Part 2 - Design

‍“Give me six hours to chop down a tree and I will spend the first four sharpening the axe."
- Abraham Lincoln

So we’ve covered what referral marketing is and, of course, it’s hard to ignore the evidence of what it can do. By this point, you might be thinking “Ok, referral marketing sounds great in theory. But how do I create a referral program for my business in particular?”

Well, that’s what this chapter is all about. 

Once you’re done with the next few pages, you’ll have a solid idea of what your referral program could look like, the sort of rewards you might want to offer, how you’ll design the user experience for ambassadors, and how you’ll test your approach before you launch.

But before we get into the nuts and bolts of your referral marketing machine, we need to take a step back and look at the big picture...

Setting goals and expectations for your referral program

As with all great marketing campaigns, referral marketing starts with a goal. Clearly defining that goal will help you determine whether or not your campaign was successful — and to what level. 

Is your goal you get more signups? More sales? More demo or exploratory calls booked in? Think through all the details — and where you truly want or need the referrals to lead — in order to make a notable difference in your business. Setting off without a true north will have you veering off course faster than you can imagine!

And these goals need to be well defined, too. 

That’s not to say you need to be as specific as “I want to schedule 10 demo calls this week” — although that laser-focused thinking can come in handy now and then. Instead, a well defined goal could be: to increase demo calls by 10-15% over the next 6 months. As I mentioned in Part 1, referral marketing is a long term channel, so factor that into your overall expectations. 

Get specific about your incentives and parameters

After you’ve defined your end goal, think about your incentives, and what an advocate needs to do to get them. What is it you’ll specifically ask ambassadors to do to earn your rewards? Fluffy or vague action plans won’t cut it here.

Luckily, if you have a clearly defined goal, it should be pretty simple to outline the advocate’s role. For example, if your goal is to get a prospect on a demo call, your ambassadors need to get the person they are referring to fill out a form and schedule a demo. If your goal is more newsletter signups, your referrer needs to get someone to subscribe to your list, etc.

Once you have your goals in place, take a good, long, objective look at them. Is your goal realistic? If achieving your goal depends on an 75% conversion rate from your demo calls, you might need to go back to the drawing board — you’re simply asking too much. 

And honestly, don’t be afraid to go back to the drawing board during this phase. Preparation is essential for getting your referral marketing right. 80% of the work is done upfront when designing your program — the other 20% is just implementing it and tweaking it. 

This phase of building your referral marketing program is a bit like building a house. You may have to take some extra time creating a solid foundation and framing the walls, but once you have a working structure, all you’ll have to worry about is updating your decor now and then. 

How to choose the right rewards

Let’s pause for a moment to redefine what a referral reward is.

A reward is not something you give people for referring their friends. A reward is the reason people join your referral program in the first place. It’s not some meaningful, novelty bonus; it is the beating heart of your campaign. 

And when it’s that important, you need to get it right.
So how do you identify the best rewards for your program?

Let’s look at the shared traits of all good referral marketing rewards: 

1. They are highly attractive to your target audience: No one is going to go out of their way to recommend you for a mediocre reward. It defeats the purpose of having a referral program at all, and may actually cause you to lose customers if they think they’re being undervalued. 
2. They are proportionate to the amount of effort required. For example, don't ask people to refer 10 friends for a $5 discount. It won’t be worth their time and could come off a bit offensive. In referral marketing, it's better to be generous than reasonable. Trust me, it will pay off.
3. They are obtainable. Ever stalled on something in your to-do list over and over and over again, until you just forgot about it altogether? Usually that’s because the task is too big, or too tasking to get around to. And the same goes for your referral program. People are busy. Even if your reward nails both points 1 and 2, it will still be ignored if it requires too much of your advocates’ time. 

So those are the hard and fast rules for making a good reward. Now, let’s look at some common reward categories: 

• Company currency 
  This reward is exclusive to the company and revolves around the idea that you reward people with "more" of your product or service. A great example is Dropbox (the famous online storage company) that gives you 250MB of extra storage for each friend you refer.

• Discounts
  If you’re offering discounts, ambassadors can easily understand the value they’ll receive — and the easier the reward is to comprehend, the greater chance they’ll take part.

• Bundles
  Bundle rewards typically rely on collaborations and partnerships with other businesses. Let’s say you work in the entertainment industry, maybe you could bundle one year of Netflix free subscription, popcorn and 3 tickets to a cinema? When bundled together, rewards often look more generous as well.

• Exclusives
  Exclusives are rewards that money can’t buy. (A ticket for an invite-only dinner or a 1-to-1 coaching session with Tony Robbins, for example.)

