At QuickLinkt, business owners often ask us if they should reward referrals. Obviously, there’s a balance between rewarding customers for making referrals, incentivizing referred customers to try your business and not discounting prices too much. So, we thought we’d outline some of the different reward types available, and when to use them.
Businesses can choose a traditional approach to referrals by not offering incentives or rewards. You can still use QuickLinkt for these referral programs – customers can submit referrals from their Smartphone or your website and Facebook page, and you can track program success. This structure solves the problem of how much to reward/discount, but you may not see a big increase in referrals at launch. That being said, if you work in an industry with pricing regulation and have a loyal client base, this program could be perfect.
It’s been found that offering a reward increases the likelihood of referrals – so with QuickLinkt you can reward customers for referrals. Rewards are only achieved when referrals result in new business (like a mortgage refinance or home sale), so customers send quality leads. This type of referral program is perfect if there aren’t switching costs for new customers (ie. they don’t have to pay out the rest of their old gym membership), and if trust is a major factor in the purchase decision – like choosing the best financial planner based on how they helped your parents with retirement.
If you really want to bring out the big guns, you can create 2-sided referral incentives. Customers share discounts or offers with friends and family, and then are rewarded once offers are redeemed. The obvious advantage of this program is that customers are encouraged to make referrals, and referred customers have an incentive to try your business. This type of referral program is also awesome because it encourages customers to share offers over social media and increase your social media exposure. And since customers are 71% more likely to make a purchase based on social media referrals, 2-sided rewards are perfect for growing your customer base.
So at the end of the day, we see successful referral programs with each reward type. It’s about choosing the best reward type for your industry, publicizing your referral program, making it simple for customers and getting the proper analytics to track success. What reward structure have you found the best for your business?