online referral program seems fairly straightforward. Once it’s launched, however, it’s out of your hands, and you may have to learn fast in order to keep your customers happy. Before launching your program, make sure you know what you’re doing! A great place to start? Make sure you’re familiar with these 7 key terms before setting up your online referral program.

Referrer: The customer who refers your products or services–that is, the existing customer who is benefiting from your referral program while sending other customers your way.

Referee: The person who has been referred to your business; the new customer.

Viral Loop: A viral loop is the desired response to your referral program: your existing customers (referrers) bring in new customers through the program. Those customers become referrers themselves, therefore bringing in new customers, and so on.

Single-sided rewards: A type of referral program that rewards the referrer, but not the referee. An example of this might be a percentage discount on the referrer’s next use.

Double-sided rewards: A type of referral program that rewards the referrer and the referee. For example, you might offer a percentage off for new customers who use a referral link while simultaneously offering a reward to the referrer.

Word-of-mouth advertising: Word-of-mouth advertising is the parent of referral marketing. Potential customers trust the advice of friends and family members, and satisfied customers naturally share information with those around them. Simply, word-of-mouth advertising is when people tell others about a business.

Precision targeting: With precision targeting, you’re able to specifically target people who need the products or services you’re offering. Referral marketing is a great way to do exactly that. It targets customers who are already looking for a business like yours, and you’ll only have to reward successful referrals–referrers who have actually brought in new customers.

When you understand the important terms associated with online referral programs, you can more efficiently create a program that will draw in customers and help stretch your marketing dollars. The best viral referral programs don’t require a great deal of upkeep on your part. Once they exist, you can easily see the increase in your business over time without expending much future effort at all.