The Ultimate Referral Software Buyer’s Guide

Updated on May 23, 2022

Table of Contents

Table of Contents

Referral marketing is one of the top strategies when it comes to marketing – and for good reason. Referrals are “the second highest source of quality leads,” according to Social Media Today, and “a standout winner that can’t be touched by any other method,” as described by Forbes.

And this is just the tip of the iceberg when it comes to tracking the effectiveness of referral marketing.

A lot goes into successful referral marketing. You need to set up a place where people sign up, for example, a web page, and a way to refer their friends, for example via sharing a link to social media.

The real challenge begins when you need to track the referrals.  Imagine having to read each and every referral to determine which one is genuine or not, which referrals came in what day, when and how to follow up, handle complaints, and ensure that each referrer received their reward.

As you can already see, it could quickly spiral into a total mess. Referral software comes in handy to literally save the day.

In this article, we’ll get into what referral marketing software is, what it is not, when it makes sense, and when it doesn’t, who needs to be involved in its implementation, its advantages, how to go about evaluating software providers, and the right questions to ask before settling for a provider and their solution.

What is a referral?

According to the Cambridge dictionary, a referral is defined as an act of sending something or someone to a person or place where what they want or need can be obtained.

In essence, it is telling someone about a product, service, or brand in order to help them get something that they need or want. If that person actually follows up and purchases that particular product or service, we could say that he learned about the product/service/brand via referral.

An example? A mom is looking for a hand wash that does not react with her family’s skin resulting in allergies. During the coffee break, she asks her female colleague at work and she recommends a particular brand. In the evening, the mom passes by the store and purchases a bottle of hand wash. The mom learned about the brand via a referral.

What is referral marketing?

Referral marketing is defined as promoting a business’ products/services to new customers via word of mouth.

The main mode, word of mouth is spontaneous, not planned. Referrals happen in everyday conversations, as we saw in the example of the mom looking for hand wash.

Referral marketing has become more organized and structured lately, with referral software helping to streamline the referral acquisition, sign up, tracking and maintenance process.

Referral marketing facilitates word of mouth by giving people a tangible point of reference as the conversation goes on. In our example above, the colleague could have sent the mom a referral link which she could have used to purchase the product at a discount, for example, depending on the incentives available.

Maybe she was given a brochure, business card, contact, or other points of reference provided by sales and marketing. These two, sales and marketing, position the brand, create materials that communicate the brand’s value, direct people on how to purchase the product or service and communicate in a way that the target audience resonates with.

The only difference that referral marketing brings is that there is a benefit to be reaped by the referrer, referred or both, depending on the program’s terms and conditions.

What are referral programs?

A referral program is an organized and structured process where your customers earn rewards when they refer others. In our example above with the mom who bought hand wash after a referral, if the brand had a referral program, she or her friend could have been enrolled and won a reward, depending on the program’s terms and conditions. Your referral program could be referred to as refer a friend.

There are other types of referral programs, for example, where brands make their most enthusiastic customers brand ambassadors/influencers. Initially, the customers share their experiences with the brand/product/service because they are genuinely happy with it. Brands could come in and work with them to get more referrals, with incentives of course.

Other referral programs may be more direct, where customers are requested to sign up for a brand’s referral program to get incentives.

What is referral software?

This can be defined as software that automates your referral program, making it easier for both the referrer to refer other people and for the business or company to efficiently and effectively track and manage their referral process.  Such software automates the ask (where the customer is requested to sign up to your referral program or refer others; tracks the referral process; and rewards the referrer (and referred, depending on the program’s terms and conditions).

Software also makes it easier to spread the word about your referral program as it can help automate marketing and the ask as well.

What referral software is not

Let’s set some expectation of what a referral software is not:

1. It is not a fallback if your incentive isn’t relevant to your brand.

For some brands, cash incentives may work best, while for others, the opposite is true. An example here would be Paypal. Their cash incentive has worked great. It could be because this particular brand is in the business of transacting money. Airbnb’s incentive is credits, and it works for the brand.

Your referral software will not help you get as many referrals as you would like to if you have chosen a wrong incentive. The only true way to know is by testing. Test cash incentives against swag, prizes, and discounts, and see which ones work best. It may even be a combination. Get creative, and don’t limit your ideas. Most importantly, you need to stay within your budget.

