4 Different Types of Referral Programs Your Business Can Offer
Referral programs can be a win-win situation for everyone involved. The customers get to take advantage of a fantastic offer on a great product, and the business owner receives a steady stream of new prospects.
Referral program often have little upfront cost. This means even small companies with minimal marketing budgets can take advantage of their benefits. Here are four types for you to consider, as well as ideas for how to create a referral program for your business.
Reward-Based Referral Programs
Rewards-based referral are probably the most common type. In these programs, both the referrer and the new customer receive a benefit such as a discount on a product, a freebie, or an upgrade.
Most programs include a condition that the offer must be taken up by the new customer before the referrer receives the reward. This ensures the company only pays out when they gain a sale.
Real Life Example: Money transfer platform TransferWise run an invite program where the inviter earns cash (£50 in the U.K.) for every three people they invite who also make a qualifying transfer on the service. The person who receives the invite gets to make a transfer of up to £500 for free.
Reward-Based Referral Program Ideas for Your Small Business
Give $20 gift vouchers for your online store to both parties.
Offer free service upgrades on your software platform to the referrer, and signup discounts to the new user.
Include free breakfast at your hotel on the customer’s next stay.
Advocate marketing involves getting your customers to spread the word about your product or service. It works because people trust recommendations from their friends. In the age of social media, this type of referral program can be particularly useful as even regular users often have hundreds of followers.
Real Life Example:Apple made use of advocate marketing with its “Shot on iPhone” campaign. iPhone users were asked to share photos taken with their device with the hashtag #shotoniPhone. Apple then chose the best pictures to use on billboards.
Advocate Marketing Referral Program Ideas for Your Small Business
The most important thing is to offer a great product or service that people enjoy. You could also:
- Make what you do highly visual, so it is more likely to be shared on social media.
- Encourage the use of specific hashtags (like the Apple example above).
- Offer discounts to customers who post about your business on social media.
- Identify people who post about your business frequently and invite them to try out your latest product.
Points-Based Referral Program
In points-based referral programs, you give customers points each time they make a referral. This encourages your customers to make multiple referrals to build up points. For your program to be successful, you should include rewards that get progressively more enticing.
Real Life Example: Tesla ran a program whereby Tesla owners could refer up to ten people to get $1,000 off a car. What made the program unique were the perks the company offered. They included exclusive Tesla event invitations, the ability to test out new cars, and even the chance to send a time capsule into space.
Points-Based Referral Program Ideas for Your Small Business
Your spa could offer additional treatments for free to those with a high number of points.
You could offer advanced previews—getting increasingly longer—of your next online course to those who share your current one.
Free merchandise at your gym, ranging from workout t-shirts to month-long supplies of nutrition products.
Charity Referral Programs
Charity referral programs work in a different way to the others on this list. Instead of the customers getting a benefit, the company makes a promise to donate to a charity. This can be an effective route to take depending on the values of your buyer persona and the positioning of your brand.
Real Life Example: Upserve is a company that sells restaurant management software. Back in 2016, they ran a referral program that saw them donate $200 every time someone signed up to their site based on a referral.
Charity Referral Program Ideas for Your Small Business
Focus on local charities or community projects if you are a local business.
Use charities related to your product. If you sell sports equipment, provide free soccer balls to schools.
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