April 24, 2014

Seven Tips for Making Online Referral Programs Work


Hostway Team

TargetDollarSignClickJohn needs a way to send out his new customer newsletter and is looking for recommendations. In the past, he might have read online reviews to learn about companies’ reputations. Now, John has another great resource right at his fingertips: his network of friends, family and colleagues on social media.

He posts his query and within minutes, he has recommendations and a 10-percent off code that his friend Gary sent him for the email service he uses. What John may not know is that Gary gets 30 percent off his monthly fee if his recommendation yields a new customer for that service.

Using referral programs as an online marketing channel is gaining more attention than ever because it works for many businesses, from mom-and-pop storefronts to multinational corporations. For example, Dropbox has grown its business significantly through its referral program; meanwhile, even a giant like Google can get into the online referral mix, recently offering users $15 for each referral to Google Apps they successfully converted.

Below are seven tips on how to build a successful online referral program:

  • Poach ideas from companies that seem to be doing a good job. They don't have to be in your specific industry – if something piqued your interest, take the time to understand why the campaign was so successful.
  • Get to know your target customers. Where do they hang out online? What content are they consuming? This early legwork will help you determine the success of your online referral marketing campaign.
  • Budget wisely. Buying Adwords on Google, Facebook ads and advertising on relevant blogs can be expensive, so make sure you are laser-focused on your audience. That will help with your first conversions. Once your initial conversions are in place, incentivize them to spread the word in the form of a discount or value-add.
  • Use social media to engage. People have liked and followed your company for a reason. Reward them with special offers and make them sharable with friends.
  • Make it easy to share. Put links, buttons and template emails together for your customers so that sharing is as simple as possible.
  • Build your email lists. If users have engaged with you previously, and have opted into emails, use them frequently but judiciously. Provide unique content. Ask for feedback and reward those who give it to you.
  • Acknowledge and reward. Customers like nothing more than a thank you and a reward for referring other customers to a business. The reward, regardless of value or delivery method, should always include two important words: Thank you.

One last piece of advice: Make sure to set a measurable goal for your referral program so you can see which type of incentive is most successful. For example, set a goal of a 15 percent increase in referral business over the next two months. Establish your baseline, and start testing various offers to see what works. You'll soon find your investment paying off. Best of all, you'll remind existing customers of their commitment to your company. You might even find an uptick in sales simply based on their renewed interest in your company.

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