A successful referral program will build awareness for your business and help you grow your customer base with your desired customer type \u2013 it can lead to a 30%<\/a> higher conversion rate and a 37%<\/a> higher retention rate\u2014B2B businesses with referrals often experience a 70%<\/a> higher conversion rate. Creating an effective referral program is one of the best ways to engage and leverage the power of a group (influencers) that already knows and loves your product\/service.<\/p>\n The referral program method you choose will depend largely on what your business offers. While you can build a robust referral program, it doesn\u2019t guarantee your existing customers will send referrals your way. Improve your chances of success by first outlining the type of referral program that will resonate most with your customers.<\/p>\n With regards to various referral marketing strategies, this is the most traditional referral program, where you simply ask your customer for a referral. Ask for a\u00a0referral in person, over the phone, via text message or by email, especially if you just completed a service or transaction and you know your customer is satisfied.<\/p>\n A tangible reward program offers your customer a tangible incentive of value that will shed a positive light on your business. One method is to offer a discount or a number of credits if a customer refers a friend (or for each referred friend). Be sure the referral reward you set up is simple, attainable and easy to understand.<\/p>\n This program rewards the community or a nonprofit organization instead of a customer or individual. What better way to draw people in than through a good cause? There\u2019s power in numbers, so a community referral program is a great opportunity to support an organization in need and promote (brand awareness) your company’s mission.<\/p>\n An implied referral program promotes your business to a potential customer \u2013 without a direct ask. This is an actionable and effective method if you\u2019re a local business owner who doesn\u2019t have the time to set up a more complicated referral program.<\/p>\n Harry\u2019s, a shaving and grooming brand, gathered an impressive 100,000 emails in a week<\/a> with its referral marketing campaign. The referral program landing page included a link users could easily share via email, Facebook and Twitter. By sharing the link with friends, users had the opportunity to earn free products. The more friends (referred customers) who signed up using the unique referral link, the bigger the reward earned.<\/p>\n Harry’s<\/a><\/p>\n Why it works<\/strong>: Harry\u2019s focus is simple: to build a program that enables people to spread the word. It clearly emphasizes, \u201cInvite Friends and Earn Product,\u201d which leaves no room for confusion. It uses attainable and achievable rewards that are clearly outlined to boost customer acquisition, from shave cream as the first tier to 1 year of free blades as the final tier.<\/p>\n A simple way to encourage your (loyal) current customers to refer a friend is by offering them a discount. After all, it\u2019s a win-win because everyone loves saving money. Vegetable and Butcher\u2019s \u201cGive $20, Get $20\u201d referral program encourages new customers to try out its meal subscription service at a discount.<\/p>\n Vegetable and Butcher<\/a><\/p>\n Why it works<\/strong>: With $20 in hand, new customers feel more comfortable trying the brand for the first time. It encourages them to make their first purchases, which ultimately increases the likelihood they will become long-term customers (lifetime value). Reward referral incentives such as this make a program easy to explain, easy to understand and super effective.<\/p>\n ClassPass, a membership-based fitness network, offers a limited-time-only referral program to members who refer five friends within a 2-week span. The member receives $500 worth of credits if their referrals complete a class. ClassPass uses the power of scarcity as a strategy to motivate members with giveaways.<\/p>\n ClassPass<\/a><\/p>\n Why it works: <\/strong>Exercise and fitness classes are always more fun with a friend (customer experience), particularly if it\u2019s new territory for you. If an existing ClassPass member gets their friends to sign up, they earn extra credits to work out and have friends to try kickboxing or Pilates classes with.<\/p>\n What do people love more than free food? Instead of a cash reward, consider offering your product instead. Butcher Box, a monthly meat delivery service, offers 2 pounds of wild Alaskan salmon to members who sign a friend up. Even better: the friend receives 2 pounds free too. It\u2019s a great referral marketing program that is as simple as sending a quick email.<\/p>\n ButcherBox<\/a><\/p>\n Why it works:\u00a0<\/strong>Offering a free product to both parties motivates customers to refer their friends while keeping costs low on your end. ButcherBox keeps it simple by including a prewritten message and form you can send via email or \u201cwherever.\u201d Free product rewards increase the perceived value of your products without impacting the actual value.