Every single referral scheme we run offers rewards (often called incentives) to both referrers and referees. Whilst word of mouth will always happen without rewards, when asking a customer to make a referral a reward will make a substantial difference to how well the scheme works.
If a client is launching with a limited time promotion (we tend to see this happen around Black Friday) it is compulsory to agree and set up a secondary/follow-up offer before putting the client live.
There are 4 golden rules when it comes to referral rewards. Let's explore each of these:
1-You must have rewards
There are two reasons why it's essential to have a reward:
- 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.
- 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!
2-The reward should be the best available offer
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.
You have to make the referral offer at least the equal of the best offer you give away. It should match or better the affiliate offers, the newsletter sign up offer, the basket abandonment offer etc..
3-The reward should be fair
Whilst there's no reason why the referrer reward and referee reward need to be identical, they should be of roughly equal value.
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.
4-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.
