Marketing 12 min read

How to Create a Referral Program for Your Business

Olivier Le Moal | Shutterstock

Olivier Le Moal | Shutterstock

Referral marketing means utilizing customer loyalty and positive customer experiences to generate word-of-mouth promotion of your product or service.

Creating a Referral Program for your business is not only more effective than many forms of traditional advertising, but it’s also easy to do. Let Edgylabs break it down for you.

Firstly, who are you more likely to trust? An ad on social media or genuine advice from a friend?

If the answer isn’t the latter, I’d seriously recommend reevaluating your social circle. As humans, we value opinions from trusted sources that are expressed directly to us. As consumers, this fact remains true.

Companies regularly spend millions of dollars on extensive advertising campaigns. Yet, most of the time, these are not anywhere near as powerful as word of mouth recommendations, which can often be far cheaper for your business.

We have to remember that consumers are humans first and foremost. We trust our friends, we want to believe the hype, but only if it’s coming from someone we trust.

Facebook’s Mark Zuckerberg recently commented that:

“People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.”

Numerous studies show that Zuckerberg knows what he is talking about when it comes to referral marketing. According to a Nielsen survey, 92% of consumers trust referrals from people they know.

Additionally, the results of a 2013 BCG survey revealed that 66% of more than 32,000 consumers in Europe and the U.S. consult friends and family before purchasing online.

What’s more is that half of the respondents also consult consumer opinions online. Respondents were also far more likely to look to other people than to consult the media or a company’s website.

If you know people, these figures will make perfect sense. These days, many consumers don’t know what to trust online or may become overwhelmed with too much choice.

For this reason, setting up a referral program could benefit your company greatly. Not only by bringing more customers to you, but also allowing your product or service to be brought to a wider audience.


referral marketing
Image courtesy of

Word-of-Mouth Referrals Can’t be Simply Bought; They Must be Earned.

Before even thinking about setting up a referral program, you need to do some honest evaluating of your company.

I’ll cut to the chase: if the loyalty isn’t there, your referral program will crash and burn.

Ask yourself, have I done the groundwork? If the answer is yes, then your company should be offering an exceptional service that is worthy of repeat business from current clients and their referral. The product or service you offer should also be the best you believe it can be.

If you’re still unsure, here are some indicators which show your company is ready to set up a referral program.

Positive reviews online and messages from happy customers are go-ahead signs that your company is ready. If referrals are happening organically, without you having to try, this is a great sign that a referral program will be extremely beneficial.

However, before you jump on the bandwagon, take a step back and ask yourself one more question. The goal of referral marketing is to channel new customers to your business. But, is your business ready to handle this influx?

If you don’t think you’re ready to expand your customer base just yet, if you’re not offering top-notch customer service, if you’re unsure in any way, go back to the drawing board.

If your company has ticked all the boxes, congratulations! The foundations of customer service and loyalty are there. This means you’re ready to set up a referral program.

Know When to Introduce the Idea of Referrals

Referral Marketing
Giamportone | Shutterstock

Introducing the idea of referrals at the wrong point in the sales cycle can zap your customer loyalty faster than you can say ‘incentive’.

If a customer is bombarded with spammy e-mails and notifications about your referral program as soon as they make a purchase, your business is going to seem insincere and pushy.

Making your customers feel like their only value to you is monetary is a recipe for disaster. Instead, you should allow them time to make their own mind up about your business.

If you have done your job, they are bound to see the full value of your product and service on their own. Holding off at first will really pay off in the long run.

Once customers have been given time to experience your exceptional customer service, it will help them make up their mind about your company before you ask them for a referral.

Figuring out the best time to ask customers is a tricky one and will be different for every business. At first, some experimentation may be necessary.

Try different times, for example. Try asking after a client’s second purchase, or ask clients who engage the most on your site.

If you are offering an app, you may want to consider introducing the referral opportunities after a number of downloads or sessions.

You should try out a few different approaches and take note of results. Once you get to know your client base, it will be easier to predict what methods will reap the most positive reactions when it comes to referral marketing.

Consider All Referral Marketing Options

Sure, e-mailing clients is possibly the most tried and tested method, but there are so many other options available to you.

You could reach out to online publications asking for them to review your products, you could ask podcasters to mention them, or even add a place where customers can leave comments or reviews to your site. 

The possibilities are endless as long as there is a human element and the source is trusted.

Bloggers and Influencers on social media like Instagram, Snapchat, and Youtube can also offer referral options. It’s easy to find someone who has built up an audience who trusts their opinions. A simple Instagram selfie or including your product or service in a review can be a very powerful method of referral marketing.

Read More: B2C Influencer Marketing Trends for 2018

This can help your referral marketing campaign be much more targeted. As these influencers tend to know their audiences pretty well, it allows your brand message to spread more effectively.

Make Your Products and Product Experience Sharable

Referral Marketing
Black Salmon | Shutterstock

This leads us to another very valid point, although it mostly goes for companies offering a physical product.

If you are going down the social media route, you should consider making your packaging and ‘unboxing’ experience sharable. Adding a ‘wow’ factor to your product or making it photogenic will make more people want to share it online via social media.

A shareworthy experience also shows your customers that your company goes the extra mile to ensure they not only satisfied but delighted with their experience.

An example of this comes from Maybelline‘s recent lipstick campaign. They sent social media influencers and bloggers not only their “Colour Stay” collection of lipsticks but also an array of instagrammable foods like iced doughnuts and toffee apples to put the product to the test for their followers. It may seem a little gimmicky, but it’s also fun, memorable, and attention-grabbing.

