Referral Incentives

Referrals are just as powerful as any other marketing tool

June 3, 2019

We live in a world where technology is advancing faster than consumers can use it. This is true in every aspect of life, but it’s especially true in advertising. With the right funding and strategy, even a small business can reach an audience of millions. And yet, despite every milestone we pass, there is one method of advertising that has never been surpassed. No matter what software you use, no matter how much adspace you buy, nothing will ever beat word of mouth when it comes to spreading the new about your business.


How do you harness word of mouth to get the word out about your e-commerce business?

It isn’t enough to simply have the best products, because that won’t guarantee that people will actually tell their friends even if they’re satisfied with their purchase. The best way to make sure that your clients tell others about your business is to offer them some incentive for doing so. There are plenty of different kinds of incentives that your business can offer, but the most common and arguably most effective is to offer a referral bonus to your customers.

Why is referral marketing so effective?

The three biggest problems that advertisers have to deal with are targeting the ideal audience, gaining that audience’s trust, and expanding the campaign’s reach from there. What advertisements try to do artificially, referral advertising can do organically. When one of your users refers somebody else, they usually will do so with somebody who would already be interested in your product. Since the referrals go to people that the referrer knows already, they help establish trust in your brand. Finally, since the referred customers are able to refer other customers themselves, the reach of your brand has the potential to grow exponentially. All this happens with little cost and nearly no effort on your part!

Of course, instituting a referral program is all for nought if your e-commerce site is not worth referring to. While this should be the case no matter what, the basis of any good referral program is excellent customer service. Make your checkout process as easy as you possibly can, and always make sure that you answer customer questions and feedback promptly and courteously. When people recommend a business to their friends, they don’t usually do so just because the product is good. If the choice comes down to recommending two different sites, most people will recommend the place where they had a pleasant experience.

Another great way to make you referral program a success is to make your products and experience shareable. When we say shareable, we mean shareable on social media, of course. People love sharing their purchases on Facebook, Instagram, Twitter, and YouTube; search for “unboxing videos” and you’ll find millions of successful results. The most popular of these videos are always from companies that make unboxing exciting in some way. Some have unique boxes, others include the products in some kind of custom bag or paper. While this might seem frivolous, it’ll improve your exposure as a brand, and make people all the more excited to refer their friends.

Consumer Experience

What to begin with?

What sort of incentive you offer is largely up to you. There are several common ways of handling it, each with its own advantages and disadvantages. Whichever you choose should best suit your marketing strategy.

The simplest strategy is to offer a monetary reward to the referrer and referred, usually in the form of discounts or store credit. This is easy to implement on your end, and is usually a solid tactic. Less tangible benefits, even if they are ultimately worth more, don’t appeal to everybody. However, everybody can understand the benefit of cold, hard cash. Even customers who are not enthusiastic about your product will give it a chance if they can get if for a reduced price, or even for free. The downside of this approach is that it can be difficult to determine how much the incentive should be worth. Too little and it won’t get people’s attention, but too much and you’ll find yourself hemorrhaging profits.

The best alternative to monetary benefits is to offer exclusive perks to customers who refer others to your business. What makes this program interesting is its adaptability. The perks you offer can change to suit your audience, and you can award one customer multiple perks for each person they refer. These perks could include free samples that can come with their next order, access to exclusive products, or even tickets to events that your company does. While these benefits aren’t as clear as 50 dollars cash, they can be more cost-effective, and also allow you to develop your brand identity further. A perk that is quirky and unique is far more memorable than store credit.

However you choose to implement your referral program, be sure to do it in a way that reflects your brand’s unique nature. More often than not, many customers will hear about your business for the first time through these referrals. The referrers will help get your foot in the door, but it’s up to your marketing and incentives to seal the deal. With careful planning, and a bit of panache, you can find yourself gaining more loyal customers than you ever thought possible.