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Is referral paid marketing?

Referrals are also earned media at their roots, as your customers choose to promote you. And when you reward customers for sharing, a referral marketing program counts as paid media, too. Thus, you'll enjoy the benefits of paid, owned, and earned media.

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It’s only natural to trust the word of friends who recommend a business more than any ads you see for the same company. Studies have shown that 84% of customers trust recommendations from people they know more than any advertising that comes from a brand. That’s why referral marketing is one of the best ways to generate leads and multiply your customer base. Plus, these recommendations mean free promotion for your business.

But without a referral marketing strategy, customers may forget to share your brand with friends, meaning referrals can be unpredictable and infrequent. How to create an engine where customers keep generating valuable word-of-mouth?

Referral marketing is all about encouraging your customers to share your business with friends –repeatedly. In this ultimate guide, we’ll go over everything you need to know about referral marketing, from key fundamentals to best practices. We’ll also break down top examples of referral marketing, and what you can take away for your own referral marketing strategy. Let’s dive in.

What is referral marketing?

Referral marketing is an organized process where you reward your customers for sharing your brand or products with their friends, family, and colleagues. Whenever someone they refer becomes a new customer, you give your existing customer a referral incentive, as a thanks for bringing in the new business. Compared to other types of traditional marketing, which are aimed at a general audience, referral marketing leverages your company’s existing customer base – and the trust they’ve built up among their friends – to generate potential new leads. It turns your customers into reliable advocates for your brand.

Purpose of referral marketing

The main purpose of referral marketing is to bring in new customers through word of mouth. Whether in person or online, people want to share what they love with their friends. And referrals from peers are highly trusted. But if you aren’t doing anything to motivate and mobilize referrals, you’re likely missing out on revenue. According to Texas Tech, 83% of customers are willing to refer your business to their friends after a positive experience, but only 29% actually make that referral. This means many customers forget to tell their friends about you, even though they love your brand and the experience you’ve given them. Even if people are satisfied with your business and willing to share your brand organically, they might not think about referring friends without a reminder. Referral marketing creates this reminder in the form of a reward, so it maximizes organic word of mouth and incentivizes customers to refer even more people. It keeps you on top of your customers’ minds, builds longer-term relationships with your most loyal customers, and creates a healthy base of new customers.

Why does referral marketing work?

A referral marketing program gives you a structured and sustainable flow of attracting new customers. When everything comes together – your customers are happy, your incentives are attractive, and your program is well-promoted – your referral marketing strategy is primed for success. 74% of customers say referrals have influenced purchase decisions. And word-of-mouth referrals are estimated to drive 3x-5x more results than paid ad channels. Companies like Dropbox, Uber, Tesla and PayPal have all achieved significant results with a referral marketing strategy. Their success is proof that a strong referral marketing campaign can strengthen existing customer relationships, bring in new leads, and grow your business through trusted recommendations. Let’s review the mechanics of referral marketing to show how and why a referral marketing strategy works.

1. Builds social proof

People choose their actions based on others’ opinions more often than you realize. What products to use, where to shop, what to eat, and even what shows to watch on TV – these are all questions people answer by looking at others. (This is why positive customer reviews and testimonials are so important, especially in online shopping where people can’t physically try the product.) And if everyone’s gravitating toward a particular brand, people will naturally assume it’s the right brand for them too. Referrals are one of the building blocks of social proof. They help prime potential customers, which leads to faster purchases based on trust.

2. Uses social currency

People are always willing to share something that will make them look good or cool – they’re willing to “spend” their social currency on a brand, product, or content piece if they think it will boost their reputation. They will only use their social currency to recommend brands they think others will also like. So, if they recommend you, this already places your brand in a good light (it’s safe to say a person wouldn’t spend their social currency on a brand that makes them look bad.) And since your brand is being recommended by a trusted source (someone they already know), referral marketing works to build both your brand and their social currency.

