4 key pillars to building an amazing referral programme

Referrals can come from anyone - a satisfied customer, a friend or family member, or even an influencer or celebrity endorsement. The key to capturing these referrals is to put in place a well-thought-out programme that promotes word-of-mouth and increases customer loyalty.


Which makes sense given that 93% of consumers trust recommendations from friends and family above all other forms of advertising, and nearly 95% read online reviews before making a purchase. As a result, recommendations and reviews (both essentials in word-of-mouth marketing) have completely changed the way consumers shop. So, in order for your brand to adapt to these changes, it requires a strong referral programme strategy.


Before you launch your referral programme, you must first establish a relationship with your customers and determine what will best incentivise them. Referral marketing can help to elevate your brand by bringing new customers to your door or website. Whether you are a small business owner, marketer, or customer engagement specialist, learning how to start a referral programme is well worth the effort. Of course, even if you have the best website design, referral software, and rewards, you will struggle to gain traction unless you promote it to your existing customers.


A strategic referral programme can assist any brand in acquiring new customers at a low cost. Referral marketing has a lower customer acquisition cost than most other types of marketing because it uses your current customers to help spread the word. Plus, customers who come from referrals are more likely to become high-value customers. According to studies, referred customers spend 25% more, are 3x more likely to refer someone else, and are more loyal to the brand. They have also been noted to help businesses generate higher revenue and return on investment.



So where do you begin?


Now that you have a better understanding of how referrals can benefit a brand, it is time to start building your own. So, where do you start? The success of a referral programme is built on a solid foundation of exceptional products and services, strong customer relationships, and a clear marketing goal. These crucial steps for establishing your programme (with the proper groundwork) should set you up for success.



1. Provide exceptional products and services with value


The first step in developing a referral programme is to provide exceptional products and services. People will not go out of their way to recommend you if what you offer does not stand out and make an impact – no matter how good your referral programme is. The core concept is to offer better value. Ideally, a loyalty programme benefits the customer and the brand equally, but the brands that focus on delivering value to their customers rather than themselves achieve greater success. You have to ask yourself:


  • Are the rewards relevant?

  • Does the reward match the effort required to achieve it?

  • Do customers receive instant gratification for their participation?


It is essential to be passionate about providing exceptional products and services. Otherwise, even the most effective referral programme may struggle to gain traction. A great way to ensure you're providing value in your offering is to put yourself in the shoes of your customers and ask the simple question, "what's in it for me?"



2. Put your customers first


Without your customers, your referral programme is meaningless. Before attempting this, it is critical to cultivate your customer relationships. And, as with all good relationships, communication is essential. Take your time when speaking with your customers. Listen to what they have to say and respond honestly. Look to offer each individual customer a truly unique, personalised experience and encourage an emotional connection with your brand. After all, these customers are similar to the ones you'll be targeting with your referral programme, so think of them as your direct line to market knowledge.


This could be as simple as sending a welcome email or addressing your newest referral by their first name; personalisation is essential for delivering a truly unique customer experience, whether you have a loyal customer base of a hundred, a thousand, or a million. With each purchase your customer makes, you gain a better understanding of what products they like, what days they tend to buy, and how much they typically spend per transaction - invaluable! Using this information, you can surprise customers with small gestures such as a special discount or free shipping - this can leave a lasting impression on a customer. Ultimately, if you are deliberate about the experience you provide and ensure that it inspires positive brand affiliation, customers will be happy to share.



3. Have clear marketing goals


Consider what success would look like for your brand before launching your referral programme. If you are not working to achieve specific goals, you cannot identify successes or failures. Keep in mind that your goals can (and probably will) change frequently as you develop and optimise your referral programme. However, setting clear and realistic goals now will help you build a stronger and more effective referral programme in the long run - why are you creating a referral programme, and what do you hope to gain from it? Your goals may include the following:


  • Drive customer acquisition

  • Attracting higher lifetime value customers

  • Increasing the average purchase value each customer makes