Most referral programs offer one reward, paid out the same way every time. A milestone referral program raises the stakes. The more referrals someone sends, the better the rewards get. It’s a simple concept, but designing the tiers well is the difference between a program that builds super-advocates and one that fizzles after the first payout. This guide covers how to structure your tiers, what to offer at each level, and the mistakes that trip most programs up.
What is a milestone referral program?
A milestone referral program (or a tiered referral program) offers different levels of rewards to motivate your customers, subscribers, or employees to make more referrals. Every time someone reaches a set number of lifetime referrals, they earn a new referral reward. And the more successful referrals someone makes, the higher the value of the rewards that the referrer earns.
For instance:
- Referral #1 = 20% discount off of their next purchase
- Referral #3 = a free product
- Referral #5 = $100 in store credits
A successful referral means that someone referred a friend who made a purchase, subscribed to your newsletter, or subscribed to your service. Basically, it’s any referral that results in the conversion you want to motivate through the program.
When do tiered referral programs make sense?
Milestone rewards tend to work best for businesses with high sales volumes, especially those where it’s likely that one referrer will make several successful referrals. They’re also a great fit for businesses that want to offer more unique one-off rewards.
Newsletters often use milestone referral programs to grow their subscriber bases. Two of the most successful referral programs ever are the Morning Brew and The Hustle newsletter referral programs – and both use a milestone structure.
That said, tiered referral programs can work well for businesses in any industry, as long as the business sets the tiered rewards strategically, and can afford to pay out these multiple rewards. We’ve seen tiered referral programs used by SaaS providers, travel agencies, ecommerce sites, and more.
Milestone referral program examples
As we mentioned above, one prime example of a tiered referral program is the Morning Brew referral program. This program currently has ten milestones: one successful referral earns someone a branded tote bag, three successful referrals earns them stickers, and so on – all the way up to a work-from-home makeover for anyone who successfully refers 1,000 friends to the newsletter.
Another example of a milestone structure is GetResponse’s referral program. Every time someone makes a successful referral, they earn $30 in credit towards their next GetResponse bill. But for every three referrals they make, they can take one of GetResponse’s courses for free – and these courses are valued at $200 apiece.
Why tiered referral programs work
Since the reward values increase as someone makes more referrals, milestone rewards encourage members to send multiple referrals and stay active in your program. They help keep program engagement high and can surface your most enthusiastic advocates.
They keep referrers coming back
Continued rewards are one main reason people will keep sharing a business via referral programs. With a tiered program, rewards not only stay available, but increase as the number of referrals increases, providing even more reasons for customers to keep sharing.
This adds a gamified element that keeps people engaged. By sending an email every time someone reaches a milestone and encouraging them to go for the next reward, you can boost that engagement further. One social share of a referral link can reach hundreds of eyes at once, and since that single share could lead to multiple successful referrals, someone could advance through several tiers relatively quickly. The tiered structure gives people a reason to put their link out there.
They surface your best advocates
If you offer significant value rewards for high amounts of referrals, this can create situations where one advocate sends in tens, hundreds, or even a thousand referrals. That motivation can create super-advocates who become reliable ambassadors for your business.
That’s especially true if you go big like Morning Brew does. To earn their top-tier reward, someone must make 1,000 referrals, and people have achieved it.
After you’ve identified these super-advocates, you might ask them to represent your brand more formally. For instance, you might ask them to be affiliates or brand ambassadors.
How to design your referral program tiers
Now that you know how tiered referral programs work, and you’ve seen some examples, how should you determine your tiered rewards? Here are some guidelines.
Spacing your tiers
If you’re going to design a tiered referral reward system, you’ll need to consider two factors when deciding on your tiered spacing: the reward at stake and how achievable the reward is.
Tiers should feel attainable at first, with a gap of only one to a few referrals between each tier of rewards. This is key in motivating continued referrals.
Take a cue from Morning Brew: the majority of their tiers are spaced at an achievable rate. If you refer five people, referring two more to earn another reward doesn’t seem overly daunting. The reward seems within reach, and it’s something the referrer actually wants.
As referral amounts get significantly higher, it’s ok to have very large gaps between tiers, just as Morning Brew does. For instance, it’s fine to give a reward at 100 referrals and then have the next (and final) tier reward be at 500 or 1,000 rewards.
Setting the top tier
Also, remember that a tiered referral program has to end somewhere – there has to be a highest tier.
If you’re a newsletter or other free content subscription, it’s best for that tier to be in the hundreds of referrals.
If you’re purchase-based and purchases are frequent, you might have a super-advocate final tier between 50 and hundreds of referrals.
But if purchases are infrequent, a final tier between five and 20 referrals may make more sense. You could also continue to give a high-tiered reward in cash – or credits – after every subsequent set number of referrals someone makes. Or, you could have tiers reset every year or every two years.
No matter what tiers and rewards you choose, make sure that they’re all motivating to your referrers. Incentives should all be items that your advocates truly want to earn, and that will be useful or meaningful to them.
Rewards for the first tier(s)
The first tier (or first few tiers) should offer motivating rewards that are attainable, but that are inexpensive for you to give out frequently. The goal here is to make the lowest tiers the most affordable, as these are easiest to reach and must be given out the most.
