Use a Referral Program to Increase Word-of-Mouth Marketing

Ever had a great experience at a restaurant or another business that was so amazing you were compelled to share it with your friends? If so, you engaged in word-of-mouth marketing—and this phenomenon can help your own brand, too.

Whenever customers positively share your brand with their friends, family, or peers, either online or offline, that counts as word-of-mouth marketing. Happy customers will spread the word about your products to their friends, and their trusted recommendations will likely convince these friends to become your new customers. And the best part? Word-of-mouth marketing is organic and can be totally free!

Sometimes, it seems like you can’t influence whether word-of-mouth marketing happens. But, word-of-mouth recommendations and referral marketing are closely linked, because referral programs depend on word of mouth. With referral programs, you can encourage happy customers to spread the word about you.

But how can you create a referral marketing program that’s highly likely to drive word-of-mouth sharing? Let’s check out tips and referral marketing success stories!

Why use a referral program?

As a brand, if you’re focusing all your energy on delivering your own messages, you’re fighting a losing battle. People trust recommendations from their friends more than they trust any messaging that comes directly from brands.

The priority and trust that people give to their peers make referral programs effective marketing tools.  Whether they’re given online or in person, referrals feel authentic and organic—so they deliver powerful results for your brand.

There are several compelling reasons to invest in creating referral programs, and to let customers deliver your messages for you:

In this digital, content-saturated world, people tune out traditional ads because they don’t seem relevant.

• According to Social Media Today, only 33% of consumers say they trust traditional ads.
• Tribe reports that nearly half of consumers think traditional ads are “annoying or irrelevant.”
• Many consumers actively hide ads entirely with ad blocking software, because they see ads as too invasive. 30% of all consumers actively turn to ad blockers to hide ads entirely, and almost two-thirds of 18- to 34-year-olds block ads.

But when a friend, family member, or influencer talks about a product they love, people listen. They trust that their friend is not misleading them, and that the friend shared the genuine, positive experiences with the product to help others.

In fact, personal experience is the source of information that people trust most.

• More than 90% of consumers from various markets trust recommendations from people in their network.
• 82% of consumers proactively seek referrals from peers before deciding whether to purchase a product.
• According to Jay Baer, 92% of consumers trust user-generated content and word of mouth more than advertising.
• 83% of Americans say that word of mouth recommendations from people they trust makes them more likely to purchase a product or service.
• People are 4 times more likely to buy a product after a friend refers them.

And many referral programs leverage the power of social media – where people constantly share with each other.

• Nearly 75% of consumers rely on word-of-mouth on social media when deciding whether to purchase a product.
• 67% are more likely to purchase a product after a friend recommends it through social media or email.
• 65% of social media users learn about brands, products, and services through social networks.
• 70% of social media users hear about their friends’ and colleagues’ experiences using products and services.

(Want more proof of the power of recommendations? Check out these word-of-mouth marketing statistics, and these referral marketing statistics!)

3 referral program examples that deliver powerful word of mouth

Now that you know the power of word of mouth, it’s time to design a referral program that will encourage customers to spread the word about you! For the maximum sharing impact, use these crucial tips:

1. Incentivize sharing!

Referral programs must give customers a reason to share your products with their friends – and referral incentives offer the most effective reason to share, whether they’re in the form of discounts, cash, credits, free products, or other rewards.

ColourPop’s referral program offers incentives for both the referrer and friend and cumulatively rewards referrers $5 in store credit for every new customer they refer successfully. Source

• Consider cumulative incentives, which give the opportunity to earn credits, free products, or discount coupons for every friend a customer refers. Make it easy for customers to track these rewards with dynamic displays.
• Also consider two-sided rewards, which reward both the person making the referral and the friend(s) they shared it with.
• Cash doesn’t always work as well as credits and discounts. A University of Chicago study reported that non-cash incentives are 24% more effective at boosting performance than cash incentives. So, only turn to cash if your customers aren’t likely to make repeat purchases for a while (like if you sell cars or mattresses).
• The most cost-effective reward? Store credits. They keep money in your business and give valued customers a reason to keep coming back (and keep spreading the word!)
• Offering free premium features or products after a certain number of successful referrals is also an effective technique.
• Make sure that your referral program call-to-action (the most prominent text of your referral page or window) clearly advertises the incentives you offer.
• Think about building in an air of exclusivity by making referral and friend incentives better than your “regular” discounts and sales. Your customers will want to let their friends in on the savings because they care – and you’ll reap the rewards, too!

