The glue that sticks an ever-evolving business entity is customer satisfaction. Measuring the adhesiveness of this glue is another matter. The business invests on likes of review emails, open customer forum, online or offline questionnaires, webinars to gauge the level of customer satisfaction. It is difficult to get a customer to rate your products and services, getting a referral from a satisfied customer are even more difficult.


Customer referral is an aspect of the mouth of word marketing and multi-level marketing. It is a reward for your business with a satisfied customer. When you give systematic structure and incentivize direction to a customer then a referral program is created. A referral can be made through referral code, referral card or referral link. The referral program has a similar structure to an unlawful pyramid scheme. The appeal is the same. Both schemes work on the principle of network marketing. The difference is between then is in customer referral you are selling some product or service. 


Customer will do marketing for you without any of your investment. Customer will act as a non-salaried workforce that will sell a product for you. It is a cost-effective marketing strategy. It can also help to measure how much your product or service customer find useful and is happy to refer to another. Here customer acts as an advocate for your business. A satisfied customer referral is more impactful in getting the customer to your business than social media ads or a pamphlet.


A definitive referral program will help to create buzz for your business when it is new. Generic emails for an incentive for referral reward are no longer helpful. Create a vibrant strategy for a referral. Flashy pop-ups in websites, opt-in links in websites, newsletter offering or social media branding are ways to go. 


Getting a referral is not enough. Tracking of referral, date when that was made, why the referred customer does not use the referral etc is also essential to track the success or failure of your referrals. You can take emailing details of the referred customer and use email data validation/email verification to increase of verified emails list and sent a referral abandonment email when they choose not to use referral.


Why a referral works


why referral works


If statistics are to be believed customer referral holds more convincing power than well-made ads. Twenty-eight per cent of millennials don’t try products that their friends don’t approve of. Eighty-one per cent of customers are more likely to get connected with a brand that has a proper referral reward system. Not only a retail customer but business to business customers are also not immune to referral magic. The referrals have seventy per cent higher lead generation and conversion rate in B2B. The referred customers provide sixteen per cent more profit than a customer acquired from any other means.


But why would a customer place opinion of others higher than his judgment? Why people are more likely to rely on peer review and reference than a well-written article. The answer lies in social and mimetic nature of human. We want approval and respect of others. Having something in common with our family and friends, make us feel like part of kin. Like in a restaurant we want what others are having. We tend to purchase something just like what our friend has. The fear of missing out on something other, having a high opinion of, is also playing a major role.


Also Read: Customer testimonial: when to ask and how to use them


Customer referral not only boosts your sales but the customers which are newly connected to you by referral are 70 per cent likely to stay connected to your brand and refer you again. It is an acquisition channel for a loyal customer. Referred customers spend more than the average customer.​


Why would a customer refer you?


Apart from altruism why would one refer someone your brand? A satisfied customer out of care for their family and friends will refer your brand. There are many ways a company can make referral efforts worthwhile for customers. 


You can offer cash incentives or non-cash incentives. The study has shown that non-cash incentives are twenty-four per cent more effective than cash incentives. Just like the butterfly effect, small positive motivations can provide wings for your referral program. Some of these positive motivations are


positive motivation for rewards


1 Cashback 


This is the most common rewards offered by any business. Whenever a customer makes a referral you can credit store wallet with some handsome cash reward. This will get you a referral and also a customer who is referring will also stay connected to your brand. This cashback reward will be used by the customer to purchase from your store. There is no losing side in this coin flip. Apps like free charge, Google pay offer these rewards.


google pay offers

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2 Trial points 


Customer referral can be rewarded with the trial points which can be used to try out trail products. What is does is reward customer for his referral and get him to try out new products. An app like Smytten offer trial point benefits to as referral rewards. You can select a range of trial of various brands from these trial points. In this way, your trial products can also reach the customer.


shopping deal


3 Gifting


Gift receiving is exciting but gift-giving is rewarding. In this referral program, when a customer refers to any friend, he can give some gift card or trial product as a gift. The referred friend will be happy to receive a gift and the referee will get satisfaction from gifting. Try the world website has this kind of offer on their anniversary. You can also gift donations to a cause. Donation gift is a new and noble idea. The charity you choose should be in alignment with your business and customer values. If you are selling ethic wear on an e-commerce store, a donation can be made for artisan families.


4 Mystery box 


This is a relatively new concept in which a mystery box is sent to the customer as a reward for his referral. The mystery box can contain some of his wish listed item or something he regularly purchases or a complete surprise. Data mining of customer website behaviour reveals a lot about his preference. This cashback and trial are greatly rewarding buy mystery box is something personal and heartwarming. A simple thank you note can also be sent with the box. There are many business offering customize gift that can work wonder in customer engagement. Websites like shopkarls, saasquatch etc offer these sorts of rewards.


5 Exclusive access


In this when a customer refers your brand you can offer his access to exclusive products. When your site offers some sale he will be prioritized over the regular customer. You can also incentivize with an exclusive offer of discounts to the customer for a referral. Nyaaka is an e-commerce website that has an insider program. This program is for the purchase of products. You can develop the same for referrals. Exclusive talk with health and beauty experts is a unique selling point of this program.


Google map has a program for reviewing and adding pictures to landmark and restaurant. It improves Google map and customer are offered space in Google drive, free access to Google products for a month etc. In referral marketing, this reward system can be imitated.


6 Referral contests


You can also organize a contest on your website and can reward the customer with the most referral with prizes or cash reward. These contests appeal to the competitive steak of customers. The other participates can also be given consolation prizes. Many brands offer luxury tours as a reward. Freebitco website has a contest based on referral on their website.


7 Double benefits


With the above programs you are only offering benefit to a customer who refers. You can also benefit new customer being referred. This, in turn, will create a positive image in front of a new customer and he will also be encouraged to refer to new customers.


8 Free subscriptions


For referral, you can reward with free subscription of your website for a month or any period you find appropriate. Free subscription of some product can also be given. Like some food delivery app offers to refer to benefit like free lunch or dinner. Online streaming websites or magazines website can greatly benefit from it.


9 Gift cards


Customer can be rewarded with a gift card with some store credit which they can either use or give as a gift to loved ones.


10 Discount coupons


You can tie up with other brands and offer a discount to the customer as a referral reward. Most common brands that are tied up with are tours and travels, hotels, watches and saloons.


Apart from this, you can come up with many interesting ways to reward your customer. Remember to reward your referral even when it costs you. A referral is a powerful way to retain old and new customers. The loyalty of the referred customer to your brand is more than the customer reached to you with any other means. There is an already positive image of your brand in his mind. You can brainstorm for more new ideas based on above points or repack the old wine in a new box. Till then.


Happy referring.