Aleksandra Velkova on August 14, 2023
If you operate a small to medium sized business and are looking for ways to increase sales without investing a lot of time, money and effort into devising an advertising strategy, a referral program may do the job for you.
Referral programs for small businesses are super effective in driving sales to the store as they work like a loop: your existing customers shares their referral link to friends and family; they sign up and make a purchase and you reward the sender with a coupon code they can use back at your store ultimately driving more sales and a higher repurchase rate.
So, what do you need to start a referral program for your business today? Read on to learn more.
A referral marketing software tool - there are a lot of tools you can use for referral marketing programs out there, and the most important thing when looking for one is to make sure it's: easy to integrate with your ecommerce store, intuitive to use by you and your customers and offers good and easy to understand insights into the performance of the program.
Referral incentives - when it comes to incentives, it's always a good approach to offer double-sided rewards. This means, you'd be rewarding both the sender and the receiver of the referral link, essentially making sure they are both motivated to engage in this process. Depending on the tool's capabilities, the incentives can range from points to discounts at the store. How to determine what's the best incentive to offer? Consider a few things here: how much can you afford to stretch for the incentives? What do your customers actually want and find valuable to be motivated to engage in a referral?
Simple and intuitive display strategy - you want to offer a simple and easy way for customers to engage with your referral program. The referral program software you decide to use will offer different display options and my recommendation is always to go with the default one. The reason why is because usually the software designers would have done the research on a much larger scale and determined that their default display option is what works best with most online consumers in driving a high program engagement rate.
Customization - make the referral program your own! Add a logo, brand the program widget with your colors and fonts and add text that resonates with your audience. Don't shy away from customizing this important marketing element to match your store design.
Connect your email marketing tool - one of the important aspects of running a successful referral program is to make sure you promote it consistently and effectively. For that, you'd use email marketing (or even SMS marketing). The referral program software you use would ideally integrate with your email marketing provider. This can be Klaviyo, Mailchimp, ActiveCampaign, Omnisend etc. Once you connect your tech to your referral program software you could expect to see loyalty data points as custom properties into your email marketing tool. This allows you to highly personalize the emails you send out, to focus on the referral program's promotion and to consistently remind your customers to spread the love about your brand and get rewarded. You can unleash your full email marketing creativity and use this integration to promote your program super effectively.
Measure the performance - the referral marketing software you use should provide reporting of your referral program. This report should include important metrics such as how much value has the program generated in a given time period? how much was the investment? Which sharing option is most popular? Who are my top ambassadors? This info can further boost your marketing efforts, as it can give you insights into your customer acquisition strategy: which channels to target more, as well as who is your top brand ambassador who can contribute towards building your brand reputation for example.
If you're operating a small or medium sized business and are just starting with referral marketing, my best recommendation would be to just launch your program. Allow your customers to engage with it and to grasp the value of it. Talk to them and try to learn what they think of your offer. The more you make your referral program an essential piece of your marketing strategy, the more creative you'll become in using its power to drive higher customer acquisition rates and higher repurchase rates.
Aleksandra is the Customer Success Manager at Lootly
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