Referral programs can bring in a lot of new business, and encourage loyal customers to get more involved with your products and services.
The best referral programs aren’t just a one-off program, 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 willing to do.
But not all referral programs work the way they’re intended.
Yep- sometimes customers aren’t into the referral program. Sometimes programs are too complex, have poorly designed incentives, or are never promoted to customers in the first place.
If you want to have a great program, you have to know what to watch out for. Here are the top 5 reasons why referral programs fail:
1. People don’t know about the referral program
If people don’t know about your referral program, or have forgotten about it, then they aren’t going to share. This is why lack of awareness is the most common problem that makes a referral program fail.
If you aren’t promoting your program enough, you’ll probably notice that not many new people are joining it, and existing sharers aren’t engaging with it.
How to fix or avoid this problem?
Dedicated emails
The best way to keep promoting your program is through dedicated email campaigns. Send monthly or quarterly emails, solely focused on the program, to everyone on your list. And don’t forget to send program invite emails to new customers if you’ve already launched, as they might have missed the initial campaign.
More touchpoints
In addition to these regular emails, promote your program on several different channels. Choose these channels based on the touchpoints you already use to connect with customers. The more ways people have to access the program, the more likely they are to join or reengage with it.
Here are some possible access points:
- Email newsletters
- Update emails
- Website (banners, footers, site navigation, CTA buttons, etc.)
- Customer portal or behind a login (in-app)
- Checkout or thank-you pages (right after a purchase)
- Social media posts
- Mobile app
- Account notifications
- Transactional emails
- Business cards, postcards, or other printed material (include a QR code for easy online access!)
- In-store signage
- Email signatures
- Sales and service reps: If you have them, equip them to promote your program in conversations.
Re-engagement campaigns
What if a lot of people joined (and shared) your program in the past, but your program’s now failing because you aren’t seeing much engagement? The people who already joined probably forgot it exists!
Regular emails, and program promotion on lots of other channels, will help keep both existing sharers engaged and new sharers flowing in. But you should also have campaigns dedicated to re-engaging existing sharers.
We recommend sending out Monthly Summaries of existing sharers’ activity. This will keep the program top of mind and give them a personalized overview of their sharing. Also, send out quarterly reminder campaigns to people who have joined the program, but haven’t shared within the quarter.
Invites based on activity or season
In addition, you could use event-based invites let you reach new and existing members at their happiest times – the times they’re most primed to share with friends (say, after they make a purchase or complete onboarding). Referral Rock lets you automate this outreach.
Seasonal campaigns are another variant of this – try promotional campaigns based on a holiday, brand milestone, peak sales time, or historically slow sales time.
2. The offer’s not compelling enough
If people are visiting your referral program page, but aren’t actually sharing, your referral program will fail because they aren’t motivated enough to share. Sure, your products and customer service might be top-notch (great reasons for people to think about sharing). But the real reason people share via a referral program is the reward on offer… what’s in it for them?
People need to be excited about your program and offer to share your business. If you aren’t seeing many shares (even though you can see that people are aware of your program), then you probably have an uncompelling offer.
Here’s how to make your offer a lot more motivating.
Reward the friend, too
Not offering a reward to both the sharer and the friend they refer? That might be a big reason your offer’s uncompelling and people aren’t sharing.
It’s all about sharing psychology. People don’t want to feel like they’re “selling out” a friend just to get a reward of their own. But if you let them give something special to their friends and gain something in return, people will feel good about sharing because they love helping their peers out. Plus, they’ll gain the social capital that comes from sharing an awesome deal.
How much better is a headline that says “Give your friend a discount (and get something for yourself)”?
Evaluate your reward messaging
Before they share, people need to know what’s in it for them (the reward) and how to earn it (how your program works).
Check the reward messaging in your member emails, on your program landing page, and in your Member Portal. Is your headline compelling and to-the-point? Are the instructions, and the rewards on offer, clear? If not, create a punchier headline, be sure the exact rewards are front and center, and think about breaking down the instructions into three or four bulleted steps.
Change reward types
If you’re already offering rewards to the referrer and their friend, that’s a good first step in making the reward compelling. But if people still aren’t sharing, and your messaging seems clear, it’s probably time to change the type or value of the rewards.
We recommend changing the referred friend’s reward first, as the friend will only see that reward once. Discounts and store credits are a great choice here, as these directly motivate that first purchase.
If that doesn’t work, try changing the sharer reward. But be careful, as this can set expectations for future rewards. We recommend changing or increasing the reward for a limited time first, before updating the main program reward. That way if the reward change doesn’t meet expectations, you’re not locked in and can easily fall back to the original reward.
Cash and gift cards make great referrer rewards because they let the sharer spend the reward on whatever they’d like. But store credits can also work if the sharer will likely purchase again soon.
It’s best to ask customers directly to find out what kinds of rewards would motivate them most. And keep your business type in mind. If purchases from you tend to be infrequent, gift cards or cash will make a lot more sense than store credits.
