Last Updated on19 minutes to read
The success of a referral marketing program relies heavily on a happy customer base that is willing to serve as cheerleaders for your business. The idea is that those customers spread the word to their networks, and both earn a reward as part of the process for doing so. If you want to gain an edge over your competitors, it’s important to learn reasons referral programs fail and how to stop these situations from happening.
Reasons referral programs fail and how to fix them
When a referral marketing program is set up correctly, this can quickly lead to an increased number of targeted and qualified leads. There are, however, many moving parts involved in implementing and running a referral marketing program, which means there are also opportunities for a program to bust. Let’s go over a few reasons referral programs fail.
Your business does not fit the profile
First and foremost, if your business is not referable, it’s quite simple. The program will not succeed. So what exactly does a non-referable business look like?
You don’t have enough referrers
You don’t need a ton of people to start a referral program, but you do need some. If your business happens to be new, or within a niche space, it’s important to think through whether this stage or model will suit your referral marketing goals.
There is a lack of happy customers
Not only do you need customers to begin with, but they need to be happy with what you’re doing. They also need to trust the quality of your product(s). Customers who don’t feel that way will be less likely to refer your services to a friend.
Your business is a secret
This can be particularly tough. If your business is not one that people are inclined to share or discuss with others, it will present problems when it comes to customers publicly announcing their referral link on social media. While it might be within the realm of possibility, you’ll have to consider other avenues for sharing. Emails and referral cards might work better in this instance.
Consider opening it to noncustomers. One option would be to open your referral program up to other people. This might include people who are not necessarily paying customers but love your business anyway. Some examples include employees, partners, past customers, etc. who can all serve to be excellent referral advocates. Think about other referral incentives that align with noncustomers and fans.
There is a lack of promotion and communication
The biggest culprit as to why referral programs fail is due to lack of promotion. That said, it is your responsibility to let people know about your referral program. A couple of quick and easy ways to do so: utilize emails or display a banner on the website. If you need further inspiration beyond that, we have an epic list of ways to promote a referral program. Other missed opportunities include:
You haven’t done any pre-or-post launch promotion
You may miss out on good quality referrals if you fail to properly launch your referral program. An initial launch typically offers a big boost of engagement and it helps to establish which customers you can rely on.
With that, the first step to a launch is the pre-launch announcement, which is essential to getting your customers in-gear for the actual launch.
A formal launch doesn’t have to be difficult. What does it entail? Here are 4 ideas worth a try:
- Send an email or newsletter announcement, or mention it in your email signature.
- Start a countdown – whether you do this on your website or just a daily tweet. Countdowns get people pumped.
- Make sure your program is discoverable, but refrain from being too in-your-face about it. The idea is to simply remind and engage.
- Make launch day exciting! You can increase engagement if you add in some extra perks. For example, offer the first 20 program sign-ups an additional $10 gift card.
Check out more of our ideas to launch a referral program.
You forgot about ongoing promotion
You can’t just launch and pray. You’ve done a ton of work setting up your program and inviting people. Why stop at that? You’d be surprised at how many businesses carefully plan out their referral strategy just to announce it once and then hope for the best.
Do ongoing program promotion. Add promotion tactics to multiple customer touch points throughout various marketing channels, product interaction and customer service. Mention your referral program within your business via email, newsletter, website, social media profiles, in support autoresponders, product on-boarding, thank you letters, feedback forms… You don’t have to be forceful about it, but a program won’t work without a little TLC.
Keep the program up-to-date and try switching up the copy. Give old programs a refreshed look, and then share the changes with customers. Whenever you change the program, remember to promote it! This can serve as a reason to remind them about the referral program, which keeps your program top of mind.
Check out many more of our ideas for ongoing program promotion.
You’ve slacked on getting feedback
If you notice a lack of engagement, you may want to reach out to customers to find out why. Gathering and integrating this valuable information is one way to transform a struggling program.
Send your customers some quick tips. You can ask them for feedback on how the program is going for them in order to find out how you can improve it. Use NPS, or send a quick questionnaire. Use that new knowledge to restructure if need be.
You haven’t been doing enough ongoing communication with your participants
It’s important to show how much you appreciate your customers and program participants. If you let them flail in the wind, they probably won’t stay engaged. But, don’t go too overboard either because that could end up annoying your customers, resulting in no reads, deletes, and unsubscribes.
TLC should be a continuous thing. Here are some ways to go about it:
- Thank You – a little acknowledgment can help build a positive relationship. Send a thank you letter/email/social shout out to let customers know you see and value their hard work.
- Engagement – Even if he or she hasn’t utilized their program, don’t nix communication. Maybe they forgot and intend to come back and share. Keep on engaging with them. You don’t need to be forceful about it, but you can reiterate the purpose and benefits of the program to help kick them into gear.