2. It is not a fallback for a complicated referral process.

Your referral process should be simple and intuitive. If your process involves clients first signing up, then entering details about the person who referred them, for example their full name, email address and phone number, followed by entering a long, complicated coupon code, the referrer and referred will get bored and abandon the program, even if you have the best referral marketing software.

Aim at simplifying your referral process to 2 or 3 steps max. Remember, users, are highly likely to use their phones when referring others or when signing up. Make it easy for them even on mobile. Test what works for desktop and for mobile, until you come up with the best options.

3. It is not a fallback for a customer journey that is not clearly understood and mapped.

Every brand needs to understand and map out their customer journey. This way, they are not only able to know where to integrate the referral process, but also when customers are highly likely to refer. This way, they can also issue referral rewards at the correct phase of the customer journey.

An example here would be Airbnb, who discovered that their customers are more likely to refer after they have traveled or hosted. This means that it is more beneficial to ask for referrals after a customer has traveled or hosted, rather than after account creation.

4. It is not a replacement for promoting your referral program

The fact that you have referral marketing software does not mean that you neglect marketing and promoting your referral program. The software is only meant to make your work, and the referrer’s work easier.

5. It is not a replacement for your staff education

Your staff members need to understand not only your referral program but the software too. This way, they will be ready to offer the referrers/customers the needed assistance, should the need arise.

6. It is not a replacement for a bad product/service

If your product or service is “bad” in the sense that it fails to deliver on its promises, or that the users have “bad” customer experiences, then the best referral software will never fix this.

Types of business specific referral program software

There are different referral software that caters to different types of businesses. Before you pick a referral software, you want to make sure to have certain expectations, as well as, requirements based on your needs.

1. B2B

B2B businesses typically have more complicated sales processes involving multiple steps and customer touch points. They generally use several software products including CRM, customer support, email marketing automation, etc. As busy marketers, you’ll want to make sure your referral software seamlessly integrates with your different tools and can map to your unique sales process. This is especially important for companies that have a multiple step sales process as you’ll want to only provide rewards on a completed sales, not on website visits or unqualified leads.

2. B2C

B2C businesses come in many shapes and sizes all using different tools and having different sales processes. However, one consistent trend is that all B2C companies have large contact and customer bases. Given this large volume, automation is key. It’s important to make sure your referral software integrates with your existing email and other marketing tools, makes it easy for your customers to join and share your brand, handles tracking and attribution at scale, provides automated fraud detection and blocking, automates reward fulfillment, and creates viral loops by enrolling new customers and encouraging existing customers to keep sharing.

3. Ecommerce

Ecommerce businesses typically have high contact and customer volumes but lower customer values. As such, automation and integration are key to running a successful referral program. A referral software must first integrate with whatever e-commerce system you are using. This allows you to correctly track and attribute new referred customers. Second, a referral software needs to closely match your customer journey and make it easy to share your brand. Key examples of this include integrating with your “my account” page, building the sharing into your purchase process (i.e. providing direct sharing option on your post-purchase confirmation page), and working with your email and other marketing tools. Finally, it should automate reward fulfillment (most likely by distributing discount coupons/vouchers that are accepted by your ecommerce tool).

4. SaaS

SaaS (software as a service) businesses are the most complicated because they combine elements from all other business types. They can be B2B or B2C (sometimes both), they can have online only or have a combination of online and offline processes, and they almost always have multiple tools that they need to integrate with. Referral software for SaaS businesses must integrate with their key systems and user touch points (both in app and through other customer channels). This is important for tracking and attribution, correct reward fulfillment, and easy customers engagement and sharing.

When does referral software make sense?

We mentioned that setting up and managing a referral program is a lot of work. This is where referral marketing software comes in handy, especially when there is a need for automation. But should all businesses and industries invest in referral marketing software? If so, when does it make sense?

1. If your referral program adds more work to your marketing team

Crafting marketing strategies and seeing them succeed takes a lot of time. If introducing a referral program only adds more work to your already overwhelmed marketing team, then referral software is something worth adding to your marketing tools. Such software allows your team to view all the stats from a central location for example. Time is therefore spent on core business tasks.

2. If you are looking for an easily shareable referral marketing program

Referral software automates sharing information about your referral, tracking customer purchases and asking for referrals. Better still, all a referrer needs to share is a link to your program.