You can also try different reward structures, like a tiered program. In a tiered program, the value of the sharer’s reward increases as they make more referrals. Alternatively, you could offer a higher reward for the first successful referral if money is tight.
3. Referred friends aren’t clicking the message
Some referral programs see lots of shares, but notice that referred friends just aren’t clicking on the program message the sharers sent them. That’s another massive fail because it means the shared message isn’t resonating with friends, and isn’t getting them to take action.
To fix or avoid this failure, we recommend improving the message people share with their friends, and the reward offered inside.
Refine your share message
The sharing message is what members use to inform their friends via social media, email, SMS, or by copying and pasting a link. This is often the first introduction a friend has to your business, so it should be engaging enough to encourage them to take action.
Give the referred friends a reason to click and learn more about you – what value do you offer that can help solve their problems or make their life better?
- Does the message connect with the referred friend, and highlight the benefits of your business? (Why should the friend care?)
- Is it written from the sharer’s point of view, without sounding salesy? (Would the sharer say this to a peer?)
- Does it highlight what’s in it for the friend? (Is the referral reward clear?)
Change up the friend reward
The reward can also be a deciding factor in whether someone clicks. So, if you aren’t offering a friend reward yet, it’s time to add one. And if you’ve got one already, consider increasing its value, or changing it up so it better ties back to your business (say, so it offers a discount, store credit, free product or service, or upgrade).
4. Referred friends aren’t converting
Referrals need to be interested in your business beyond any rewards they get as part of your referral program. If you’re getting lots of clicks on the shared message but referred friends aren’t converting, that means you aren’t giving them a motivating enough reason to become a lead or customer. In other words, the page they’re landing on isn’t compelling or relevant enough for them to take immediate action.
Remedy this by making sure you present the exclusive offer friends stand to receive, and the reasons they should buy or learn more.
Optimize the page friends land on
The friend landing page is your best chance to convince new referrals to engage with your business. Most of the time, it’s also their first introduction to your company. So make sure they grasp what your company does and why it’s relevant to them.
The shared message got them interested. Now this page needs to convert them – get them to take immediate action. And don’t just drop friends on your homepage, or any old landing page that explains your business. Instead, make sure the page presents the unique benefits of being a referred VIP, whether that’s right on the page or via a special pop-up.
Optimize your landing page with this checklist:
- Does the page present the offer the friend gets?
- Do you present the offer as exclusive to the friend, with a mention of the peer’s name that sent them?
- Do you briefly explain what sets your business apart, and how it can help solve problems or pain points?
- Is the call to action clear and relevant?
- Is the call to action easy and simple to complete?
- Are you providing a smooth and compelling journey (from referral message to friend landing page to action)?
Check on your entire friend experience
Remember that, from the share messaging to the landing page, the text, images, offer, and call-to-actions need to convey a single experience.
The share message got the friend interested – and now, the landing page needs to convert them. They need to work together, not feel disjointed.
That’s yet another reason why the landing page needs to present the friend offer and connect to the referral program. There’s no room for generic landing pages without any mention of the referral, as those kinds of pages only just add to the confusion.
Make the “ask” an easy yes
To ensure a successful conversion, the “ask” (what someone must do to convert) should be as straightforward as possible, and highlight clear advantages for the referral.
Make it effortless for referrals to agree. Your call to action should be uncomplicated and create minimal resistance.
Avoid asking for a purchase unless your products are true impulse buys, and keep the number of form fields to a minimum. You can always get additional information later, after you already have their main contact details.
The incentive is also important. If you’re not already offering a reward to referred friends, consider doing so. If you are, think about increasing its value or changing it to better align with your business.
5. You aren’t ready for referrals
One more reason why your referral program could be failing is that you simply aren’t ready for referrals. Even with a compelling offer and lots of promotions, people won’t refer if you aren’t worth sharing.
Before your business thinks about starting a referral program, make sure that you have a large base of happy customers who are willing to share you. How to build this up? Creating a stellar product or service that stands out from the pack, and providing an above-and-beyond customer experience, are the first steps.
To check whether you’re delivering on these points, and whether you’re ready for referrals, see if you’ve got lots of five-star reviews, positive in-person and online comments, and glowing feedback on customer surveys.
What if this feedback isn’t up to snuff?
If your customers are flat out telling you they aren’t happy, it’s not the best time to maintain a referral program. There’s a good chance customers will get annoyed if you ask for referrals instead of addressing their concerns. First, focus on the points of improvement you find in your customers’ feedback. Once the improvements reflect in customer comments, you can then think about pouring your time and energy into a referral program.
Avoid these referral program mistakes!
So, there you have it: the top 5 reasons referral programs fail, and how to fix or avoid them.
For more help in preventing these and other mistakes, we’ve launched our program advisor services to help customers with reward recommendations, tailored program and campaign messaging (written for you), technical integration assistance, and more. Check out how this works here.
