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. Let’s go over what you shouldn’t expect when starting a referral program, and the realities of what you’ll need for referral program success.

1. Don’t expect a Dropbox-level viral referral program

Thinking that way is definitely not realistic and it will likely set you up for disappointment. Yes, a referral program has the potential to bring in lots of traffic and leads. But most referral programs won’t earn viral success. Viral referral programs can and do exist, but they’re hard to come by.

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.

2. Don’t expect the program to be your marketing “silver bullet”

A referral program is no substitute for the essentials when it comes to attracting customers. In fact, you need the basics already in place before you even think about using referral marketing.

Ensure you have a solid group of satisfied customers eager to recommend you. Without this, you won’t see many referrals in the first place. How can you achieve this? Start by developing an exceptional product or service, an outstanding customer experience, and a USP that differentiates itself from the competition, .

To assess if you’re meeting these goals and are prepared for referrals, see if you’ve got five-star ratings, encouraging comments both in person and online, and enthusiastic responses from customer surveys.

3. Don’t expect momentum without rewards

Sure, you might have seen lots of referral programs that don’t offer rewards. But do they work? Reality check – they don’t drive as many shares as you might think.

While having an excellent product and customer service is essential for encouraging sharing, most customers will only be motivated to actually share if they see a potential reward. It’s important to ensure that the incentive is appealing and useful to them.

And an appealing incentive is also about offering something to give. 

People don’t want to feel like they’re selling out their friends just to get a reward for themselves. But if you offer them a chance to share something exciting with their friends while also earning a little something for themselves, they’ll be eager to participate. The reward then feels more generous and selfless, making them more inclined to spread the word.

4. Don’t expect to set it and forget it

You can’t just launch a referral program and expect it to go to work all on its own. Like all good things, a referral program needs promoting. People won’t know it exists if you don’t tell them! To make promotion easy, implement your program into your already existing marketing efforts and it will become a regular fixture in your company.

Start with direct promotions as your backbone: Send out monthly to quarterly emails completely focused on your program.

Then, think about emails you already send out: Transactional emails, newsletters, update emails and the like. You can add a short sentence in all of these to advertise your referral program.

Next, look at your website: This is the hub of your brand and where your loyal customers come to buy or get info about you, so how can you promote your referral program there? In top and bottom menus? With a hero image? On your thank you page, right after a purchase?

Finally, evaluate other ways you connect with customers: Do you post regularly on social media? Send texts? And how might you promote your brand in your physical location or on service visits?

5. Don’t expect customers to remember the program (without help)

We have no doubt you’re awesome. Even so, 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 consistently after your big launch. A lack of continued promotion is an injustice to all of the hard work you put into setting it up in the first place.

Besides regular promotional emails for all customers, we recommend targeted communications aimed at re-engaging current sharers.

  • Monthly Summaries, which provide personalized insights into the activities of existing sharers, can help keep your program fresh in the minds of those who are fairly active.
  • Quarterly reminder campaigns can invigorate those who have signed up but haven’t shared in the last three months.
  • Event-based invitations can connect with sharers during their happiest moments—like right after they make a purchase or finish onboarding—when they’re most likely to share with friends.
  • Seasonal campaigns that leverage holidays, events, or special limited-time rewards can spark renewed interest among existing sharers.

6. Don’t expect shares to roll in right away

Referral programs often need some time to gain traction. Even if lots of people come to your sharing page through your first promotions, that may not lead to immediate shares, and those shares might not convert into new customers right away.

People may hesitate to share your brand until they identify relevant connections. And even after a lot of people start sharing, their referrals may not be in a buying mindset immediately (especially if your business has a longer sales process). The key to a successful referral program lies in steadily building momentum, which will ultimately lead to positive outcomes over time.

This process requires patience, as it involves creating awareness, sending reminders, and repeating your promotion cycle.

7. Don’t expect engagement to stay consistent after launch

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.

If you’ve just launched and promoted your program for the first time, it’s likely that your engagement levels will be high. But what if things look like a ghost town after a few months? This happens with a lot of programs. No worries, it doesn’t mean your program is dead on arrival. People likely just forgot about the program. You’ll need to maintain a consistent cycle of promotion to create more engagement spikes.

Things to consider when starting out

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 points you’ll need to consider are determining who to invite, how you’ll invite them (promote the program), what rewards you’ll offer through the program, and how you’ll manage and track referrals. Here’s the lowdown.

1. Deciding on rewards

As we covered above, rewards and incentives are the driving factor in getting customers to send referrals. First, think about who you want to reward. Remember that the best programs are give-get, with rewards on offer for both the referrer and friend.

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. Store credits or discounts will only work if someone’s going to buy from you in the near future. If purchases aren’t super frequent (or the person you’re rewarding doesn’t actually pay for your services, like with some B2Bs), offer cash or gift cards instead.

2. 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.

3. Asking for the referrals

After deciding who to invite, you have to figure out how you’ll invite them. Typically, email is a great option. Other options include: phone calls, asking in person, or even using social media. We’ve covered a lot of this above, but here’s another look at how to get inviting:

  • 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.

4. DIY or software?

Deciding on how you will track and implement your referral program is another challenge you may face. A DIY approach like our manual referral tracker might work well when you’re just starting out. But once you start getting a higher volume of referrals, this will get too complicated to track and manage on your own. That’s where software comes in, as it automatically creates unique links and tracks the source of every referral.

If you 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. Will it accommodate the rewards you’d like to offer, help you promote your program with automation, and track all the important metrics? And does the subscription come with dedicated guidance to refine your rewards and promotion, like Referral Rock does?

We recommend scheduling a demo with your top contenders. A run-through of the software you’re considering can be very helpful in making that decision.

Where to go from here?

There you have it. Everything you should expect (and not expect) when setting up 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 aren’t blinded by unrealistic expectations.

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, check out the best practices we recommend.

For a more detailed guide to setting up your program, check out our referral program template.