This might mean awarding swag bought in bulk if you’re a free content subscription business, and a small but still motivating amount of store credits (or a smaller free product) if you’re purchase based.
Especially if you’re a free newsletter, keeping the reward cost low is key.
- Morning Brew’s sticker rewards cost just 25 cents each to reward.
- Other lower-tier incentives (the notebooks and totes) are bought in large bulk amounts as well, so they’re also very affordable for Morning Brew to award.
For purchase-based businesses, be sure that the first tier(s) of rewards tie back to your business. The reward costs will ultimately be lower when the reward encourages customers to put money right back into your business.
- Store credits are overwhelmingly your best bet here.
- But small free products might also encourage your customers to buy more.
Rewards for the middle tiers
Middle tiers should be worth more than the first tiers, but still be cost-effective to pay out based on the number of customers or subscribers brought in. Again, each middle tier should be worth more than the last. Higher-value swag, credits, or free products are great options.
- For instance, if the lower-tier reward is shave cream, a middle-tier reward could be a shave set.
- Or, if a lower-tier reward is a notebook, a middle-tier reward could be a Yeti tumbler or Columbia fleece.
Rewards for the highest tier
The highest super-advocate reward should be extremely valuable. Regardless of your business type, it must reflect the value of all the customers or subscribers the top referrer brought in.
This could be:
- A tech package
- Travel credits
- An exclusive VIP experience
- A personal and expensive gift basket
- A significant amount of store credits or subscription credits
- An entirely free service
- Several free subscription months
This gives the best advocates something to shoot for.
Don’t forget the friend
Most tiered programs focus entirely on the referrer’s rewards, and that’s a mistake. Across our data on 500+ referral programs, 74% use one-sided rewards (referrer only). But programs that reward both sides consistently see better results.
Think about it from the referrer’s perspective. They’re putting their reputation on the line every time they recommend you to someone. If the referral feels like a transaction (“refer a friend, get $20”), the referrer feels like they’re monetizing their relationships. That’s uncomfortable.
The fix: frame each referral as a gift the referrer gives their friend. At every tier, make sure the friend gets something too, whether it’s a discount on their first purchase, a free trial extension, or a bonus. All your messaging (the program page, emails, share messages) should center on what the friend receives.
When the friend gets a meaningful offer, the referrer isn’t asking for a favor. They’re doing their friend a solid. That shift changes the entire dynamic and makes people more willing to share, not less.
Best practices for tiered referral programs
Now that you’ve designed your tiers, here are more ways to set your program up for success. General referral program best practices still apply too.
Show referral progress front and center
On the referral program page, you’ll need to display the total number of referrals someone has made, front and center. After all, advocates need to know where they are in the tiered scheme so they know what they’re working towards. It’s also beneficial to display how many referrals they need to earn the next reward.
Display a progress bar
Several successful tiered referral programs have their page operate like a progress bar, with the number of referrals someone has made displayed underneath. This way, referrers can easily see the reward they’re working towards, as well as how many referrals they need to earn that next reward. When users can see these visuals, it can motivate them to keep sharing: “Oh, I only need to refer two more friends to get to the next tier.”
A progress bar may also add a gamified element, as it gives customers something they can compare with their friends (and this healthy competition could encourage even more referrals)!
Harry’s prelaunch referral program is one example of the progress bar at work.
Tease the next tier in every reward email
Once referrers earn a reward in your milestone referral program, you’ll need to send them an email so they can redeem it. But don’t just congratulate the referrer and give them the details. Use the email as an opportunity to tease the next reward and encourage them to keep referring.
Here’s an example: “Congratulations, you got 3 friends to sign up for the MNO Scoop Newsletter. You’ve earned an MNO Scoop tote bag! Refer just 2 more friends, and you’ll earn a pair of MNO Scoop socks!”
Keep promoting beyond launch
Tiered rewards create motivation, but only for people who know the program exists. Most referral programs fail not because of weak incentives, but because promotion stops after the initial launch email. A contact list goes stale in 2-3 months.
Build referral touchpoints into your ongoing operations:
- Add the program to your website, app menus, and email signatures so people discover it naturally.
- Have your frontline team (sales reps, service techs, account managers) mention the program during customer interactions. They’re your always-on recruiters.
- Send periodic reminders, not just when someone earns a reward, but to re-engage members who haven’t shared recently.
A tiered program gives people a reason to keep referring. Continuous promotion gives them a reason to remember.
Choose the right software
Referral program software is key to your program’s success. It lets you create trackable referral links and monitor all of your customers’ successful referrals in real time.
Not all referral program software can run a tiered referral program. Many options are only designed to run a simple “give-and-get” structure with one fixed reward.
Referral Rock referral software has everything you need to design and launch a tiered referral program. Set the reward tiers you want, pay out the right rewards automatically when they’re earned, and send emails that keep referrers engaged and aware of what’s next.
Making tiered rewards work
A tiered referral program gives your best advocates a reason to keep sharing. But tiers alone don’t sustain a program. The reward structure has to feel attainable, reward both sides of the referral, and stay visible through ongoing promotion. Design those pieces well, and you’re not just running a referral program. You’re building a system that surfaces your most enthusiastic customers and gives them a reason to keep going.