3. If you are looking to launch your referral program fast

If you are looking to launch your referral program, or even relaunch it, referral software will come in handy to help you achieve this goal within a shorter time, than it would if you to manually do it. You could start by inviting your existing customers via email, for example, giving them an incentive for signing up, and even more incentives if they bring in referrals.

Promotion is also easier, as you can embed the link on your site, share it on social, newsletter, and customers emails.

4. If you are looking for an innovative, agile, and up-to-date referral program

With referral software, you can easily test what works and what doesn’t. You can test copy and messaging for example. Do you get better results when you email or invite to share via social media? This way, you can distribute your efforts and messaging accordingly.

Do you have an idea that you think could be a competitive edge? Well, with software you can easily implement and test it, and know whether it works or not.

How about ways to improve the referral process? Or even the user experience when using your software?

Referral software allows for testing, growth, and faster implementation.

5. If you are looking for accurate tracking and analysis

If you are looking to measure the success of your referral marketing program, whether it actually affects bottom lines, the user experience, and user insights like the point in the customer journey when there are the most referrals, then software comes in handy.

You are able to track where your customers are in their purchase journey, and the system is able to even notify customers if they are yet to claim their reward.

6. If you are looking to integrate your existing tools and systems

Seamlessly connect the referral software with customer experience and touch points. If you are looking to integrate tools that have to do with the customer journey so that you have centralized tracking, then referral software is the place to go. You are able to track referrals from a variety of sources too.

Integrate your systems and sales process:

  • CRMs
  • Ecommerce
  • Billing
  • Custom Systems
  • Online Portals/Software Applications

Integrate your lead capture process

  • Lead Form
  • Free Trial
  • Online Purchase
  • Application
  • Email Sign Up

7. If you are looking to personalize your communication

Software does a better job when it comes to personalization. You can send personalized thank you messages after a purchase, use the customer’s name in the messaging, and even refer to their specific purchase. Better still, you can personalize the communication your customers send to their friends and family.

8. If you are looking to automate your rewarding

Trying to manually track the customers who have earned rewards can be overwhelming. You may miss out on customers who should have received their rewards, creating angry customers. This is definitely not good for your brand.

Automating rewards ensures that you do not spend physical efforts like manually mailing the rewards, and then calling the referrer to ensure that they received it. Software helps you reward referrers immediately, which also showcases your brand as efficient, trustworthy and reliable.

9. If you want to keep fraudsters at bay

Trying to identify people who may be looking to get awards they don’t deserve may be time-consuming. You may need to confirm the made transactions first. Why do all the work when referral software can automatically detect and block fraudsters?

When referral software doesn’t make sense?

Referral software is not always a necessity. This mostly depends on a number of factors though. When doesn’t it make sense?

1. Business is new or niche

If your business just started, you are probably just starting to build your customer base. You may not have many customers, and you may be allowing referrals to happen via good old word of mouth. Alternatively, you can start small with even a web page where users fill in a form. It is better than to have no form of a referral program at all.

If your business is highly niche, investing in a referral software might not make sense. Referrals are highly likely to happen via word of mouth, rather than software. You probably also have a small client base, who are fiercely loyal to your product. Since there are a few customers, and you probably know all of them in person, you are able to manually handle them and the referrals they may bring.

2. Margins are really small

If after adding referral software and incentives to your cost of customer acquisition your margins are practically gone, you may want to invest in a simple referral program like a web page first. Most importantly, ensure that referrals are happening either way. As you get more and more referrals, you can then start by investing in a simple software.

As for incentives, you need not break the bank. There are many incentive types. An incentive can be as easy as printing phone or laptop stickers to give to your customers.

3. Don’t have the time

Even if the software is meant to automate the referral process, you still need time to follow and track your results. You need to read the reports generated by the software in order to determine whether your goals are being achieved. Are you actually getting referrals who end up being your customers? Is the software easy and intuitive to use? When is the best time to ask for referrals in the customer journey?

4. If the incentives do not make sense to your customers

If your customers are not price sensitive and prefer to focus on high quality, then an incentive that gives them a discount may not make sense for your brand. There are many incentives to choose from, and you can always get creative. It’s rare to find that there is absolutely no incentive that will work for your brand and customers.

