You already know the benefits of a referral program, calculated your referral program ROI and now, you’re expecting your first referral program. Congrats! There are some things you should know before diving in head-first.
As with any new business endeavor, you have to set some realistic and achievable goals. Doing this is a lot easier when you know what you’re getting yourself into. And while all businesses have their differences, there are usually some commonalities along the way. Learning about what those are will help you better prepare for what you can expect with your first referral program.
What your proper referral program expectations should be
It’s always good to dream big, but being realistic is a better bet when it comes to your referral program. Since you may not know what to expect with your referral program quite yet, here are some we would recommend you start with.
1. Don’t expect a viral referral program
Thinking that way is not realistic and it will likely set you up for disappointment. Yes, you can drive big traffic, but you’ll probably have to earn viral success some other way. Viral referral programs can and do exist, but they’re hard to come by.
- You assumably won’t have Uber or Dropbox’s instant success. You may have heard about Uber and Dropbox going viral thanks to their referral programs, but that’s actually not quite the case. While of course, the programs helped with their growth, ultimately, it was the business models and products that inspired so many people to become customers so quickly.
- Your program isn’t going to be shared like a viral meme or video. You may have a meme or two out there about you, but it’s more than likely not because (or about) your referral program. Either you have a stellar product, you have witty comebacks, or your customer service is on the rocks. Think of Wendy’s and United Airlines.
2. Don’t expect customers to be thinking about you
We have no doubt you’re awesome. Even still, people are busy and may accidentally forget about your rewards program. It’s not necessarily because they meant to, but things do come up and people have a million other things they have to think about.
Which is exactly why you should remember: You will still need to promote your program. If you have a program, it needs to be promoted. A lack of promotion is an injustice to all of the hard work you put into setting it up in the first place.
3. Don’t expect to set it and forget it
Like all good things, a referral program needs tune-ups and regular promoting. Referral programs aren’t particularly difficult to run, but they do require a little work. To make it easy, implement your program into your already existing marketing efforts and it will become a regular fixture in your company.
Common terms you need to know
No matter how you decide to set up your referral program, there are commonly used words that you’ll come across in the referral marketing world. A lot of these terms are interchangeable, and as you’ll find out, not all referral software companies use the same term(s) for the same thing.
To give you an idea, here are some common terms and their synonyms.
- Dashboard: Your dashboard is your information hub. All your major statistics, including recent activity, active programs, pending actions and results will be shown on your user dashboard.
- Synonyms: control panel, user console, master dashboard
- Customer: These are the people who are doing the referring. Your customers are the people who bring in new leads and help your business grow. Referrers aren’t just customers, they could be your partners and employees too.
- Synonyms: member, referral, ambassador, influencer, rockstar, advocate
- Referral: These are the new people your customers are sending you.
- Synonyms: new lead, friend, new customer
- Rewards: Most referral programs provide some sort of referral reward to the customer and/or referral. The reward may be one of the main reasons people participate.
- Synonyms: incentive, gift, perks, offer
- Program: This is the bread and butter of everything we are talking about. The program is the “home” of all the components listed above.
- Synonyms: campaign, rewards program
Challenges you’ll face
Setting up a new referral marketing program poses its own challenges. You may be relieved to find that the most common referral program challenges aren’t actually too difficult to handle. In fact, most referral programs can be set up relatively quickly and without any major roadblocks.
The main challenges you’ll face are determining who to invite, how to invite them, and coming up with the initial design and offer(s) for the program. Chances are you won’t face too many, if any, odd ball challenges beyond that. Let’s cover some of the more common ones we typically see.
1. Figuring out who to invite
Once you decide who your program is going to be aimed at (customers, employees, partners), you’ll have to decide who you will ask to join. Your initial answer may be ‘everyone’, however, when initially asking for referrals we recommend you start things off by using segmented lists.
Ask those who are active in your community, whether it be a partner company you have developed a good relationship with or a few of your top customers. Asking the cream of the crop first can be more rewarding. Plus, you may receive some helpful feedback about the program as well.
