How To Set Up A Referral Programme
For startups, finding a scalable and low-cost customer acquisition method is one of the most challenging parts. A referral programme enables you to make this process easier by encouraging existing customers to refer new prospects to your products or services and get paid for it.
Setting up a referral programme shouldn’t be difficult if you know how. This blog covers each step that can help you grow your customer base through referrals.
The Purpose of a Referral Programme
A referral programme is a promotional tool that rewards an existing customer for referring new prospects to your business. The customer will get rewarded with something of value, usually in the form of discounts, cash, vouchers or some other offer. This can be in the form of vouchers, a free trial or even just cash.
The purpose of this type of promotion is to encourage existing customers to refer new prospects to your products or services and get paid for it. It’s not only cost-effective but also scalable because it doesn’t require any additional time or upfront investment on your part. You don’t have to hire more people or spend cash on marketing campaigns because your current customers are doing all the work for you!
How To Set Up A Referral Programme
The first thing you need to know is how to set it up. Here are some steps to take:
- Define the scope of your referral programme
- Choose between a passive or active referral programme
- Determine what kind of incentive programme (like cash rewards, free products, or vouchers) you want to implement
- Work on your marketing strategy and link it with your referral programme
- Create an incentive for customers and make sure they’re aware of the programme
- Partner with relevant other organisations and promote your referral programme through social media and email campaigns
Find the best incentive for your referral programme
A referral programme is usually structured as a reward for an existing customer for referring a new prospect. The reward varies but there are two rules of thumb: the incentive should be enough to convince someone to refer someone else and it should be cost-effective so you’re not spending too much on payouts.
There are three common types of referral incentives:
- Cash – This is the most popular referral incentive and it’s also the easiest one to implement. There’s no need to worry about shipping, product quality or ensuring that the person referred actually buys something from your company
- Discounts – Often used as an incentive, discounts can be delivered immediately, which means they’re great for quick results and short-term gains. A discount could range from 10% off your next purchase to 50% off on your first order depending on what you offer and how competitive your market is
- Giveaways – Another popular option, giveaways can be anything from a simple accessory like a T-shirt or mug to more expensive items such as electronics or even cars. Rewards can also include experiences such as tickets to see a concert or sports game or tickets for amusement parks.
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Track Your Metrics
The first step of setting up a referral programme is tracking metrics.
Understanding how your customers are finding your brand and what they’re doing once they get there can help you figure out where to focus your marketing efforts. With that information, you’ll be able to develop a new campaign that will work better for your business.
If you’re not sure how this works, all you need to do is set up an analytics account for your website and start gathering data on how new customers are finding and interacting with your website and products. You’ll be able to see the sources of traffic, like social media channels or search engines, and which of these sources convert best for your business.
This data will make it easier for you to set up the right referral programme in the next step because you’ll know what’s already working for your business.
A referral programme is a great way to reward customers for spreading the word about your brand. But to set up a successful referral programme, you need the right incentive for your customer base.
At Second Voice we offer a referral programme to our clients, partners and friends, and it is very straightforward. If you refer a new customer to us, we will give you a cash reward. You can either take this and enjoy it or for those who choose not to receive a monetary reward, we will donate it to a charity of your choice in your name.
If you want to know more about our referral scheme or want help to set up one of your own, use the form below.
Book your free consultation with one of our team, today!