Understanding what makes a Good Reward

Getting your reward strategy right is key to a high-performing referral program. Here’s what to focus on:
 

Always offer a reward

There are two reasons why it's essential to have a reward:

1. Rewards provide a very direct and selfish incentive for the referrer to do something; in effect, the brand is paying the referrer to do something for them.
2. The reward gives the referral offer more usefulness for the referee, so a referrer can feel like they're really helping a friend out when they make the recommendation.

You should not run referral without either a referrer reward or a referee reward. It rarely works!

Choose the Right Type of Reward

• Retail: Discounts (percentage or fixed amount) work well—they’re clear and create urgency.
• Subscription, Travel, Insurance: Gift cards or vouchers tend to land better here, as purchases are less frequent and more considered.

Match Rewards to Buying Habits

• Frequent purchases (e.g. fashion, food, beauty): Discounts feel relevant and encourage quick repeat buys.
• Infrequent or high-value purchases (e.g. travel, finance): Gift cards feel more worthwhile and better match customer expectations.

Make Your Referral Offer Stand Out

If you give away 20% off for signing up to the newsletter and promote 20% offers all over their site, then a referral incentive of 10% will not encourage sharing, and the scheme will not perform well.

Referral rewards should be your best offer. If customers can find a better deal elsewhere on your site, they’re unlikely to refer others. It should match or better the affiliate offers, the newsletter sign-up offer, the basket abandonment offer, etc.. 

Keep It Fair for Both People

Referrers and their friends don’t need the exact same reward, but the value should feel balanced.

If they're not fair, then either the referrer will feel like they're being asked to benefit at the expense of their friend, or they will feel like they're being taken advantage of. Either will suppress the performance of the scheme.

You must be able to fulfil the reward!

The final, very important rule.

For any given referral reward, we must know exactly how we will fulfil it - how will we give it to the referrer or the referee. For 80% of referral schemes, this is easy, we simply send out a voucher code via email to the right person at the right time.

But sometimes it's not that straightforward, perhaps you want to send something in the post to the referrer, or want to give them a credit on their account. Or maybe you want to run a competition.

No matter what you want, you will need to figure out how to get the rewards into the customer's hands before you start offering it to customers.

Don't fret, we've got an answer for all the scenarios you're going to encounter, so just ask.

Consider simplifying with Automation

Using a reward platform can save time and avoid mistakes. It also ensures a smooth experience for customers. Get started with one of our integrations now.

Delay Rewards When It Makes Sense

For some categories, it’s smart to wait before sending rewards. For example:

• Travel: Send rewards after the trip takes place.
• Subscriptions: Wait until month two or when a contract is confirmed.
• Retail with high returns: Only issue rewards after the return window.

Also, make sure your definition of a “new customer” is clear and reflected in your setup. Contact the team for help accommodating eligibility checks and implementing qualification rules.

What do good rewards look like for different businesses?

Here are some examples of what setups would work for different types of businesses.