Referral campaigns are one of the best ways to create brand awareness, generate new leads, and boost customer acquisition, without the hit-or-miss nature of advertising and cold contacts. Referrals from your existing customers to their friends and family come from someone they know and trust, and carry the weight of social proof through a personal contact. While most people deliver referrals casually, from time to time, a referral contest is an excellent way to encourage every active customer to become your brand advocate, and potentially multiply your customer base as a result.
In return, your customers gain the opportunity to win valuable prizes and rewards, tailored to the unique needs and interests of your target audience. Running your own referral contest only requires a few steps in preparation and an engaging publicity campaign. Let us walk you through everything you need to know about conducting your own successful referral contest.
What is a referral contest?
A referral contest is an online event in which customers share your business with friends and family using a unique referral link. Each customer’s referrals connect back to them through that link, allowing them to enter either a contest for generating the most referrals or a random raffle drawing. Prizes and referral rewards are used as an incentive to participate – all referrers get a small incentive, but also stand to win larger prizes for bringing more people and new orders to your business.
Types of referral contests
There are several ways to run a referral contest, and you can tailor your style based on your brand personality and the interests of your audience. Gamified referral programs, formal entries, and social media events are all possible approaches. However, when it comes to how you decide a winner and deliver prizes, there are three main types of referral contests to choose from.
Referral drawings / raffles
A referral drawing or raffle (sometimes called a referral sweepstakes) enters every participating customer as a potential winner of the grand prize. A successful referral is anyone who becomes a new customer, client, or subscriber using the referral code of an existing customer. Each successful referral earns a “raffle ticket” which is entered in the random drawing. Those who make more referrals have a higher chance of winning, but anyone who makes a single successful referral could be the winner.
A popular example is the Morning Brew newsletter’s Macbook Pro giveaway series, where drawing winners win a MacBook Pro for themselves and the friends they referred. Morning Brew still runs these drawings at random times to boost their subscriber base.
“Most referrals” contests
A more traditional and direct type of referrals contest is the “most referrals” contest. This approach tracks how many successful referrals are made by each participating customer, and the one who brings in the most new clients or customers wins the grand prize. Many “most referrals” contests also give runner-up prizes for the top three or the top ten winners so that everyone remains engaged during the event.
“Most referrals” can relate to direct referrals or to the total order value of the new customers who were referred by the winning participants.
The Hustle newsletter uses “most referrals” contests from time to time. Notoriously, they once gave away a business worth $20K to the winner who made the most referrals in a month.
Referral leaderboard contests
Leaderboard referral contests can last over several months and tend to have far more prizes and tiers of prizes. Otherwise, the method works similarly to the most-referrals model. Customers can always see where they are on the leaderboard, providing live and motivating competition for those with many friends or followers they can persuade to join your customer base. Top referrers over certain achievement thresholds win increasingly grand prizes, and your leaderboard may remain active over several giveaway periods.
Why run a referral contest?
Word of mouth is the most trusted form of marketing, as people trust friends’ recommendations far more than they trust ads. Referral contests are a word-of-mouth marketing campaign that also directly rewards engagement from your current customers and audience. Contests have always been a great way to boost engagement, and referrals build awareness of your brand through the trusted recommendation of friends and family. People are more likely to take a referral seriously than an advertisement, and your customers often enjoy the opportunity to earn prizes while sharing a brand they already know and love.
Referral contests can also inspire super-sharers – something created by today’s social media environment – because people are motivated to share with everyone they know in a short period of time to win the grand prize.
How to run the best referral contest
Running a referral contest can be a fun experience for both your brand and your participating customers. The best referral contests are planned from beginning to end with smooth features, fun implementation, and a motivating reward for those who participate. Here are our tips for running a successful referral contest.
1. Choose the perfect grand prize
The grand prize for your referral contest needs to be a big-ticket item to encourage shares. You are asking your customers to go out of their way to advocate for your brand, and looking to reward someone who may – potentially – bring you dozens, hundreds, or even thousands of new customers. The super-advocate’s reward should be significant. It should also be big enough to inspire hundreds or thousands of people to participate just for a chance to win.
This big reward could be a tech item like a laptop or gaming rig, season tickets for a sports arena, a high-value gift card, a luxury vacation, or even a vehicle. Make sure that the grand prize is something that will be worth the time and dedication of your potential top referrers.
2. Give away multiple winners’ prizes
Don’t just issue one grand prize. If people see someone pulling out in front (perhaps an influencer with thousands of followers) they might get discouraged if only one prize is available. This could lead to fewer referrals overall. Avoid this scenario – you want the rest of the audience to stay motivated to keep referring.
Offer multiple grand prizes, or offer tiers of prizes, that reward the top three, top five, or top 10. You could even have enough rewards for a few dozen people who reach certain thresholds of referral success. This will give everyone a better feeling that they have a chance to win, and keep them engaged.
Make sure these secondary prizes are unique, but still big-ticket. You don’t have to spend as much on these as you do on the ultimate prize, but they should still be worth competing for.
3. Reward every customer who participates with a small incentive
Of course, big prizes aren’t your only option to engage your entire audience. Like any referral program, you should also incentivize every customer who successfully makes even one referral. These prizes should be smaller, but still enticing. Store credits and discount coupons, small free products, branded swag, temporary upgrades, and stacking rewards for multiple referrals are all great ways to get your entire customer base involved, even if only a few entrants can win the big prizes.
4. Consider tying your contest to the seasons
Holidays and major sale seasons are a great time for referral contests, as everyone is getting into a social and pro-shopping mood. Looking for gifts, splurging on fun, and reconnecting with old friends is the perfect environment for a referral contest.
Feel free to reference the holiday seasons in your contest messaging and/or graphics. You can also tie rewards to seasonal events, like a romantic Valentine’s getaway in late January or early February, baseball season tickets for an early spring contest, or theme park season passes in the summer.
Tying your contest to the seasons can also create hype during a slow season for your company, creating a new period of activity and excitement when there are no other competing events for your audience.
5. Make entering easy
Entering your referral contest should be quick and easy. Make sure your referral contest landing page is easy to find and easy to use. The landing page should start with a headline inviting customers to share and teasing the contest rewards.
You should also offer multiple sharing options, including email, social media, and direct messaging. Include social media buttons so that sharing the contest with multiple friends and even groups at once is easy, potentially creating multiple entries rapidly if their friends click the link and subscribe or purchase.
Regardless of the other sharing options you choose, giving each customer their own unique referral link is essential. This way, it’s easy for customers to copy and paste the link anywhere, and referrals will instantly be tied to the person who made them.
6. Clarify the rules
Define the rules of your contest and make them extremely clear – explain the referral process in a few simple steps on your landing page.
- Who can enter the contest? (ex: minimum age or location)
- What prizes are on offer?
- What must happen for a referral to result in a contest entry? (ex: the referred person subscribing or buying)
- How is the winner chosen? (ex: most referrals or a raffle drawing)
If your rules or terms are more complex, link to a separate terms page, to keep your landing page clean while providing your participants with everything they need to know.
7. Promote, promote, promote!
The final step of any great contest is publicity. You need to get word out about the contest publicly, but you also have direct access to potential participants through your email list. This is where your participation incentives come into play. Send out an email campaign promoting the referral contest, offering every participant (and perhaps their referees) a rewarding prize while teasing the grand prize, to motivate those with large networks and a lot of social energy.
In addition, include program teasers in newsletters and transactional emails, and mention the contest in emails not directly related to the program. Be sure to spotlight your contest across all your social media channels, promote it in big graphics on your website homepage, and include easy links throughout your website and app to gather participant customers in every way that they might interact with your brand.