<\/p>\n Zenefits is an online HR platform that offers a cash reward for business referrals and utilizes a tiered reward platform. The bigger the business you refer to the platform, the bigger the reward. It comes in the form of a digital gift card that the customer can use however they wish.<\/p>\n Zenefits<\/a><\/p>\n Why it works<\/strong>: Customers may be more motivated to provide multiple referrals if the reward or incentive grows after one tier. Consider setting criteria and specific rewards for each tier so the referral process becomes a fun challenge.<\/p>\n Quip, a dental hygiene service, offers a $5 refill credit to customers who refer a friend that signs up. The friend also gets a $5 coupon. The referrals help this subscription service reach new customers by word-of-mouth marketing.<\/p>\n Quip<\/a><\/p>\n Why it works<\/strong>: Quip is mindful of how it positions the referral \u2013 as a \u201cgift.\u201d People love receiving gifts. The program landing page is a useful marketing tool that is also beautifully designed, simple and easy to understand.<\/p>\n Vena, a software company that helps businesses manage their budgeting, planning and revenue forecasting, donates $3,000 to the charity of a customer\u2019s choice if they refer a business. The company lists the charities they work with below the form for easy reference.<\/p>\n Vena Solutions<\/a><\/p>\n Why it works<\/strong>: People are typically inclined to do good for the community, especially if they\u2019re given an easy opportunity. A referral program is often an extension of how the company operates, so people will be more likely to help a business achieve its goal if they are also helping make the world a better place.<\/p>\n Papa Gino\u2019s pizza shop offers local organizations fundraising opportunities for joining them in the restaurant. If the nonprofit comes into the pizza shop on a given night, they will receive 20% of the proceeds.<\/p>\n Papa Gino’s<\/a><\/p>\n Why it works<\/strong>: By creating an opportunity for nonprofits, schools or organizations to fundraise, you can build word-of-mouth marketing for your business, support great causes and draw customers in. There\u2019s also the potential for the customers who join you to become repeat customers proving how referral marketing works!<\/p>\n The holiday season is the perfect opportunity to capitalize on (optimize) shoppers who are in the spirit. Penfold Motors took advantage of this opportunity by offering extra spending money to customers who refer a friend or family member to any of its dealerships by Christmas Eve.<\/p>\n Penfold<\/a><\/p>\n Why it works:\u00a0<\/strong>People are in good spirits around the holidays and would be happy to earn a little extra spending money for gifts. The big banner ad on the Penfold ecommerce website is catchy, simple and emphasizes the bonus holiday dollar amount.<\/p>\n Stitch Fix, a personal styling subscription service, is dedicated to customer happiness. The fashion service grew to $1 billion in revenue<\/a> in less than 6 years and owes part of that success to its successful referral program. The dedicated landing page clearly guides the user through their first referral, earning $25 in Stitch Fix credit when the referral\u2019s first order ships.<\/p>\nTypes of Referral Programs<\/h2>\n
Direct Referral Program<\/h3>\n
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Tangible Referral Program<\/h3>\n
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Community Referral Program<\/h3>\n
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Implied Referral Program<\/h3>\n
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Referral Program Strategies to Steal<\/h2>\n
Spread the Word via Social<\/h3>\n
![\"harrys](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/harrys.png\")
<\/p>\nReward Both Sides with a Discount<\/h3>\n
![\"vegetable](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/vegetable-and-butcher.png\")
<\/p>\nOffer Generous Member Credits<\/h3>\n
![\"classpass](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/classpass.png\")
<\/p>\nOffer Your Products for Free<\/h3>\n
![\"butcher](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/butcher-box-.png\")
<\/p>\nCreate a Tiered Reward Structure<\/h3>\n
![\"zenefits](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/zenefits-.png\")
<\/p>\nMix Free Credits with a Coupon<\/h3>\n
![\"quip](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/quip.png\")
<\/p>\nDo It for a Cause<\/h3>\n
![\"vena](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/vena-solutions.png\")
<\/p>\nFundraise with a Partner<\/h3>\n
![\"papa](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/papa-ginos.png\")
<\/p>\nCapitalize on a Big Event<\/h3>\n
![\"penfold](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/penfold.png\")
<\/p>\nUse Customer Happiness to Your Advantage<\/h3>\n
![\"stitch](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/stitch-fix.png\")
<\/p>\n
![\"referral](\"https:\/\/www.valpak.com\/wp-content\/uploads\/2019\/02\/referral-program-strategies.png\")
<\/p>\n