Referral programs are an inexpensive and scalable way to attract more customers to your business. In the right hands and in combination with the right product a referral program can even become its main engine of growth. But they are by no means a secret sauce that can be simply thrown in and suddenly make your traffic skyrocket. Nothing is, despite what countless marketing gurus tell us via their long copy websites.
Any successful referral program is a result of careful planning, design and iterative tuning. This post is the first in an upcoming series that will cover referral program design best practices, common issues, bottlenecks and ways to deal with them.
So how to get more of your customers participate in the referral program?
Target the users who like your product and need the reward you offer
Now I am just stating the obvious, am I not? And yet, many of our customers are making the mistake of putting InviteBox button on their website’s front page. I assume the reasoning behind it is along the lines of “there’s no harm in more people seeing it, maybe some will even participate”. The problem with this reasoning though is that you can’t afford to place your referral program teaser in a premium spot on the front page since that is where your main value proposition needs to be, so it always ends up either in the footer or somewhere in a side column under a pile of navigation, banners, widgets and what not.
To have a meaningful participation rate you’ll need customer’s full attention when you offer them to participate. But grabbing their full attention is a risky endeavour – if they don’t yet have at least the smallest reason to like your product or service, they will see it as annoying distraction. So how to do you know if someone is ready? Turns out it’s easier than it might seem.
Here are some indicators of a loyal (in a broad sense) customer that can be captured using purely technical means:
- They have just bought something from you
- They are about to buy something from you (added a product to the cart, or are at the last checkout step)
- They are making repeat purchases from you
- They are subscribed to your opt-in mailing list
- They have signed up for your application and are making non-trivial use of it
- They are engaged with your site (viewing multiple pages, commenting, etc.)
Note how in most of these cases you can target the right user segment simply by placing your referral program teaser on the right page of your website. These are just examples, but hopefully the line of thought used to arrive at them is clear.
Loyalty, without a doubt is a crucial factor in getting customers to participate in the referral program. The killer one, however, is need. If you can reliably target people who are in need of whatever it is you offer as a reward at the precise moment they are conscious about that need, your referral program is virtually guaranteed to succeed. In part, this is an issue of choosing a proper reward that is relevant to your customers, but it’s equally important to inject the offer into that exact spot in user’s workflow when their need is felt the most. For example, a SaaS application might offer an increased usage limit in exchange for referrals at the moment when a user hits their current limit, a discount offer is relevant when the customer is about to make the purchase decision, etc.
Articulate the offer and campaign rules clearly
This is another piece of seemingly self-evident advice. The teaser for your referral campaign is no different from any other advertisement, despite the fact that you are advertising to your own customers. So treat it like one. State clearly what is the benefit for the user. Include a call to action.
When the user expressed initial interest in the referral program, give them a clear explanation of the way it works: what exactly they need to do, what exactly they will receive and exactly when and how they will receive it.
Measure and optimize
Just as everything else in marketing, a referral program can only be perfected through continuous testing and improvement. In the next post we’ll take a closer look at what InviteBox has to offer for this purpose.