3. Hits your target market

No one is going to refer every single one of their friends to you – they’ll only refer those who actually need or may be interested in your product. Even if someone shares their referral link on social media, only their like-minded friends will be the ones who click. This gives referral marketing the added benefit of having a natural filter. Only the people most likely to become customers are referred to your business.

What are the benefits of referral marketing?

We may be a little biased, but the benefits of referral marketing are incredible. While it usually takes some time, building relationships and trust with your existing customer base is well worth the wait.

Here are a few of our favorite benefits:

1. Empowers word of mouth

Referral marketing enables scalable word of mouth to happen. Because you are encouraging your biggest brand advocates to recommend you to others, a referral marketing campaign puts you in front of a large pool of people you might not otherwise have access to. With an automated referral and reward system in place, you’re able to turn word-of-mouth marketing into a channel and generate even more brand awareness.

2. Grows a targeted audience

Most of the time, a business is brought up in conversation because someone is discussing a new brand or product they found. This puts the business in front of high quality and targeted leads, which is a goal for most marketers. This is more or less what happens in referral marketing. Your current customers share your brand to their friends and family members, already filtering the people they think would benefit from your products and services. And because these potential new customers hear about you from a source they trust, they’re more inclined to give your brand a try. 3. Extends your business reach through a paid, owned, and earned media channel A referral marketing program is owned media, which makes it an authentic channel to interact and engage with your customers. Not only is it a marketing channel you have complete control over, your referral program allows you to scale quickly because every new customer can lead to multiple sales. Referrals are also earned media at their roots, as your customers choose to promote you. And when you reward customers for sharing, a referral marketing program counts as paid media, too. Thus, you’ll enjoy the benefits of paid, owned, and earned media.

4. Increases loyal customers

Referrals who turn into new customers often end up becoming some of your most loyal advocates. From the first time they hear of you (from a friend), you’re already placed in a good light. And if you offer dual-sided rewards – meaning the new customer gets a reward, too – the odds of them being a satisfied customer are continuing to stack in your favor. The stronger loyalty of referred customers means that these customers have a higher overall customer retention rate, and a higher customer lifetime value – 16% higher than that of other customers. Emails, social media, and customer support can all tie into referral marketing. For example, you may already send email blasts or share content on social media. Referral marketing gives you another reason to share on these platforms and communicate with your customers – and not only to invite customers to join your program. You can also engage with existing referral program members by giving them shout-outs on social media, and showing appreciation for their support. A little public praise can be the exact engagement a customer needs in order to keep referring.

6. Builds a cycle of sharing

One especially powerful feature of referral marketing is that it has the potential to create a cycle of sharing. Previously referred customers are four times more likely to refer their own friends, in part because they want to pay it forward. In turn, these friends are likely to refer their own peers, possibly kicking off a continuous cycle of sharing.

7. Creates a cost-effective marketing strategy

Traditional marketing can take a lot of time and get very expensive. Referral marketing, on the other hand, is an inexpensive way to market your brand and get the word out there relatively quickly. Because you’re inviting existing customers to help promote you, you’re making the most of relationships you’ve already built. And once your referral program is up and running, it functions as a performance marketing channel (as you only pay when you see results). After the initial setup costs, you only have to pay out rewards when you get a new customer.

What businesses should use referral strategies?

Referral marketing can work well for businesses in any industry, whether you run an ecommerce business, a B2B, a SaaS company, a subscription service, or even a bank. Of course, not every business is ready for a referral marketing program. Here are some easy ways to tell whether your business is a good fit for a referral marketing strategy:

1. You have established social proof

Referrals are only effective if you have something worth referring in the first place. This means you have positive customer reviews, glowing testimonials, organic word of mouth, and other forms of recognition. By showing that your existing customers love you, you’re using the power of social proof to encourage others to try you too.

2. You offer a great product and strong customer service

It makes sense: If you don’t offer something that solves a problem or meets a need, or if your product is poorly made, you won’t get good word of mouth. Products that do something unique or unexpected, or that accomplish a task significantly better than competitors, generate the most buzz. The same goes for your customer service – you’ll need to offer a top-notch customer experience before people will recommend you. No matter how great the incentive, your referral marketing plan will have a hard time scaling in the long run if people realize your product, or your customer experience, doesn’t meet their expectations.