5. Unhappy customers

It might seem impossible for a brand to have only unhappy customers. There is a possibility of the number of unhappy customers outweigh the happy ones though, and this is where all the problems begin. If this is the case with your brand/product/service, then you need to fix this before investing in a referral program, let alone software.

6. If your business requires a high level of secrecy

This could also apply if the nature of your business requires secrecy, for example, if you are a private investigator. You may not want people posting about your services on social media in the name of getting referrals. Good options to explore here include referral cards and email.

7. If legally, referral marketing software is not allowed

There may be businesses that are not allowed to run incentive based referral programs. In this case, you may want to work with organizations in your neighborhood, for instance, and donate to them for every referral that you get. Since you are probably dealing with a few organizations, depending on the size of your business, then you may not need referral marketing software.

8. If you are not getting referrals already

If there are no referrals coming to your business even from word of mouth, there is a high likelihood that investing in referral software may not be necessary. You need to find out why there are no referrals in the first place. It could be because you do not have a significant loyal customer base, your customers are unhappy, you do not request for referrals, or that there are simply no systems in place to even collect customer information. That being said, almost all businesses get referrals, even if they’re not aware of them (a referral software would help track this).

Why do referral programs exist?

One word best defines why referral programs exist – leverage. What can be leveraged?

  • Word of mouth: These programs enable businesses to leverage word of mouth in order to gain new customers more easily. These programs result in high-quality customers who not only have a higher lifetime value but are more motivated to refer others.
  • Repeat business: Referral programs leverage repeat business. Referred customers are more likely to refer others creating viral loops where customers refer their friends who then join your referral program and refer their friends. . Better still, if a program is multi-tier, where a customer keeps earning rewards based on certain milestones or tiers, then they are further encouraged to keep sharing.
  • Trust: Since referrals are based on trust, businesses are able to leverage this invaluable human trait. By the time a customer purchases a product or uses a service, they already trust it, as the referral came from a reliable and trustworthy source (usually a friend or family, though sometimes it could be an influencer).
  • Exclusivity: When people refer others to products/brands/services, there is a level of exclusivity as not everyone is privy to that information. A referral program not only leverages this kind of exclusivity but also pushes its boundaries a bit. Not everyone can participate in a referral program. Better still, referrals are earned. This sense of exclusivity makes customers want to sign up for the program and refer others too. When offering a dual-sided reward, the referred friends benefit from the exclusivity of being referred (i.e. they get an exclusive discount because of their friend).

What is the referral process like for most brands?

The referral process for many brands is simple and straightforward. This is what gets integrated into their referral programs.

  1. Ask customer to refer someone
  2. Customer makes a referral
  3. Friends purchases your product/service
  4. Referrer gets rewarded

This is as simple as the process appears to the referrer. What does it look like to the brand?

The referral process from the brand’s perspective

Step 1: Do the first ask

This can be done in person, using an automated system, on social media, email, or via referral software

Step 2: Customer makes a referral

Step 3: Confirmation that the customer has indeed referred

Is there any fraudulent activity? When was the referral done? Who was referred? This should take an extremely short time. If automated, the better.

Step 4: Sending the confirmation of the receipt of the referral

Inform the referrer that their referral has been received, and inform them when to expect their reward. In the case of Trunk Club, for example, a reward of $50 is given when the referred spends their first $50.

uber email awarding a free ride

Step 5: Track until the referred actually makes a purchase

This may mean sending them email reminders from time to time. That if they spend, their friend, who was kind enough to refer them will earn $50, as in Trunk Club’s case.

Step 6: Finally reward the referrer

Once the referred spends their $50, then the referred is rewarded.

Step 7: Ask the new customer for a referral, and the initial referrer too

This is what is referred to as the double ask. As you can see, it can get easily complicated if you keep asking for referrals from the initial referrer and the new customer. It means that you need to have a way of knowing when the new customer becomes a referrer in order to tweak the communication.

The double ask can easily become a tree graph that needs to be properly tracked, otherwise, it could easily spiral into confusion, miscommunication, and even angry customers.

Key advantages of referral programs

What are the advantages of using referral programs?

1. Higher customer retention

Referred customers have a longer lifetime value, up to 25% higher than customers who were not initially referred. They already trust your brand even before purchase. If they actually come and confirm that indeed your brand is worth its salt, they will keep making repeat purchases and become your number one advocates.