• Free products
  ‘Free’ is a lot of people’s favorite price. If you really want ambassadors to spread your company message, free stuff is a good way to do it.

So there’s lots of choice available to you there, but sit tight for a second: you need to choose your reward type very carefully indeed — your reward approach needs to make sense with the rest of your business model. Here’s why:

Let’s say you own a software company and you want to offer a discount to your advocates. But the majority of your users are on a free plan. Will discounts really incentivize users who don’t pay a dime? No. Instead, you could offer free products like updated features or education. 

The crux of it is: no matter what kind of program you decide to run, it should offer an obvious value that’s specific to your ambassadors.

Here’s a little test. When deciding if a reward makes sense, ask yourself:
“Would I genuinely refer this product to a friend if I was offered this reward?”

Even better, if you have a good relationship with any of your clients or customers, ask them what they think about your reward ideas. Would it motivate them to tell their friends? If the answer is no, ask them what would. 

Rating your rewards: a framework + scoreboard to use

Alright, by now your mind should be whirring with loads of reward ideas. So let’s put them to the test with this easy, 2 step process:

Step 1: Write down 2 to 5 ideas for each reward category listed above (the more the better.) At this point, you don’t even need these ideas to be realistic, just think of what you’d offer in an ideal world, and let your creativity flow.

Step 2: On a scale of 1-10 (with 10 being “Nailed it!”) rate each reward idea against the following five criteria:

1. Does the reward look attractive to my target audience?
2. Does it feel proportionate to the number of referrals required?
3. Is the reward obtainable for your advocates? (if your ambassadors only need to refer a handful of friends, give it a score of 10. If they need to refer 15+, score it a 2, etc.)
4. Is it cheap?
5. Is the reward simple for you to create or fulfill?

Now, sum up the scores of the 5 criteria. If the total score is less than 38, then you need to refine or replace the reward. If the score is more than (or equal to) 38, congratulations! You have the making of a promising reward.

But there’s one more stage to go through.

You need to filter all those exciting reward ideas down, to just one.

While you might think that having a range of rewards will appeal to a wide audience, a complex system will probably do more harm than good. PayPal, Uber, Amazon Prime — all the big names have just a single reward strategy.

After all, one reward is far easier to communicate to prospective ambassadors and far easier for the company to manage.

Sure, there might be scope to introduce a secondary reward further down the line, to reinvigorate interest from lapsed advocates. But for now, at the start of your referral marketing journey, it’s time to pick a favorite.

Referral marketing is not a free channel — invest in your program

No matter which way you cut it, your rewards are going to leave you a little out of pocket. But that’s a good thing! In the same way you’d invest in ad placement, content writing, a website redesign, etc., your rewards should be seen as necessary marketing spend.

There’s no standard ‘good’ or ‘right’ budget for these types of programs. Rather, you’ll need to consider the cost of your rewards plus the cost of the software it will take to run your referral program, and weigh that against the potential business it will generate.

If the numbers look good, then go for it!

You’ll probably find you spend less on referral marketing than other forms of promotion, too — while getting the same, or more, ROI. In a referral program, your outreach is "outsourced", in large part, to existing customers. And referred customers are more likely to stick around longer and become ambassadors themselves — creating a virtuous cycle that is simply not possible with other channels. 

Customers acquired through Facebook ads don't make acquiring more customers through Facebook any easier, do they?

If you plan your rewards and incentives correctly, referral marketing will not only drive more leads, but higher quality leads as well. And that is invaluable. 

Double the reward, double the power

When designing your referral program, you should make two-sided rewards your default approach. 

You’ll be familiar with double-sided rewards, no doubt — the biggest and best referral campaigns use them, and for good reason. A two-sided reward is beneficial for both the advocate and the referral. Any "Give $10, Get $10" offer, or Dropbox's famous "Get 250MB of storage for every referral and they get the same" do this well. 

These rewards play to the ‘everybody wins’ part of our psyche and are motivational from all sides — and that’s the engagement we’re after!

(Yes, some brands do use one-sided rewards. But do they get as much uptake? Doubtful.)

The element of surprise

Customers love to feel appreciated. 

So every now and then, try to delight your ambassadors with random rewards or mini giveaways as a way of saying ‘thank you’. Not only does this nurture a positive relationship, it gently reminds them that going the extra mile will always bring a payoff from your brand. 

Design the User Experience

Ready to get going with your one reward idea? Great. 

Sticking with our home building analogy, now that you have this incredible, amazing referral marketing program framed out, the next job is bringing it to life. You need to make it super easy for potential advocates (and customers in general) to understand what you’re offering and to take part.

A great User Experience gives customers everything they need, from start to finish — making the process both enjoyable and fulfilling. A disappointing User Experience, however, can lead to confusion and disengagement.