3. You’re active on social media

More and more customers are turning to social media to follow the brands they like, ask questions, and interact with other customers. If you want to connect with your best customers and ask them to share you, you have to be where they are. Social media also gives you a great platform to share quick posts, behind-the-scenes stories, and user-generated content.

4. You have a base of loyal customers

Referral marketing starts with your most loyal customers, fans, and brand ambassadors. Since they already use and love your products, they are the most likely to refer others (maybe they do this already!). Plus, the rewards that are baked into referral programs are a great way to show your appreciation for their support.

5. You have a good reason for consumers to refer you

No, we’re not talking about rewards, although that definitely helps. Aside from offering incentives, your brand should also offer something of value. For example, you may offer an easy way to build a website, or healthy meals in 30 minutes. A compelling product story or brand story, such as why a product was created or the journeys and challenges involved in development, might also establish your brand as valuable (like how Browndages was the first to create bandages that blend in with darker skin tones). And if you offer a unique experience that people already can’t help but share? Even better. This is the value proposition you bring to customers and referrals, and should be established before launching any marketing campaign. It should be easy for customers to both grasp and concisely share with others.

10 best referral marketing strategies

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While the perfect referral marketing program depends on your business and market, there are a few best practices that can guide the way and optimize your referral experience. Here are the referral marketing strategies we find most valuable:

1. Know when and how to ask for referrals

Referrals don’t just happen on their own. Sure, you can get some organic word of mouth just by providing great products or services. But for a steady source you can rely on, you’ll need to ask for referrals. Asking when customers are happiest with your products or services, and when your brand is already top-of-mind, is best. If a customer has recently left a positive review or raved about you on social media, that’s a great time for the ask, as they’ve already shown their willingness to share you publicly. Right after a purchase (especially a repeat purchase or a renewal) is another great time to ask for referrals. So take advantage of your thank you page or transactional emails to promote sharing. It’s also good practice to ask for referrals whenever a customer gives you direct positive feedback.

2. Go beyond customer expectations

Referral marketing relies on happy customers. Most customers have come to expect good products and friendly customer service. To really stand out, you have to find ways to exceed your customers’ expectations. For example, you can send a surprise gift on their birthday, upgrade their plan for a month, or perform an act of kindness in a time of need. These small tokens of appreciation are a great way to make your customers happy and encourage them to refer their friends.

3. Create community around your brand

Creating community is one way to offer value, keep your brand top of mind, and provide customers a reason to share. You can foster community around your brand in several ways. You could produce compelling social media or blog content that fosters lots of comments and conversation. Or, try different prompts and contests to encourage customers to share user-generated content featuring your products. You might even establish an online group or forum where customers can trade tips for using your products (or come up with different ways your product can be used, like LEGO has done with its LEGO Ideas site). All of this will increase customers’ investment in your brand – and encourage them to invite friends to join the community.

4. Offer strategic referral incentives

Even if customers like your brand, that might not be enough for them to actively refer others. What might help? A referral incentive can do the trick and get people talking. And the incentive doesn’t have to cost a lot – or be paid in cash. You can offer free early access to your new products, an exclusive invite to your next webinar, store credits for a future purchase, or discount coupons. Or, you could offer some branded swag, as newsletter The Hustle does – they bought their referral program swag in bulk, so it’s especially cost-effective. Content and experiences can also work for rewards, if they feel exclusive enough. With a little creativity, you’ll find the perfect reward that fits your budget and your business. If people purchase from you frequently, tie the rewards back to your business with store credits, discounts, or free products. If you offer products that people don’t purchase often (like cars or mattresses), cash, experiences, and tangible rewards will work best. If your business operates on a subscription model, consider discounts on subscriptions, a free month, or upgrades. How to decide on the best referral reward? Think about how often people purchase your products or services. You’ll also need to consider if your customers and their friends will get rewarded, in what’s called a double-sided referral scheme. Customers may be more motivated to refer if they get something for themselves and give something for their friends. And rewarding the referred friend motivates them to make their first purchase.