Another top tip for making offers shareable is to add a personalized touch. Research by Extole found that “adding a picture of the advocate’s face to a referral increases the rate of conversion by more than 3%.” 

Personal touches can communicate trustworthiness, which is a key element of referrals.

Obviously, different approaches are going to be more effective in different industries.  However, no matter your product or service, considering how you could creatively make your product or service more shareable is definitely food for thought.

Make It Easy For Visitors And Customers To Refer Your Brand

I can’t emphasize enough what a difference making things easy for customers can make.

As amazing as your product or service may be, chances are your customers’ lives don’t revolve around it. People are busy and don’t want to waste time going through complicated processes to make referrals.

Always make it as simple and accessible as possible for customers to share your products and refer your brand. Easy solutions to this could be adding a ‘share’ or ‘refer’ button to your site’s navigation. When it comes to referrals, social media is your best friend.

A Facebook post, Twitter tweet or Instagram selfie can now reach hundreds, if not thousands of friends in a matter of seconds. Another simple but effective tactic is adding social sharing badges to every product page.

You can reach a huge audience through a human filter, allowing sincerity and scope. It may also be a good idea to pre-populate the Twitter and Facebook messages so they don’t have to take the time to think of one.

Make it a Win-Win Situation

Referral Marketing
Chris_tina | Shutterstock

There’s nothing like the prospect of getting something for free that will motivate people to take action. Incentives can work wonders when it comes to enhancing your referral marketing program. You could have the best product and flawless customer service but people still need a push to take action.

Incentives can range from cash back or a discount on a future purchase, credits for future purchases, upgraded or free shipping, priority service, a complimentary trial of your service or product or even a personalized thank you. Make your customer feel valued by rewarding them for their efforts and you will be rewarded too.

You should keep in mind that specific motivating factors vary by industry and business type. For example, offering free shipping isn’t going to work if your company is offering a service. Discount codes, for example, will work very well for E-commerce shops. offer a clever referral program to customers who use the service to book a certain amount of hotels.

After making a number of bookings via this website, you get access to their exclusive ‘Genius Club’. This means you can see special offers that the regular user cannot.

In addition, if ‘Genius Club’ members share their experience, they receive further discounts. This not only encourages users to continue to use the service but also encourages them to recommend it to other potential customers in the form of people they know.

Clearly, a two-way referral program can offer double the benefits. Another example is Air BnB. This online accommodation service implemented a referral program in Europe that offers customers 25 euro worth of travel credit when they invite their friends via Facebook and an additional 15 euro travel credit when a friend completes a trip with Air BnB.

The impact of this is clear, thanks to referral marketing promotions like this, the company’s growth has doubled every year from 2012 to 2015 while also accommodating an estimated 100 million visitors in 2017.

When it comes to choosing which incentives to use in your referral program, only you will know what will work well for your audience. However, these industry-specific guidelines can be helpful in determining which direction you ideal incentive could lie in.

Is the Juice Worth the Squeeze?

Referral Program
baibaz | Shutterstock

There is no point in doing any of this without implementing a mechanism of tracking successful referrals and distribution of bonuses.

This will not only help your referral program to be more effective in the future but will prevent your company from potential loss due to unsuccessful incentives.

Most companies that need to manage referrals at this level use paid software like RewardStream or Referral SaaSquatch which can help some companies to manage referrals.

However, adding a question to the transaction process is another simple way to manage per-transaction referral bonuses.

Smaller companies may even be able to keep track of referrals on their own spreadsheet. It’s all about finding the most effective method for you.

Protect Yourself from Legal Risks

Referral Program
fizkes | Shutterstock

Referral programs are extremely valuable. However, if they are not carried out professionally, they can get messy. You should outline a concrete set of referral marketing standards.

Firstly, you should define the goal of your referral program. How is it going to represent your brand when it is being shared with others? Are there any content sponsored guidelines you should make customers aware of?

These should also clearly outline who is eligible to earn referral bonuses. It’s often a good idea to limit the number of referral bonuses that can be earned by an individual customer to avoid scams or exploitations.

You should also cover bases such as whether or not you will disallow participants from posting discounts on web deal sites. This information should be clearly stated on your website and also sent out via e-mail whenever a new referrer signs up to your program.

Referral Programs: a Defining Factor in your Company’s Growth

Referral programs have the potential to greatly increase not only your company’s loyalty base, but also your brand recognition, product sales, and, most importantly, the size of your customer base.

If used effectively, these referral programs are the perfect way to get your company’s name out there in a way that is simply not possible with more conventional forms of advertising.

Use social media and influencers to your advantage and, above all, listen to your customer’s and gauge their reactions to your program. Often the best way to start a referral program is through trial and error; begin with small customer sample sets and see what works best.

In time, you’ll eventually find the perfect balance that’s right for you.

What’s the most unconventional referral program you have ever come across?

First AI Web Content Optimization Platform Just for Writers

Found this article interesting?

Let Alexander De Ridder know how much you appreciate this article by clicking the heart icon and by sharing this article on social media.

Profile Image

Alexander De Ridder

Alexander crafts magical tools for web marketing. He is a smart creative, a builder of amazing things. He loves to study “how” and “why” humans and AI make decisions.

Comments (0)
Most Recent most recent
share Scroll to top

Link Copied Successfully

Sign in

Sign in to access your personalized homepage, follow authors and topics you love, and clap for stories that matter to you.

Sign in with Google Sign in with Facebook

By using our site you agree to our privacy policy.