How positive (or not) the User Experience is, depends on every single stage of the referral journey — and that’s true for both advocates and referrals alike. 

Let’s take a closer look at each audience’s experience, to see what really matters:

The Advocate’s experience

When you’re asking a customer to advocate on your behalf, you have a responsibility to make that process as easy and satisfying as possible. If they have a great time promoting your product, there’s a good chance they’ll do it again. 

When designing your advocate User Experience, ask yourself:

• How and when will your customer hear about your referral program?
• What do they have to do to take part — and how clearly is that explained? 
• When will they “win” their reward? 
• How will they know they have succeeded? 

Once you’ve got these details ironed out, it’s time to start creating...

Create a message that appeals to the head and heart

Ideally, your program should be summarized in one line (which you should use as the tagline for your program). E.g: "Invite 3 friends, get 3 months free" or "Give $10, Get $10".

Just like any advert, you want your message to stop a reader in their tracks. Maybe they see your email drop into their inbox, or your offer emblazoned across your landing page. Wherever they come across your proposition, they need to instantly understand what you’re offering (in less than 3 seconds).

Then, once it’s clear what you’re asking for and what you’re offering in return, we can lean on emotion to bring them in. Words like love, smile and friendship are all emotionally weighted and can invoke a sense of warmth from customers. 

But you can also use emotionally triggering words that evoke a sense of loss or a ‘fear of missing out’ for your program. 

For example, this email from HubSpot that indicates the customer would be doing their friends an injustice by not telling them about their software. 

And this email from FreshBooks prompts users to ‘rescue their friends from old fashion accounting’.

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Both HubSpot and FreshBooks make spreading the word look like the admirable, heroic thing! And any psychologist would tell you that’s a motivating incentive for most.

To get you started here are the 5 most popular headlines for referral programs:

• Get {{offer}} by sharing {{brand}} with friends
• Give $10, get $10
• Refer a friend. Earn {{advocate offer}}
• Give and get a free {{offer}}
• Get {{discount}} off your next purchase
  

Display your message in the right place

You may want to go on to promote your reward message on many platforms — and that’s something I’ll discuss in detail in Part 3. But before we get into all that, there’s one touchpoint you need to sort out first: your referral program landing page.‍

This page, often called “the Referral Hub page”, is the one of source of truth for your customers about your referral program.
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A great landing page should have:

1. A clear and attractive design (simple beats complex every time)
2. Clear refer-a-friend program instructions
3. A description or picture of your prizes
4. Transparent and concise terms and conditions 
5. A referral link that’s easy to copy and easy to share, via email and social media (this is super straightforward with ReferralHero, just sayin’!)

If you have the time and skills, I’d also suggest A/B testing your referral page headers, images, copy, etc. Small tweaks can increase your conversion rate significantly, leading to more signups and ultimately more referred customers. 

Empower advocates to share the message

So your excellent reward offer and incredible UX made people want to share and refer — nice! Now, you need to decide how they do so. 

You might be surprised to learn that personal communication channels have historically high conversion rates (email and WhatsApp in particular). But why?

Social media platforms like WhatsApp are 1-to-1 communication channels — here, advocates speak directly to their friends. On Twitter, LinkedIn, Facebook etc, people are just broadcasting out to the world — the communication is less personal than a direct message, and therefore less powerful.

‍Keep this key tip in mind: always make it easy for your customers to refer via 1-to-1 channels. Enable WhatsApp, email and others, or risk missing out!

The Referred Customer’s experience

While it may seem like an extra (unnecessary) step, I’d always recommend a separate, dedicated landing page designed for referred customers alone. Sending referrals to a page that’s unique to them allows you to create a more personal interaction — one that’s entirely focused on their user experience — helping to boost conversions as a result.

Think about it this way: let’s say that Mark has referred Alice to a new platform. Chances are, he’s mentioned the reward that awaits if she signs up. If Alice’s referral link directs her to the platform’s main homepage, which hosts no message related to the referral program, she could think she’s landed in the wrong place, or that Mark has got it all wrong.

In this instance, Alice might spend a minute or two looking around. But, if she can’t find what she’s looking for quickly, there’s a good possibility that she’ll bail out.‍

If, on the other hand, Alice arrives at a landing page that clearly exhibits the terms of the reward — better still, in a way that’s speaking directly to her — then she’ll know right away that she’s in the right place, and that Mark has really helped her out.‍

“Hey! Great to see you here. Since Mark referred you, you get 20% off your first order!”‍

Suddenly, Mark has really gone up in Alice’s books — as have you!