5. Tap into social media

We live in a social media crazy world.

The average internet user spends up to 145 minutes on social media every day – that’s almost two and a half hours of daily browsing and sharing. And a study by Nielsen reveals that 60% of people learn about a specific brand or retailer from a social networking site. Why not use this to your advantage? Many referral marketing campaigns are shared on social media every single day, and these posts reach many sets of eyes all at once. If you make it easy for existing customers to share your brand on social media, you can increase your chances of being seen by potential customers. Plus, if someone sees a referral post and is interested, they may share with their own friends, possibly kicking off a cycle of viral sharing. Looking to leverage social media in your referral program? Here are some ways to maximize your social media referral marketing

6. Use email marketing to promote referrals

Email is a little more personal and reliable than social media. It goes straight to the recipient. So, sending out emails is an effective practice to promote your referral program and its rewards, and entice existing customers to share. Plus, referral marketing fits right into your other existing marketing campaigns. A quick referral message can easily be added into any emails you’re already sending out. For example, you can add a referral link to a customer’s thank you confirmation email, or place a small banner in your next company newsletter. You could also ask for referrals when you ask for reviews, like mattress company Casper did. A quick link in your email signature or a simple CTA at the bottom of your newsletter can also work really well as a form of referral messaging. It helps remind people about your program, without being too over the top.

7. Make it easy for people to refer

Referral marketing is supposed to be easy. If someone has to complete a huge checklist before they can send a referral (or even to join your program), they likely won’t. Make things easy for them and integrate referral marketing automation into your program. Make sure that they can share your brand in as few steps as possible. Breaking things down into three steps, like Digital Ocean does, is a great way to show how easy referring can be. It’s also best to include multiple ways for customers to refer their friends (including via email and social media), like Freshly does.

8. Use referral links

Referral links are key to creating a successful referral program. They’re a super easy way for customers to send their friends to your website, via any channel, since they can be copied and pasted anywhere. You can easily attach rewards for both the referrer and their friend to the link, and activate these rewards when the friend makes their first purchase. Plus, referral links are unique to each customer. They trace every referral back to the person who made it, so it’s easy for your brand to see who made the referral and give them the earned reward. If you use referral marketing software, generating unique, trackable referral links is easy and requires no coding.

9. Consider other types of referral programs

Although customer referral programs are a reliable word of mouth engine, they’re not the only referral marketing program available. You might consider running one alongside other types of referral marketing programs. For instance, you might also run an employee referral program, which encourages employees to refer your business to their network. Or, you might create an influencer or ambassador program, which trains and mobilizes an exclusive group of customers to share your brand as your representatives.

10. Streamline your referral program with referral software

One of the easiest ways to incorporate all of these best referral marketing strategies is to launch a referral program that you’ve created with referral software. Referral software makes it easy to design a trackable referral experience, distribute referral links and instantly issue rewards for successful referrals. The right software also automates engagement reminders, so customers are nudged to send more referrals at the right times. And thanks to robust data, you’ll always know how well your referral marketing program is performing, so you can multiply what works and refine the areas that need improvement.

Referral strategies by industry

The type of business you run also plays a role in your referral marketing plan. Here are some detailed bonus strategies tailored for businesses in different industries, to help further increase your customer referrals.

Referral marketing for B2C ecommerce

It’s common for B2C ecommerce businesses to use referral marketing and reward programs as a way to increase customer acquisition. Although the incentives for B2C referral programs are relatively low in value (given their lower profit margins), they’re still effective at converting referred leads into customers. Why does referral marketing work for ecommerce? Most stores sell a wide range of items at a range of different prices. So even if a referral reward is only $5-$10 or 10% off the next purchase, it can be worth the effort if the average product is below $50. Let’s look at a referral marketing example from ColourPop, a B2C company that sells wallet-friendly beauty products. ColourPop’s refer-a-friend program is simple to understand and use. Just a few clicks, and customers are ready to share. And their “Give 15%, Get 15%” offer works because their products are fairly affordable (a tube of lip gloss is $8 and face powder is $10).