2. More personalized communication

Where brands use referral software, it is possible to track your users, the customer journey and how referrals happen. These valuable insights can then be used to craft more personalized communication to your prospective referrers and customers .

3. Higher purchases on the first order

Referred customers come in with a higher level of trust for your brand. It is no wonder that they spend 10 to 25% more on their first purchase.

4. Higher ROI

While referral software, managing a referral program and incentives may add customer acquisition costs, the ROI is higher when compared to other marketing efforts. The number of customers and the value of their purchases quickly outweigh the initial investment in referral marketing.

5. Greater reach

Referral marketing literally rides on word of mouth. Word of mouth is able to reach people that advertising and other marketing methods may never reach. Conversations happen any day, anywhere and at any time. There is virtually no limit to the number of people you’ll reach. If you have happy customers, they become advocates that you can rely on. Referred customers are 3 times more likely to refer other customers.

6. Low maintenance

Once your referral program is established, it largely runs on its own with only a few tweaks from you to keep it going. This is especially true  when you are using referral software. Unlike other forms of marketing where you need to keep coming up with new campaigns frequently, all you need to do is track, analyze, test and improve.

7. Improved overall brand reputation

When many people are talking about your brand literally everywhere – on blogs, discussion forums, review sites, social media, and website, then it is not only a strong signal to your prospects that they are dealing with a legit brand, but to search engines as well.

Your site will continue to rank higher and higher in search results, which increases exposure for your brand. This means higher website traffic and ultimately increased sales.

What are the key referral software advantages

As we said, the trickiest part when it comes to buying software is choosing a great fit for your business. In this section, we look at the features that you will be paying for, and that are most likely to be what you are looking for when it comes to referral software. Here are the features to keep in mind:

  • Automated rewarding
  • Referral tracking codes
  • Fraud detection and protection
  • Pre-made sharing widgets to allow for easy sharing
  • Seamless integration with existing marketing systems
  • An all-inclusive platform where referrers stay up to date on the status of the people they refer

If referral software is this great then, why don’t people sign up?

You have seen how successful referral programs are for brands. The stats back them up. Even your marketing agency lauds them. But why are they not working for you?

1. Many of your customers are unhappy

If there are a lot of negative reviews about your brand everywhere – social media, review sites, and Google reviews, you need to listen to your customers. What is making them angry, frustrated or disappointed?

Are you receiving a lot of complaints about your products or services? Are there a highly alarming number of returns? If that is the case, you are dealing with unhappy customers, who will never be your advocates. If anything, they will do you more harm than good, as they will talk about their bad experience.

You definitely need to look into your product/service/customer service, or whatever it is that could be causing the returns.

2. An incomplete, unclear or hurried onboarding process

Before customers decide to sign up for your referral program, they need to be sure that it is worth their time. Is the incentive worth it? How much time will they need to invest in it? How does the referral process work? How easy is it to refer? Are you looking for specific types of customers?

In the excitement to get people to sign up, it is possible to fail to include all the necessary details.

This does not mean that you write a lot of text on your introductory email or landing page on your site. You can summarize the questions and their responses in a short video or FAQs page.

3. There are dead ends

You need to strive to ensure that all sections and links within your program are working all the time. If there is any breakdown or downtime, it can result in customers abandoning it altogether.

Ensure that there are no 404s being served and the call to actions are clear.

4. The signup process is complicated and long

If your sign up process is not clear, your customers will definitely give up halfway. Make it simple, clear and intuitive.

5. The incentive is not worth it

While brands need to stay within their budget when choosing incentives, it is important to ensure that those incentives actually make sense to the customers as well. The best incentives are built into the brand and bring to the fore the values upheld by the brand as well.

This is what makes brands like Dropbox and Airbnb have successful referral programs. The former will give free storage space, which is part of their core business, and the latter will give credits for your next stay.

Your product and brand are vital here. If your product is a major one-off purchase, for example, a business that sells cars, offering a discount on the next purchase may not be viable. How about free car servicing for every referral?

The incentive also needs to be worth the customer’s time and effort.

Your incentive should also not feel like a lot of work needs to be done in order to earn it.

