Are you thinking about launching a referral program? Here are 13 tactics that you should keep in mind to get started.

Understand Referral Marketing

Understand Referral Marketing

You cannot create a referral program unless you understand it. Fortunately, it is quite easy to understand. All it involves is to create a plan that attracts referrers into your system. The role of these referrers is to get as many buyers or subscribers to your website. Why is this effective? Well, it entails having other people promote your website for you. If you have tried pushing yourself before, you’ll find that it is hardly sufficient. It is far better to have other people promote you instead. This is one of the reasons why referral marketing is effective. It is because it entails getting another person (usually, it’s your customer) to help you promote your website. It is more effective than other forms of marketing because it leverages the person’s circle of trust. This pertains to the people in his inner circle, such as his family and friends. Since these people have a prior relationship with the referrer, they are no longer considered as cold leads. They already know and trust the person, so they naturally trust his recommendations.


Choose Your Reward

You cannot set up a referral system without a reward. A reward is a necessary element in all referral programs. It acts like the bait that your customers will take when they promote your website. When you ask your customers to assist you, they will not do it right away. They need to know that there is something in it for them. A reward fills this need.


There are different types of rewards that you can use. The most common type of compensation for eCommerce website owners is a discount code. This is effective because it doesn’t require any form of investment from the website owner. It can be listed as a reward right away. This is in contrast with other types of bonuses, such as cash and free items. These items require an upfront payment from you. But they can be more effective when it comes to attracting more referrals on your website.


PRO TIP: You can experiment with different rewards until you find the one that your market responds to the most. You’ll find that they will prefer some rewards over others. It is best to test these rewards to see, which will be more effective.


Choose Your Referral Format

Next, you also need to choose your referral format. This is how you will distribute the prize or bonus of your referral system. There are different formats that you can follow.


The most common is the ‘reward-the-referrer’ system. In this format, the focus of the reward is the referrer. The referrer pertains to the person who is doing the promotion. This person gains the bonus upon his successful referral of another. This works when you want your referrers to take action right away.


The next type is the ‘reward-the-referral’ system. In this system, the referrer takes the background, and the referrals are the ones who get the reward upon signing up. This is great for products and services where users are naturally motivated to promote it. With this, you no longer need to convince them to tell another about your brand. They will do it on their own. When this happens, the referral gets a reward upon signing up. This motivates their invites to take action and sign up.


The third type is the most effective. This is where you reward both the referrer and the referral. It is called the ‘reward-both’ system. This is because you give prizes to both actors in your referral program. This is the ideal model for referral programs. In this model, you don’t leave an actor behind. You make sure that they are sufficiently rewarded for their efforts. If there is one downside, it is the cost. Since you have to give two rewards for each successful referral, it can be quite costly, especially for a newly launched business like Best Drums Set Labs.


Use Referral Software

Once you have worked out the specifics of your referral system, it is time to create it. If you plan to do this by yourself, you’ll find that it is quite challenging to do. Not only do you need some prior knowledge in coding, but you also need to set up a database to contain all of your referrers and referrals. From here, you should set up a system so that you can track all successful referrals so that you can send rewards as needed. All of these are quite complicated to do if you don’t have referral software.


This is the reason why you should use referral software when you launch your program. You’ll need a system that can help you capture, track, and measure the performance of your referrers and referrals. You also need a system where you can send payments in a single click. These are things that only referral software can do. Be sure to look for compatible software like WooCommerce affiliate plugin.


Make It Prominent

Once you manage to create your referral system successfully, it is time to promote it. The first thing that you need to do is inform your website visitors and customers that your program exists. How can you do this? That’s simple. You simply show them a link to your referral program in prominent places on your website. For eCommerce websites, this can be your website’s announcement bar. In Shopify, there is an area for all of your announcements. You can simply link your referral program here.


In the same way, you can also have a link to your referral page on a pop-up. This will ensure that it can go past the distractions and go right in front of your customers. This is because they will see it when they visit your website.


Inform Your Prospects via Email

How about those people who signed up to your mailing list but hardly visited your website? You can reach out to them through your mailing list. More than sending a broadcast email, you can incorporate your referral system into your monthly or weekly newsletters and let them see it regularly. They say that prospects may need to see something up to 9 times before they take action. By making it prominent on your website and also promoting it in your email list, you give your prospects plenty of opportunities to see your referral program. This increases their chances of signing up and participating in your program.