Referral marketing for service businesses

You’ve probably seen your fair share of referral programs for service businesses. (Think of hair salons, food delivery, fitness trainers, and the like.) This is because most people choose services based on recommendations. Since service businesses rely on regular customers, it’s common to see referral programs with a tiered reward system or different reward levels. For example, a hair stylist may give customers $10 for every successful referral. Then, once the customer has made five successful referrals, they start earning 25% off their next service. Or a landscaping service can offer customers a small reward for every referral who requests a quote. Then, the customer gets another larger reward if the referral ends up as a sale.

Referral strategies for small businesses and startups

Small businesses and startups often don’t have the time, money, or manpower to run big referral campaigns. They can, however, use good old fashioned word of mouth. Word of mouth and referral marketing are great ways to grow a small business without going over budget. Oftentimes, customers will recommend small businesses without any reward. They simply like the owner, product, or service being offered. But if you want to grow your word of mouth as a channel, consider starting a formal small business referral program so you can show your appreciation to your loyal customers. Even a personal thank you email or note can do the trick! Take a cue from Dragon Gym. The gym thanks loyal students for taking classes, and rewards them with money towards tuition when friends they bring in start taking classes themselves. Bring in five friends who start taking classes in the same year, and a student receives an entire year of free membership! No, you don’t have to use a reward that high in value to incentivize small business customers to make referrals. But directly tying your reward back to your business (like Dragon Gym does) works especially well if your business is small.

B2B referral marketing strategies

A B2B referral program is usually more structured than other customer referral programs. Not only are B2B sales cycles generally longer than B2C sales, the motivations of a business are different from individual customers. For example, offering a discount or store credit won’t appeal to someone if they’re not the ones paying the bill. (B2B referral programs are sometimes referred to as affiliate marketing programs, partner programs, or even reseller programs.) Here are some best practices if you’re planning to run a B2B referral marketing program:

1. Provide an easy way to send referrals

This is important for all referral marketing, but especially for B2B referral programs. Businesses have a job to do – one that doesn’t involve sending referrals to your business. So, keep your referral process as simple as possible. If they have to provide you with a ton of information or perform too many steps, they likely won’t refer at all.

2. Create a clear agreement

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As with all business agreements, it’s important to be clear on all details. The last thing you want is to run a B2B referral program that’s confusing and disorganized. Be sure all referral partner agreements are understood by all parties and mutually beneficial.

3. Make the most of automation

It’s likely that your B2B referral program is just one campaign your business is running. So the more streamlined you can make your program, the more likely you’ll be able to stick with it. Plus, by using trusted referral software or other marketing tools, it won’t be as difficult to track how the program is doing.

4. Update your business website

Most people will do a little research before getting in touch with your business. If you don’t have a nice website or landing page, you’re going to miss out on a lot of potential leads and partners. The same thing goes for business websites that don’t look professional or trustworthy. Other sites to consider updating and leveraging are third-party review sites. We all know reviews and recommendations go a long way in building (or breaking!) a business.

5. Give and you shall receive

In the B2B space, you may need to give a referral in order to get a referral. Referral marketing works because it offers mutual benefits. If you show initiative first, others are more likely to follow your lead.

Referral strategies for SaaS businesses

Whether they’re B2C or B2B, SaaS companies can also benefit greatly from referral marketing. Because they operate fully online, it’s easy to communicate with customers and encourage them to share referral links and codes through email, direct messaging, and social media. Take Dropbox, for example. Its referral program marketing is one of the main reasons for its global success – 3900% growth in only 15 months! By leveraging the power of existing users’ referrals, Dropbox doubled its user base every three months. Dropbox invited its members to refer others to its cloud storage service using an easy online form. Even the referral incentive – more digital storage space – was rewarded in just a few clicks! The reward provided clear value for referring (more Dropbox space = a better experience with the product = customers who are more likely to stay loyal to Dropbox).