6. You have not equipped your staff members

Your employees need to know that you are launching a program and its importance to the business. They also need to know how it works. This way, they get to assist customers more effectively and even encourage them to sign up.

7. You have not promoted the program

Let your customers know about your program – in person, and via all forms of communication – email, social, website, ads, and referral cards.

What you need to look out for when buying referral software

The above highlight features are actually what you need to look out for when buying referral software.

1. Referral tracking

Tracking your referrals is undoubtedly the biggest win for referral software. This is where the most work is and it can easily get confusing and chaotic, for both you, the company and the referrers.

You need to have a way to track the customer journey in order to know where and when to do the asking. You also need to track when the referral is actually made, by who to who, and when the referred actually makes a purchase in order to send the reward. We have not even mentioned disappointed customers who feel that they need to be rewarded and others who may try to game the system.

Needless to say, this is better handled by software.

When it comes to referral tracking, you need to first define your goals and KPIs. This will help in choosing the software that will help you achieve those particular goals. KPIs come in handy as standards to use when measuring goal achievement.

Tracking your referrals helps you measure customer satisfaction, share rate, conversions, participation rate, and whether the model works.

In addition to tracking the referral process, software can give you reports and insights about your program and the customers too, especially when integrated with other tools like Google Analytics.

Referral software uses a conversion script to collect data related to the referral program. This includes whether the referral is legit, actions related to the referral, for example submitting the ‘request a quote’ form and ‘updating’ the referral ‘database’.

It also assigns unique codes to the user in order to track their journey. The code can be issued to a customer who wants to refer in order to share it with the person they refer to. It can then be used to reward the referrer after the referred makes a purchase, or takes the action equivalent to conversion, for instance signing up for a brand’s referral program. Learn more about these referral codes.

2. Automated rewarding

Rewards are at the core of referral programs. This is what customers work for, really. For a business, it means that rewards need to be issued at the appropriate time and promptly. Keeping up with these can be time-consuming and stressful.

The software helps you to automatically reward after a referral is made, depending on your program’s terms and conditions. There are programs that send out rewards after a specific period of time. The rewards could be batched and sent out on specific days. Others send a reward link with a catalog to choose from.

Referral software comes with automated customer support features which also makes it easier to deal with customer complaints.

3. Fraud detection

You can reduce the possibility of people wanting to game the system. You can do this by ensuring that the reward is big enough to make sense to your customers while remaining small enough not to attract too many fraudsters, or ensuring that your rewards are non-cash and are within your business. An example here is Dropbox. There reward is free storage space. If they gave free movie tickets, it might increase the number of people who want to get free tickets which they do not deserve.

The truth is there are still people who will try to cheat the system, for instance, customers who want to get rewards for referrals that they did not give or those who want to get rewarded more than once for the same referral.

Referral software is able to track a referrer’s IP address and account. If a person uses the same account and IP address to cheat the system, then they can easily be tracked and blocked. Unusual activity is also easily detected and blocked.

Fraudsters may also use bots. The software should be able to limit the number of times one referrer can get referrals within a particular period of time. This way even bots can have their limits.

4. Sharing widgets

Referral software includes sharing widgets that allow for seamless sharing across different platforms – social, email, and on the site. You may want to go for software that allows engaging repeat shares. There is software that has cross-device sharing allowing customers to make referrals on the go. All these happen when protecting your customers’ privacy too.

Sharing widgets make it easier for customers to join your referral program and even further spread the word about it. They also help to automate the ask, as all you need to do is share it on social, email, or on any of your communication tools.

5. Integrations

Referral software needs to be easily integrated with any existing systems that you are using for your marketing, for example, CRM and Google Analytics. You should even be able to integrate it with other business departments like sales (Salesforce and POS). This makes it easier to track the referral process and gain insights into KPI performance at a glance.

You are able to glean insights that allow you to streamline your process so as to walk with your customers before they ever make a referral to when they make one and even after. It also makes it easier to make follow up.

6. Updates

Referral software is able to keep your customers updated on the progress of their referrals. The updates are sent automatically. The referral can also log in to your referral program platform and check the status for themselves.

This also helps them make the necessary follow up with their friends. If you do not give any updates on their progress, they will not refer their friends in the future. You do not need your referral program to become a source of bad customer experience in your business. Remember to thank the referrer when their friends take an action like purchasing a product or signing up to your referral program.