2. Make social sharing easy

Most modern word-of-mouth marketing happens on social media. After all, it’s the easiest way to communicate with friends. Thus, it’s only natural for people to share brands and products on social networks, usually with all of their online friends at once.

Plus, this information can quickly spread to friends of friends, if those friends decide to share further. So, give your customers an easy way to share your brand on social media with a referral program!

• Provide options to instantly share a referral link via Facebook, Twitter, and other popular social media channels (along with an email sharing option). Choose these channels based on where your audience spends the most time.
• Supply a prewritten message, with image, so users can accurately share the referral offer with just a few clicks.  Make sure the message sounds conversational, not salesy, as real people will be sharing it.
• But also give users the option to customize the exact message that they post to social media. This will add all-important authenticity to the referral! Some companies even require that customers customize their referral message.
• Make sure your referral program is mobile-friendly. After all, so many people use mobile devices for shopping and the purchasing of services, as well as social media sharing (and texting friends!). If you have a brand app, integrate the referral program so it’s easy to find.

3. Make all sharing simple.

Remember, one major goal of referral programs is to make word-of-mouth marketing easy for all involved. The sooner your visitors understand what you want them to do and how, the sooner they’ll spread the word to their friends!

• Include multiple sharing options like email, social media, and text, so all visitors can pick the most convenient option for themselves.
• Enable customers to copy and paste a unique referral link directly, without tying it to a specific sharing method. That way, people can share it on their social account of choice, email it, or text it, with their own message.
• Cut down on the steps needed to refer a friend, as much as possible.
• Also, make sure the text is streamlined on referral pages and windows (including the offer) and easy-to-understand, not cluttered.
• Make sure that anyone can find your referral program easily, via a compelling action button. Ideally, this button should be placed “above the fold” of a website, before users scroll down. Even if they haven’t bought your product before, people might share before buying because they think the product is valuable to them or their friends.

4. Target customers who believe in your brand – the most likely to share

Before they spread kind words about your brand, customers must already love your products enough to share! Usually, existing customers are your best referrals will give the best referrals as they can speak from experience.

But if they believe in your brand (even if your products have not launched yet), new customers can also provide valuable word-of-mouth shares.

• Your satisfied existing customers provide a strong testimonial to others about why they should purchase from you. So, your referral program must be especially easy for existing customers to find.
• Consider programming referral banners and pop-ups to appear more prominently for returning site visitors, or including referral program info in your emails to customers.
• Provide an incentive for customers who read about your brand and its mission, and then share a post on social media. This is an especially helpful technique if you’re just launching your brand, to find customers who are invested enough in your products to spread the word.
• Consider when to enable referral programs for a visitor only after they’re either signed into a brand account or after they’ve entered their email to sign up for your email list (the latter also works well for pre-launch startups).

3 referral program examples that have delivered powerful word of mouth

Now, let’s take a look at three of the most dynamic referral program success stories, which have driven word-of-mouth recommendations like masters. We’ve even included two brands that got their start from referral programs, so you can see how they exploded!

Uber

Rideshare giant Uber has delivered one of the best-known referral program successes. Yes, the main reason why Uber is so successful is that it provides a convenient commuter alternative to taxis, especially in cities.

But word-of-mouth marketing is also a major contributor to its success, thanks to its streamlined referral program for both drivers and riders. Uber started out by offering valuable amounts of credits to referring riders and their friends, with no limit to the number you could earn, and this quickly caused new customers to come rolling in.

Today, riders can earn $20 in Uber credits for every friend they refer who takes their first Uber ride (advertised as a  free ride, as most Uber rides cost less than $20). The friend gets $20 in credits as well: $5 off their first 4 rides. And drivers aren’t left out, either.

When an Uber driver refers a friend by sharing their personal driver referral code, and that friend becomes a driver, the referrer and friend both earn a reward.