Both referrers and newly referred customers received storage space through the program.

As a result, Dropbox users sent over 2.8 million referrals in a single month (April 2010)! Of course, the referral marketing reward and form don’t tell the whole story. Dropbox took other actions to help encourage those referrals.

The company kept improving the product based on users’ needs and feedback.

And given the reward on offer, the referral invite came at the perfect time – right after the onboarding, when customers were excited about the product. In other words, Dropbox told customers, “Thank you for trusting us for your cloud storage needs. Here’s a way to get more cloud storage from us for free!” Plus, Dropbox made it easy for customers to track the progress of their referrals, including by sending notifications whenever a referral earned them more storage space. One more piece of evidence that proves Dropbox’s referral program success? The Dropbox referral program is still active today, and continues to grow Dropbox’s user base! Today, 35% of all Dropbox users come from the referral program. That’s over 245 million users from referrals, considering their current user base is over 700 million strong. Even though your referral marketing program probably won’t cause growth that staggering, you can still take cues from Dropbox if you’re planning on using referral marketing for SaaS – or for any business – and accelerate your growth. If your business has an app, you may want to consider integrating a mobile referral program

3 more referral marketing examples with real results

Plenty of other brands have seen exceptional results with referral marketing. Even if you don’t see the same results, there’s a lot you can learn from their referral marketing strategies.

PayPal

PayPal was one of the first businesses to use a referral marketing strategy, and their program is still going strong. Their program helped them achieve an astounding yearly growth rate of over 1,650%, reach a million users in only two years, and grow to a whopping 100 million users in only six years!

What can you learn from PayPal’s referral marketing?

Sometimes, you can’t beat the simple, equal referral reward – an amount of credit for the referrer, and the same amount to the referred friend, when the friend receives their first purchase. This is known as a double-sided, reciprocal reward. Make your referral program easy to understand, so customers can start sharing right away. Tie your reward back to your brand, to motivate repeated use of your product or service. This may mean giving out credits or discounts, or awarding free products to the referrer and friend.

Make sure your rewards are motivating, but sustainable to pay out consistently.

Don’t underestimate the power of an exceptional product in driving referrals. PayPal revolutionized digital payments and was the only product like it on the market at the time.

Morning Brew

In addition to the tiered referral incentives that are available all year, the Morning Brew newsletter offers pop-up referral contests and giveaways where referrers earn drawing entries. The winners receive a MacBook laptop. Thanks in large part to their referral marketing program, Morning Brew grew their reader base from 100,000 to 1.5 million subscribers in just 18 months. Today, around 30% of their over 2.5 million subscribers come from referrals. This referral program proves that even businesses that offer free content can build up their subscriber base through referrals – without breaking the bank.

What can you learn from Morning Brew’s referral marketing?

Swag works great as a cost-effective referral reward (and gives you free promotion when your customers wear or use it). A tiered structure, where customers can earn more valuable rewards as they make more referrals, effectively encourages repeat sharing. It helps if you make it easy to track how many referrals it takes to get to the next tier, like Morning Brew does with their counter. A big-ticket reward (the ultimate work-from-home makeover!) helps mobilize super-referrers. Even the most prolific referrals have a reward to keep working towards. It helps if you promote your referral marketing program frequently and naturally, like Morning Brew does. The brand uses their emails to their advantage, by promoting the program in every issue of their email newsletter. You can use this strategy even if you don’t have a newsletter – promote your program regularly in other emails, such as sale and announcement emails. Provide multiple options for customers to make referrals, including social media, email, and a unique referral link.