There are no distractions and no confusions. Just a really compelling reason to join. Hopefully, it’ll be so easy for Alice to sign up and make use of her reward, that she’ll take the offer without hesitation.

Here’s some things to keep in mind when designing this page:

• Keep it personal
• Keep the reward front and centre
• Make sure you talk about the product!
• Nice bold calls to action e.g Buy Now or Get $10 OFF‍

Want to see this in action? These two landing pages do it really well…

Automation emails — which emails to automate and how 

While the cogs of your referral program can be pretty hands-off once they’re up and running, that’s no excuse to leave your audience out in the cold. No matter how amazing your program is, you need to keep engagement levels up — and email’s a great way to do it. 

Better still, you can use smart automation to manage these emails for you. Here’s what I’d recommend, for existing customers and new referrals. 

Existing customers

If everything goes to plan, you’ll be wanting to convert your loyal existing customers into advocates — and email can help:

1. Send them an email to announce the launch of your referral program
   A quick caveat before we get stuck in: this isn’t an email you’ll be automating, necessarily. Instead, it’s a promotional tool you’ll line up once — when your referral program first launches.
   
   Customers already on your mailing list will receive an email celebrating the release of your referral scheme, explaining what rewards are on offer (and what they have to do to “win” them).
   
   Hopefully this email will be enough to nudge them in the right direction, and sign up to take part.
   
   

2. Schedule First Referral emails
   If they’ve never taken part in a referral program before, the first sign-up can be a real rush for advocates — and it’s one worth celebrating! The First Referral email is automatically sent to a subscriber when they successfully refer their first friend (ie: Alice signs up through Mark’s link; Mark gets the First Referral email). 
   
   Congratulate, thank them, encourage them to do it again, and remind them to keep their eyes on the prize (quite literally). For example, if they need to refer 5 friends to get 5 days free access to your platform, end your email with, “Only 4 more referrals to go!”.
   

3. Send Milestone emails when they reach a certain threshold
   The Milestone email is sent when a subscriber refers a specific number of friends (ie: 5 people).
   
   Use this email to congratulate the advocate, maybe sending a special coupon code as a surprise reward. Either way, this milestone email should encourage them to keep sharing. 

4. Use email to bring them back in, if their engagement fizzles out
   Every now and then, an advocate who was once very active, fails to refer a new customer for weeks, maybe even months. Why? It could be for any number of reasons, but a well-timed and friendly reminder might be all they need to come back in.
   

Referred customers

Chances are, referrals are pretty new to your business. As such, you want to say “hi” and “welcome”, but automated emails can be used for a lot more besides:

1. Welcome referrals with a Referred email
   The Referred email is sent to a person who has been referred (ie: Alice signs up through Mark’s link; Alice gets the Referred email). This email is normally used for two-sided referral programs (“Give $10, Get $10”) and giving away coupons of access codes. In this email, you might also want to highlight particular product offers or content — whatever it takes to welcome them into the pack. 

2. Introduce new customers to your referral program
   Arguably the very best thing about referral marketing is that it feeds itself — a new customer is referred to your brand, then they become an advocate, and introduce their friends as well. And that cycle just goes on forever!
   
   But, of course, timing is everything when it comes to asking a customer to step into the role of advocate. Act too soon, and you risk leaving a bad taste in their month. Act too late, and you might have missed the boat.
   
   I’d say, automate an email to reach their inbox one or two weeks after they first purchase from you. In this email, you’ll clearly explain what your referral program offers and what it demands of them in return.
   
   Remember: keep it simple. Summarize the proposition in one sentence, and you’ve got a much bigger chance of converting.
   

Hold up, what are automated emails anyway? And how can ReferralHero help?

Setting up automated emails, which are sent at the right time, to the right people can be tricky. 

Luckily you can take all the pressure off yourself by using ReferralHero’s suite of automated emails. Set up these emails in a couple of clicks, then sit back and let our automated system do the rest.

Now, time to test!

Again, as with typical marketing campaigns, referral marketing requires testing, testing, and testing again to make sure all of the components of your program come together beautifully. Running a trial or experiment (especially if you have a very large customer base) is definitely recommended.

As you can tell, referral marketing programs have a lot of moving parts — between the landing page, the signup form, the automation emails, and how you actually distribute your award, it can all get pretty complicated. That’s why it’s absolutely crucial to test and walk-through every single detail of a referral program before it goes live.

Impersonate the individual who will go through your entire experience (sign up, refer a friend, get engagement emails, etc) start to finish. 

In the same way that great event organizers step into their attendees' shoes and "experience" the event before it happens, troubleshooting any issues that arise before you roll out your program to your customers will ensure successful delivery.

Satisfied with all aspects of the process so far? Congratulations, you’re ready to launch.