2. The dreaded ask
After deciding who to invite, you have to figure out how to invite them. Typically, email is a great option. Other options include: phone calls, asking in person, or even using social media.
- Inviting specific customers: You may know a few people that would be perfect for your referral program. These people may be your top customers or even friends who happen to be customers. It’s easy to shoot these people an email or even ask them in person.
- Email blast: This is great for asking all your customers at once. It’s probably one of the easiest ways to ask well.
- Asking after every (good) customer interaction: Whether you’re brick and mortar or exclusively online, asking after a good interaction is a great idea. If you ask when a customer is happy, they will be more inclined to join.
- Program banner in all customer emails: Add a little blurb or picture and link in all your drip email campaigns and customer emails. This helps with program promotion, and it’s a less invasive way of asking. Plus, customers will always know how to get back to the referral program in the future.
- Social media (bios, comments, status updates, messages): You probably have a ton of customers who are on social media. Use your profiles to promote and ask for referrals.
3. Deciding on rewards
Rewards and incentives may be the driving factor in getting customers to send referrals. It should, however, be noted that plenty of referral and rewards programs work without any type of incentive.
If you do plan on giving rewards you need to think about who you want to reward. Will it be the referrer, referral, or both? The next thing you need to think about is what you would like to give that will make the program worth it for those individuals.
4. DIY or software
Deciding on how you will implement your referral program is another challenge you may face. If you do choose to use software, you must do your research first. There are plenty of services out there, but you have to find one that fits what you’re trying to accomplish. Big tip: schedule a demo with your top contenders. A run-through of the software you’re considering can be very helpful in making that decision.
Engagement Flux
As far as engagement goes, your typical referral program will venture through cycles of lots of engagement and then low engagement. When these low engagement times hit, many businesses think their program is failing. When in actuality that’s not the case. Programs take time, effort, and patience.
1. An influx of engagement
You just sent your referral program out, whether it be to a select few or your whole customer base. Chances are your engagement levels have skyrocketed. Why? Well, your program started with zero statistics so if one person participates in your program, your program engagement will look like it took a big leap.
2. Then a drop-off in engagement
You sent all your customers an invite and had great engagement, but now it’s a ghost town. This is normal. This actually happens with a lot of programs. No worries, it doesn’t mean it’s failing. Programs take time, and sometimes they need to be tested and revamped early on to get people engaged again.
3. Repeat customers
You may notice some of your referrers turn into your top customers. This is especially evident if you offer a credit or discount. #retention
Growth strategies
The good news is, once you create the program and it’s ready to roll, there are a few things you can do that will help your program grow. To better prepare yourself for launching your first referral program and to keep your referral program from failing, here are the best practices we recommend:
1. Incorporate your referral program into your marketing strategy
Chances are you already have a marketing strategy in place. Use that and then sprinkle in your program where you see fit for promotion.
- Newsletters: Even if you add a tiny section about your referral program, newsletters are a great way to continually promote your program.
- Retargeting ads: Perhaps a few people have clicked to view your referral program, but still, haven’t signed up. They could be busy or could have forgotten, so use retargeting ads to get those people back.
- Drip email campaigns: If this is something you are already doing, use it to the advantage of your referral program as well. Many companies add a link to their referral programs towards the end of their emails. You can also add it to your email signatures.
2. Be sure you’re promoting
Whether you simply add the program into your existing marketing strategy or come up with a strategy specifically for your referral program, you’re doing yourself a favor. Think about it. If people don’t know the program exists, they aren’t going to sign up.
- Promote changes in the program: Changes call for referral program promotion. If your program title changes, make it a big deal and rebrand it to customers. If you have a new incentive, be sure to share that news as well.
- Promote top referrers: People enjoy seeing success in others because it makes it easier for them to picture themselves in that position. Try doing social shout outs on Facebook and Twitter.
There you have it. Everything you should expect when you’re expecting your first referral program. Most referral programs are pretty easy to set up and plan, but it makes it a whole lot easier when you know what to expect and what referral program challenges are ahead.
For a more detailed guide to setting up your program, check out our referral program template.