Uber’s Free Rides program for riders who refer. Source

Why it works

• Streamlined but versatile format: Finding and using the referral page on Uber’s app is easy: riders just need to tap on “free rides,” copy their personal invite code, and paste it into the messages and social media posts of their choosing. The “free rides” text makes the program easy-to-find and enticing. Meanwhile, the code system is simple to figure out, even for newer Uber users, and drastically cuts down on the steps needed to refer. And since users are already signed into their Uber account, they don’t need to enter any additional information to access the referral code. Rather, the app already has what is needed. So, users are much more likely to send the codes to their friends!
• Mobile-based meets users where they are: Yes, Uber itself is mobile-based, but having a mobile-centric program meets customers where they spend most of their time—with their devices. Since Uber users keep the app open while they’re awaiting their rideshare, this increases the odds that they’ll find and engage with the referral program.
• Cumulative rewards: As long as Uber riders don’t exceed the referral cap in a given timeframe, they will earn cumulative free ride credits for every new friend they refer.

Girlfriend Collective

Instead of using an expensive advertising campaign, athleisure brand Girlfriend Collective smartly decided to use a referral program to promote their products before they launched.

Interested customers who read their FAQ and shared a referral link on Facebook received a code for a free pair of $80 leggings, made from recycled water bottles (customers paid only the cost of shipping). The campaign was so successful that they received 10,000 orders on launch day and extended this referral promotion even longer. Their website even crashed because the campaign was so popular!

Ellie Dinh, Co-founder of Girlfriend Collective, explained to Instyle why she rejected ads and chose a referral marketing campaign:  “It costs money to acquire a new customer. So we just took the budget for traditional advertising and delegated it differently. This is, essentially, our ad.”

Girlfriend Collective promotes its free leggings referral program on Instagram prior to launch. Source

Why It worked

• Enticing reward: Few people will say no to a free product that they’re genuinely interested in. And Girlfriend Collective made their incentive clear! While an immediate free product incentive of this scale isn’t recommended unless you’re just launching, consider offering enticing free products that customers will earn after a certain amount of referrals.
• Mobilized believers in the brand mission: Only customers who clicked through the FAQ, and thus only those who showed interest in Girlfriend Collective’s philosophy, were eligible to refer friends and receive the reward. These customers were also among the first to receive and have experiences with the product, making them even more equipped to refer more friends down the line.
• Leveraged social media with a powerful incentive: The Facebook link let each interested customer share with multiple friends at once. Also, the attractive incentive was so enticing to referrers’ friends that many shared their own link with their own friends.

Harry’s

Razor brand Harry’s also decided to be proactive by using a referral program to market before their launch. Since they planned to operate under a subscription model, they wanted to collect as many email addresses as possible before launch.

So, when website visitors entered their own email address into a streamlined landing page, to sign up for updates on the service, this triggered a referral page. On this page, visitors were asked to spread the word to friends who might also be interested in the service, using email, Facebook, or Twitter, with a unique referral link.

When a person got enough friends to successfully sign up for Harry’s email updates, they were rewarded with free products—the more friends who signed up, the more products the person earned. The campaign ran for a week leading up to launch. In that week alone, Harry’s secured 85,000 valid email addresses of interested potential customers—and today, the company is worth almost a billion dollars!

Harry’s prelaunch referral program page with dynamic reward tracker. Source

Why it worked

• Stacked, easy-to-track rewards: The more friends who signed up for Harry’s emails via a referrer’s unique link, the more free products referrers earned. Also, Harry’s made it easy for referrers to keep track of what rewards they earned, and how many more referrals were needed for the next reward,  with a dynamic progress bar.
• Mobilized interested visitors: Only those who entered their email, and thus showed interest in Harry’s products, were eligible to refer.
• Tapped into social media sharing: Harry’s made it easy for people to spread the word to multiple friends at once, via Facebook or Twitter. The company provided prewritten but conversational messages for referrers to post on their social media accounts.
• Leveraged exclusivity: Harry’s made its brand feel exclusive by inviting interesting customers to be the first to know about their launch (complete with key), and then encouraging customers to pass on this insider info to their friends.
• Designed program pages for clarity: Streamlined the referral process by including only the needed text, but still provided all the needed information.

Key takeaways

Word-of-mouth marketing provides free publicity for your business. Referral marketing is a powerful tool for encouraging word-of-mouth because it rewards people for sharing your brand with friends, and simplifies the process for both the brand and consumer. When designing a referral program, make sure to offer incentives for referring; tap into social media sharing; make it easy for all customers to share; and focus on encouraging referrals from people who believe in your brand.

Following these tips, and taking cues from word-of-mouth referral success stories like Uber, Girlfriend Collective, and Harry’s, will increase word-of-mouth sharing and help boost your customer base!