A few more considerations…

The above considerations may be the vital ones. Here are more that may help you distinguish between software if all the options seem to have all the above features and have a price that is within the same range.


Referral software should look great. Better still, it needs to be simple and intuitive to use. You do not need someone to show you how to use it. You should easily find your way around. Great UX will save both you, the business and the referrers time.

Features that are more directly related to revenue

Do you really need to pay more for software just because it has more features?  You need to know what features directly impact your revenue and choose those over others. A good example? Software that is able to help you track your referrals even on social may be worth paying more for than that which only automatically shares your program. The former goes an extra step in helping you to measure your ROI.

When do referral programs not work?

Referral programs make it easier to map your customer journey, request and track referrals, they are no means an elixir. You need to analyze your business to see where referral programs need to come in, how they can integrate with your already existing business systems and the goals that they can help you achieve.

1. When the communication is not personalized

When asking for referrals, it is important to ensure that the communication is as personalized as possible. If sending out an email for example, where you request someone to refer a friend, you could mention the specific purchase that the customer made.

If sending an email where a friend already referred someone, and your brand is looking to help the person sign up to your referral program, it helps to include a picture of the referrer. This way, it not only looks genuine, but the recipient can resonate with the message.

2. When there are unrealistic expectations

We mentioned that a referral program is no quick fix. Once you launch a referral program, you need to thoroughly promote it and give it time before you begin to see any significant impact in terms of subscribers and customers too. Businesses may actually think that their program has failed, while all it needed was a little more time and promotion.

3. When there are feedback issues

This is more likely to be experienced with employee referral programs. The referrer should be able to track the status of their referrals without having to check with their employee. Every referred person also needs to be contacted. All these need to happen seamlessly.

You need to factor in feedback when launching a referral program. Would live chat work best? Or will you need to have staff on standby for 24/7 customer support? Go with whatever would work for your business.

4. When customers are unaware of its existence

It is possible to have a great referral program that no one knows about. If you do not let your customers know that they can get rewarded by referring others via your program, then they will never know. You need to tell your customers about your program in all your communication – newsletters, email updates, website, social media, email signatures, and even in person, if your business has a physical location where customers make purchases or pick orders.

Once the word is out, you then need to make follow up on whether they received the communication, and whether they are interested in becoming part of the program.

5. When the referral process is complicated and hard to use

If your referral process makes it hard for people to refer to others, or even sign up, then it will simply not work. In essence, customers are doing you a favor by taking the time to refer others or sign up. Make their work easier by making the referral process as intuitive as possible.

6. When your staff members do not understand the program

Your staff needs to understand the program in order to offer your customers the required assistance. Otherwise, the program may offer unreliable customer support which may frustrate the referrers.

7. When customers are unwilling to refer

Only happy customers refer. If most of your customers are unhappy, they will not refer even if the program is in place.

Should you build or buy referral software?

On the one hand, a lot goes into building robust, dynamic and agile software to manage your referral program.


If you choose to take this route, then here are the features that your dev team needs to incorporate into the software:

  • A/B testing
  • Fraud protection
  • Automated tracking
  • Automatic rewarding
  • Omnichannel sharing
  • Convenient referral follow up
  • Easy access from any device
  • Updates when the referred signs up
  • Several programs to run concurrently
  • A unique code for every referring person
  • Integration with other systems, including CRM
  • Crafting of the message to be sent to the referrer
  • Tracking codes and cookies to track their purchase journey

In addition to all the above features, you need to factor in the cost and time needed to build from scratch. Your development team may already be overwhelmed by the software they may be building. Tasking them with more might make it difficult to build within the stipulated time.

An advantage of building your own referral software is that any issues are easily resolved internally. An even greater advantage of building is that it allows you to fully integrate your brand, products, and services into the referral program. This, however, should only make sense if it is absolutely necessary.


On the other hand, referral software is plug and play, and most of the times only a few tweaks are necessary in order to fully integrate it with other marketing systems that you may already be using, for instance, analytics and CRM software.

With buying, you get to offer a simpler and seamless way to make referrals while your business continues to focus on its core.

Buying takes away the hard work and pressure from your team who already need to ensure that referrals are coming in, converting and increasing sales. Customer relationships also have to be maintained, and the double ask keeps getting complex.