Leverage Influencers

Leverage Influencers

If you want more people to know about your referral system, you will also need to leverage influencers. This will now take you outside your website. If, in the past two tips, your primary focus is your existing customers and website visitors. In this tip, you will focus on new leads that you can acquire outside of your website. The fastest way to do this is to leverage influencers. Why influencers? Well, these people have already built a significant number of followers and have established their brands in their niches. Also, they are called influencers for a reason. They are called as such because they can drive people to respond and take action.


However, you cannot just approach an influencer and ask them to promote you. If you have tried that already, you’ll find that your message will often get ignored. You see, you have to provide value before they promote you. You need to show them what’s in it for them.


For this, there are many strategies, but it is essential to get to know the influencer and learn to think outside of the box. If you are thinking of just recycling the strategies that other businesses do, you’ll find that some of them may not be as effective in your niche. This is where nurturing comes in. It is essential that you talk with your target influencer and get to know them and their brand. If you want, you can sign up for their courses and products. Try to get inside their exclusive groups, and you will soon get their attention. This may be quite costly in terms of time and effort, but it will pay once you manage to convince them to promote you.


Create a Contest

One of the things that you’ll find is a regular referral program is hardly useful in getting your desired number of referrals. For this, you may need to tweak it a little bit to attract more leads. This is what a contest is for. You can quickly transform a typical referral system into a game that gets more referrals.


Fortunately, this feature is often built in your referral software. There is software that allows you to list multiple prizes for your contest along with a regular referral reward. This is great not only for making your game attract more referrers, but it can also help referrers become more excited in getting more leads to your website. This is because there is another reward that they can win for getting more referrals to your site.


Give Rewards with Milestones

Similarly, you can set up milestones for your referrers. This is different from a contest in terms of the number of rewards. In a game, you only give prizes to the winners. If the referrers don’t make it to the winner list, they don’t get anything. With milestones, however, it is different. This is because you give away a reward every time a sign is met. For example, you set the milestone to 10 referrals. Every referrer in your system that managed to reach this is entitled to a prize. This is quite similar to a typical referral program, only that it requires referrers to reach a certain ‘payment threshold’ before the award is released.


NOTE: You can implement a typical referral program where a reward is instantly granted and combine it with this strategy. When you do this, your referrers are entitled to instant compensation and other rewards once they meet certain milestones.


Collaborate with Other Brands

Aside from influencers, you can also choose to work with other brands. For this, it is best to stick with complementary brands. These are brands that have the same target market, but they don’t compete with your products and services. Take a photography service, for example. Their target market includes soon-to-wed couples. If you run a flower shop, you have the same target market. So if you ask them to promote your service in return for supporting them, they will most likely say yes. It is essential to define your target market and focus on what you can offer. This will help you to find complementing brands you can work with quickly.


Give Premium Prizes

Another way you can attract more leads is to have premium prizes. These are prizes that your referrers or referrals may not have access to if they have not joined your program. This is true for brands like Tesla that managed to use this strategy to their advantage. The company did not spend anything on advertising. They allowed other people to promote them. How were they able to do this? Well, they gave away a Tesla as a reward for their referral program. This fueled conversation around the brand and got them their sales.


Turn it Into an Affiliate Program

You can also transform your referral system into an affiliate program. This is where you give away a percentage of the sale for each successful purchase. This is great because it attracts marketers to your program. Unlike a typical referral program where you ask your customers to promote you, an affiliate program can be promoted on joint venture forums and communities. This will allow you to tap marketers who know how to promote products and services to become your marketing army.


Track Your Referral Performance

You will need to track how well your referrals are performing if you want your referral system to be effective. You see, it is not enough that you have their contact information. You also need them to take action. You can only get your website visitors to take action if you know how they are doing. This way, you can reach out to them when needed.


Another factor that is worth the examination is cart abandonment. You’ll find that referrals can quickly transform into customers upon the recommendation of their family and friends. However, they may add products and not proceed with the order. It is essential to look at this metric so that you can lower or stop shopping cart abandonment.


That sums up our list. Which strategy will you try first? Tell me all about it below.