- Progress Updates – Keeping customers in the dark can be detrimental. When a customer sends a referral, keep them in the loop. Let them know when a referral is added, or when they have a pending reward. These simple actions can help keep customers motivated and engaged in the process.
- Follow Through – If you don’t hold up your end of the deal, customers will lose confidence in the program. Who wants to do all the necessary work just to end up empty-handed? Don’t slack on issuing rewards. If you do run into a snag and can’t issue it right away, or as expected, let customers know. They will appreciate the gesture.
Customer referral software like Referral Rock’s referral software enables customers to see their referral statistics which allows people to know what’s going on. They can view how many referrals are sent, and how many referrals have used the referral link. Customers are also able to keep track of any rewards heading their way. Combine these visual aspects with messaging and you’re golden.
You haven’t perfected the user experience
Simply put: complicated referral programs do not bring favorable results. The user experience should be easy and relatively pain-free. Remember, gaining a referral is a favor your customers are doing for you, so make it simple.
You’re making the user do too much work
If it looks and feels like it will take up too much time, you can kiss any chance you had at getting referrals good-bye. Assume that people do not want to put forth unnecessary and wasted efforts. It doesn’t matter how much they like you or the reward you’re offering. People will not participate in your referral program if it feels like a job. For instance:
- Links – This may not seem obvious, however, if there are too many steps in the process, it can lead to a decline in program engagement. It is good to have links available for sharing, but it’s unlikely that this will be the method people gravitate towards using.
- Social Sharing (buttons) – Most people would prefer to be connected automatically to their social media sites with a single click.
- Messaging – You would be shocked by the number of people who decide not to share at the last minute. Why? Because they don’t want to write a message explaining the referral program. So, it’s important to write the message for them. The trick is to make sure it’s something they would say! But, on the off chance that your customer does want to write their own message, the opportunity is there. Many referral software options allow the customer to either alter the message or add their own additional messaging.
- Unclear messaging/branding – Another big no-no is giving too much or too little information. You could overwhelm or confuse a customer, which could, in turn, make them want to abort the mission.
Just get to the point. Use bullet points and cut out any unnecessary wording. If you have a ton of information to share, try and add it to a terms and conditions page. Or, enable an opt-in for people to receive the official referral program rules.
Another tip: make sure the program branding aligns with the business. If people can’t tell it’s yours, it may result in a lack of trust for the program altogether.
You settled on poor structure
Your referral program doesn’t have to have all the bells and whistles. But it does have to make sense and be easy to navigate. For instance:
- No landing page – This can be very damaging. It can be confusing to the customer when they click a link and end up on your homepage, or another page with no guidance or insight as to why they are there. This can cause the customer to second guess themselves, and result in them not joining the program.
Provide users with a landing page. Let them know what their next steps are. You can reiterate what their part in the referral program is. Also, be sure to mention their reward, as well as how to receive the reward (if they are given one).
Check out more ideas for a referral program landing page.
You have complicated forms
Stay away from complicated forms. Don’t make users jump through hoops to complete the process.
Get the basic information first. For instance, their name and email will do just fine. If they join the referral program they can always update their profile information later (i.e. once they have successfully earned a reward, they will likely be more inclined to provide extra personal information).
You’re not doing something referrers care about
If you’re not providing users with a good reason to refer, they won’t. You have to make sure you’re making the referral program beneficial to them, whether that means it makes them feel good, or that they are earning some sort of reward out of the deal. People usually won’t help if they don’t care about what you’re trying to achieve. So you have to find ways to get users to care.
You have misaligned or bad incentives
What do your customers want? Is your referral program offering them value? If the incentive does not align with your business or customers, chances are there will be a lack of engagement. The incentive needs to motivate a customer to share.
You did a bad ask
You really don’t want to sound desperate when asking customers to join your referral program. Doing so could come across as insincere and risks making your customers uncomfortable. This is bad for business, and a quick way to kill your referral program. There are certain ways on how to ask for referrals.
You aren’t providing social gifting
This is a relatively easy fix. If you provide a two-way incentive – so that both the customer and the referral (their friend) get something, — it will seem less self-serving. People do want to share cool and interesting things with friends – think of social currency.
Be sure you provide value to your customers and ask nicely. Timing is important too, so it’s also best to ask when you’re certain customers are pleased with your business. And, make sure you have selected an incentive that will drive forth a referral. Here are some other recommended ways to ask your customers to join. Remember, tact is everything!
You haven’t given the program enough time
Like all marketing efforts, a referral program is not a silver bullet. It takes time for it to become established and integrated with your customer experience. With that, it’s easy to get discouraged, especially at the beginning if you don’t see flocks of referrals coming in. Don’t worry, even the best programs can take time to scale.
People aren’t aware of your program right when you launch it
You’ve launched your program, had a few members and referrals, but expected to have way more at the start. This doesn’t mean your program isn’t working. It just means your customers need some time to find out or learn about it. Like sales, it can take multiple touch points for that to happen. Even if you send initial email blasts or post on social media, most people will need to come across your program more than once before signing up.
