Building a Customer Referral Program


Christine Lee

May 28, 2020


category folder



Word of mouth is still one of the best ways to market your product, especially when combined with social media marketing. It's easier now for someone to share your brand on their timeline and connect your product to all their friends who are simultaneously browsing, yet it still feels like a one-on-one recommendation. If you have ever felt compelled to post about a product online and tag someone, then you know why referral programs have the potential to be very successful today.

Customer referral programs offer incentives to current customers to market your brand and spread the word about your products. These programs have a specific process to promote word-of-mouth referral marketing, leading to epic rewards for current customers who send new customers to your business. Some examples of customer referral programs include:

  1. When companies offer you $20 to sign up your friends
  2. Dropbox asked customers to invite friends to get free storage
  3. Uber offers credits when you sign up your friends using a personal code
  4. PayPal created a refer-a-friend program and gave away free cash for a successful sign-up

It's also one of the reasons why online reviews are important. We'll show you how to set up one of these programs for your own business and start using word-of-mouth advertising in the modern sense.

Why Do Customer Referral Programs Work‍?

Two Women talking to each other

When customers research your business and find several people recommending it or when it's personally recommended to you by a friend on social media, you receive social proof that a product is trustworthy and worth your time. Your friends and peers endorse that something works. This almost guarantees a sale.

Precisely 74% of consumers say that word of mouth referrals are the most crucial influence on their purchases, and 92% of all consumers also say that they trust referrals from their friends and peers the most.

In addition to the products and services you offer, the website experience and branding make a difference, too. People also like to share exciting offers and content that inspires them or solves a problem that they can now help others solve. This constant sharing and recommending on social media work out well for businesses.

So how do you go about building a customer referral program? ‍

This step-by-step guide gives you some insight into the most successful types of referral programs and how to customize one for your brand or products.

1. Identify the Purpose of the Referral Program‍

Of course, you want to get more customers and acquire leads. However, other purposes lead to these superior results, such as:

  1. Increase customer loyalty
  2. Grow sales on a particular channel
  3. Get more return customers
  4. Turn customers into brand advocates
  5. Build awareness and increase your customer base from social media

It's essential to identify the purpose or goal of your customer referral program early on. This allows you to create the perfect incentive and measure the success of your referral program.

2. Outline Who It's for and Why It Will Work‍

Basically, how will you reach your target audience? What messaging will you use to sell the referral and incentive?

The referral program you choose has to be easily understood by your customer base. They should be able to quickly sign up and get their friends to join, as well. For example, when you join Lyft, you are automatically given your code to sign up your friends and get ride credits. Airbnb, Chime Bank, PayPal, and other retailers around the web also offer these sign-up-a-friend incentives.

3. Pick the Right Incentive‍

Money and a Gift

It's not enough to ask your customers to tell friends about your brand and products. If they like you, they'll do that on their own. However, an incentive motivates customers to act. Most of the time, it is a credit or cash incentive, such as a discount. It can also be a free e-book or another download.

Perhaps it's also a free product. Dropbox gives you and a friend up to 16 GB of free space with a referral offer.

Your offer should make sense for your brand and mutually benefit you and the customer. To pick out the right offer, here's the best advice from experts:

  1. Put yourself in your audience's shoes
  2. Ask questions like your customer
  3. Define language that inspires your customer
  4. Figure out what your audience wants most: cash, credits, gifts, discounts, etc.
  5. Answer this: what would benefit your audience the most from their perspective? Meet your consumer somewhere in the middle

4. Design the Ultimate Referral Landing Page‍

When setting up your referral page, all the information needs to live in one place, including the answers to these questions:

  1. What's the incentive?
  2. How do they get the incentive?
  3. What's in it for their friend?
  4. What does the friend have to do to get the incentive?

Your referral page needs to be easy to find and accessible on all platforms. You should also talk about it on social media, posting graphics that make it easy to understand how to get the incentive and where to do so.

Your main message and call-to-action should also support the referral program.

The best referral programs have a form at the top right of the page, making it easy to submit a referral and get the incentive.

5. Set Up Tracking and Analytics‍

Graphics and analytics on mobile phones

To ensure that your referral program is a success, you need to set up conversion tracking and Google Analytics. You should know how many people are visiting your page, bouncing off, or completing the form.

You can also use conversion tracking from Facebook and Google to track the success of campaigns, as well as see what channels bring you the most referrals. As you market your referral program across the web, you can easily see the funnels leading them back to your landing page.

Examples for Building a Customer Referral Program‍

It's time to get in front of your customers and show them why they should refer their friends to your brand. We've got some good examples to share from companies that have acquired hundreds of thousands of new customers through referral programs.

  1. Share with a friend to get $10 off
  2. Help us help you with 20% off
  3. Give $100 to your friend, get $100 for yourself
  4. Invite your friends and get free credits
  5. Sign up and invite a friend for a gift
  6. Give 30% off and get $20

Also, it's essential to ask at the right time. For most companies, this is right after the point of delivery or at the peak of their enjoyment with the product.

You can also create promotional events where sharing earns discounts and credits for all of your social media followers and fans, such as a "Spread the Love" referral strategy.

Remember to Say Thank You‍

Writing Thank You Letters

Referral programs typically do talk up the product and brand, but it's important to say thank you to your customers. Companies cleverly do this by saying, "As a thank you, we want to give you and a friend $50 off."

This messaging is great because it sets up your offer quickly and shares the incentive instantly. Your referral program should be easy to find and fill out, and the thank you is the finishing touch to show what their endorsement means to your brand.

As you build up your online presence, listing distribution software can help bring in additional website traffic by pushing your business information out to hundreds of search engines, geo directories, and vertical directories giving you more online visibility.

Ready to Grow Your Business?