Harry’s

Razor company Harry’s used referral marketing to generate buzz before their official launch. Whenever website visitors gave their email to learn more about the brand, Harry’s directed them to a referral page where they could invite their friends to sign up for email updates as well. Once someone got enough friends to sign up, they earned free Harry’s products as rewards. This referral marketing effort was a smashing success – in just a single week, Harry’s secured 85,000 valid email addresses of interested potential customers! Plus, the people who referred the most friends during prelaunch still remain some of the biggest advocates of Harry’s.

What can you learn from Harry’s referral marketing?

People love being treated like insiders – and they also love letting friends in on insider information. So, creating a pre-launch referral experience is a great way to earn social currency. Invite people to refer while your brand is top-of-mind. For Harry’s, this invitation came right after people signed up for emails. For your brand, this likely means asking for referrals on your thank-you page, right after someone makes a purchase. The strategy works especially well if you offer free products, store credits, or discounts off of their next purchase. Consider encouraging people to help friends discover something new in your messaging, like Harry’s did with the text “Don’t leave your friends behind.” Try offering new products as referral rewards. Customers will love being the first to try them, especially for free. A tiered structure, where customers can earn more valuable rewards as they make more referrals, effectively encourages repeat sharing. Keep your program description simple on the referral program page, so it’s easy for customers to understand the program and start sharing. Make sure it’s easy to tell what rewards are available. Provide multiple options for customers to make referrals, including social media, email, and a unique referral link.

Setting expectations in referral marketing

After putting time and thought into your referral marketing, it’s only natural to want immediate results. While we all want our campaigns to go viral like the examples above, we also need to be realistic. If this is your first stab at referral marketing, we recommend reading our other post on what you should expect from a referral program

1. Don’t expect to go viral

You may not have the next Dropbox referral program on your hands – and that’s okay! Your program can still be successful. Don’t let the referral numbers of other programs throw your expectations. Instead, focus on providing a standout product and a memorable customer and referral experience, and sales will naturally flow in.

2. Don’t assume customers are always thinking about you

Even the best-laid referral marketing plan still needs constant promotion.

Just because a customer likes you doesn’t mean they talk about you (or even think about you) on a regular basis. This is why you need to promote your program. Even your most loyal customers are busy with other things, and sending them a friendly referral email or message can be the reminder they need to refer others.

3. Don’t expect the program to run itself

This is slightly true. You can definitely automate your entire referral process, from creating referral codes for customers to issuing rewards. You can even set certain triggers to promote your program. But, in the end, you still have to do a little work if you want your referral marketing plan to be a success. You need to occasionally check that your program is still running smoothly. We also recommend changing your rewards and promotion strategies to align with your other marketing campaigns. If you decide to run a DIY referral marketing program, you’ll have to be even more hands on. It’s important to align referrals to your core business, check for any referral fraud (i.e., self-referrals, duplicate referrals), and make sure you keep track of every referral and reward customers right away.

4. Don’t expect a constant level of engagement

After launching your referral program, you might get a surge of new leads. Congratulations! In time, however, the number of referrals may mellow out. This is normal. Just like slow sales months, you’ll also have slow referral months. This is the perfect time to do a little pruning and testing in some areas of your referral marketing program. For example, try offering another type of reward, or promoting your program through other channels. Take note of any changes and see what works best for your business.

Start your referral marketing program

Now it’s time to start creating your referral marketing program.

The big question is: Will you build a DIY program, or use specialized software? If you have the time, patience, and ability to build your own referral marketing program, then go for it. But be warned – all the management and tracking tasks involved can quickly cause headaches once lots of referrals come rolling in. If you’d rather leave the heavy lifting and any development issues off your plate, ready-made software might be the answer. Referral software handles everything from referral tracking to analytics and reporting, and creates a smooth referral experience for everyone involved. Plus, it allows you start getting referrals to your business right away. By automating your referral marketing, you’ll be able to focus on your own business, instead of trying to add more work on for your team. If you’re interested in starting a referral program, check out our list of all the top referral marketing software to choose from.

referralrock.com - Referral Marketing Ultimate Guide [17 + Strategies for 2023]

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