Even after the program starts producing, it isn’t a shortcut to being a viral sensation. You should consider your purchase cycle and how long it takes for customers to get to the point of sending a referral. Consider your overall traffic. If you have a long sales/purchase process and/or low traffic, it could slow your referral program, but that doesn’t necessarily mean you’re unfit for referral marketing or that it won’t work for you.
Your customers might not be ready to refer immediately
People might not immediately know who they want to refer to your business. Even if they really like your business and plan on sharing it, they might not have had their “aha moment” of who to share with. A customer might not be able to think of or immediately identify the friends that need what you’re offering. It usually isn’t until a conversation happens, or a friend expresses their need for your type of product that a referral happens.
You haven’t figured out the right formula for referral success
Your need to be flexible with your program. Which means you may need to test out different strategies, messaging, rewards, etc. After giving your program time to get acclimated, if it’s still not where you’d like it to be, experiment and test different options.
Chances are you have done some A/B tests or at least know about it. Referral programs can greatly benefit from a little A/B testing. Whether you test out incentives or elements of the overall user experience, you can hone in on what works best for you. For best results, don’t stop after the first test.
Give it time. Referral programs are a great way to bring in new customers, but it’s definitely not a shortcut to success. When given enough time, effort, and testing, a referral program can become a core component of your marketing strategy.
Make the program part of the customer experience so that people are always aware of it, but avoid being annoying or pushy. Be realistic with your goals and expectations. You might have heard of some brands or businesses who have grown like crazy from referral programs (the Dropbox’s and Uber’s of the world) but even these programs weren’t instant successes. They took the time to scale properly.
You dropped the ball on the referrals
A lot of what’s been talked about thus far has been focused on the customer experience. There is, however, another key player involved in referral programs and that is the referral. The referral needs to have a good first impression of your brand. This means providing them with all the necessary steps to become an actual customer.
You offered zero personalization
Just like when you’re inviting a member, personalization for the referral is important. If they feel like they are just another number or if it doesn’t look like it’s in their best interest to join, they won’t.
Provide what you can. Providing the sender information can help a referral associate a brand with a friend. If you know their name, even better! This can make the referral more comfortable with your brand. Evernote does a great job of adding personalized touch points to their referral experience.
There was a poor transition for referral
Remember, these people are new customers. They are just figuring out what you do. If they click their friend’s referral link and are brought to a landing page that is confusing, has too much information, or just plops them right onto the homepage, they will likely be discouraged. This can cause the referral to second guess themselves, and, because of that, a conversion might not happen. Don’t leave too much up in the air. Otherwise, you might end up with The Bermuda Triangle That Eats Your Referrals.
You had poor default messaging
This is the first impression a referral will experience with the brand. If the messaging is weak right from the start, it will likely be difficult to turn prospects into believers.
You did the homepage drop
You’ve dropped them on the home page… Either you haven’t given them enough information or you’ve given too much information. Unclear instructions or confusing landing pages can cost you a referral. For instance, it’s confusing for a referral to click a link and land directly on the homepage of a website. They might not know what they should do next.
Providing just a bit of the right kind of information on the landing page is all it takes. You can use a simple pop-up to let them know their discount has been applied to the cart, or that they can use the discount during checkout. Make transitions as seamless as possible, and directions and information easy to understand. For example, don’t leave them wondering if they have been successfully linked to the right referrer.
You provided too much information at once
Yes, you want to provide the referral with information on the referral program. However, just like the member experience, you need to be careful about the quantity of information you’re giving. Too much can be overwhelming. He or she might think the program is too complicated and will likely avoid further requests.
If you need to provide additional information, provide a link to additional documents. This way, if a referral really wants to learn more, they can. If not, they will at least understand all the major components.
Speak to the referral like a new prospect. You may need to do a little bit of convincing. Just like you had to work hard to get into the hearts of your customers, you need to show a little love to referrals. Don’t assume referrals are automatically sold on your business. They may value their friend’s recommendation, but that doesn’t mean they will follow blindly. Have a specific plan for them. Include them in your traditional marketing funnel.
If done correctly, referral programs work
Sometimes, businesses expect that by starting a referral program, they will instantly have hundreds of new customers. Referral programs aren’t a magic fix, but they can be awesome if they’re built for success. Customer referral software helps this along.
It can take a while for a referral program to gain traction. Hang in there. It can take several months for a program to get going, but it is totally worth it. Referral programs are an excellent strategy for rewarding current customers and gaining new ones. The key is to make sure you have a well-developed program that gets customers excited about your brand.
The best referral programs aren’t just one-off programs, but part of the larger customer experience. Offering a referral deal to a happy customer is like giving them a bonus for something they’re already doing.