The tricky part when it comes to buying is that you need to choose software that fits your business needs, offers great support, is high-quality and that fits within your budget. You also need to buy from a reputable company.

How to evaluate software providers

In the section on whether to build or buy referral software, we mentioned that a tricky part about buying is that you need to choose a reputable provider. Let’s look at how to go about evaluating software providers in this section.

1. Refer to your goal

Before you even get to buying referral software, you need to have defined your referral marketing goals. Even more important is how to measure whether you are achieving your goals – KPIs.

Once you have these defined, it becomes easier to identify the software that you need and the provider that aligns with your goals and business values.

Let’s say that your goal is to increase the number of referrals from every advocate every month. You need to define it more clearly, for example, how many new referrals do they need to make every month? How many advocates do you need to be sharing referrals every month?

When you further define your goal, you are able to measure whether it is being achieved or not.

When you have a clearly defined goal, you can then easily identify and choose the vendor who has the best interests in your goal achievement.

2. Check their landscape

What does their referral software provide? And again, does it align with your goals? Which of them are more directly related to revenue? It helps to have a list of your must-have features and the optional ones.

After you have your top 10 providers, check the features that their software has against your own list and narrow your vendor list further down. Look out for software that seems to be built for a specific integration, for example, Salesforce. This should be a win as you can easily plug into a system that already working for you.

3. Business type

Software that leans towards a particular business type, for example, SaaS, e-commerce, B2B or B2C makes it easier to make your decision. Rule out software that does not favor your business type. If you are a B2B, then you have no business listing software that is focused on SaaS.

You may also find that a provider has more experience dealing with specific business types. If they are experienced in dealing with your type, then you are at an advantage. If not, you may be safer looking everywhere.

4. Referral program types

You may find providers that deal with a specific program type, for instance, refer a friend, direct referrals or donation based referrals. You may want to go with the one that is familiar with the referral type that you mostly use in your business. If you want to try several types, then go for the provider with the software and experience to match that. You also want to ensure that the technology to allow for multiple programs to run is smooth and does not cause any issues.

5. Customer experience

Are there any other customers who can vouch for the provider? Are there reviews? If so, how positive are they? You may want to confirm the authenticity of the reviews for example by looking out for providers who link the review to the reviewers’ social media accounts (for example LinkedIn). You can then check out the profile and see if it comes from a real person. You may even reach out and ask for a confirmation.

Go ahead and ask the provider to show you case studies from other users.

6. Price

Most providers will stay within the market price, and you are highly unlikely to get one with unrealistically high pricing. The most important consideration when it comes to price is whether the features you are paying for are absolutely necessary. Go for the most important ones followed by those that are more directly related to revenue. Ultimately, those that make it easier for your program to stand out among the competition.

You may want to go with providers that allow a trial period. You will be able to gauge their software and customer service before you settle on them.

7. Customer service

Ideally, the customer service you should go for should feel like an extension of your own team. They need to show that their customer service is great throughout their customer journey. How can you rate their customer service from the initial contact with their business? This should continue to onboarding all the way to when you encounter any issues or challenges with their software.

Look for a team that can help you not just with the software, but even go beyond to help you refine your marketing strategies, referral program, best practices into the software, and integrations with your systems.

8. Sales process

What is their sales process like? Most importantly, what is the exit strategy when you have outgrown the product for example?

What are the questions to ask before you book a demo?

You need to prepare for questions before you book a demo with the providers who you had made it to the top of your list. Here they are:

  • Will the referral software integrate with our existing system?
  • How easy is it to use?
  • How much training will users need to use the software?
  • To what extent does your customer service go should I sign up with you?
  • How do you manage updates and upgrades?
  • Can I run multiple programs simultaneously? What technologies allow that?
  • How are changes made and who is involved?
  • Do we have API documentation?

In addition to preparing for the above questions, you need to also understand terms like affiliate marketing, referral program, and referral.

In conclusion

As you can see, a lot goes into choosing referral software, from understanding your business goal, business model and type, different terms in referral marketing, whether the software makes sense for your business, when it does, mapping your customer journey and referral process, whether to build or buy, what features to prioritize, the vendors to choose, to the questions to ask them.

This guide has got you well equipped to make the best decision for your business. Are you ready to get referral marketing software?