In a world teeming with social media and digital marketing campaigns, a friend's recommendation can go a long way: 27% of digital marketers report that more than 50% of new customers are obtained through referral marketing efforts, according to a Gigaom study.

To break through the media clutter and convert consumers, getting a "boost" from their current followers is a surefire way for brands to successfully expand their reach and deepen engagement.

At a basic level, digital referral programs encourage a brand's customers to tell others about the brand's offerings by providing incentives in return for making referrals.

Though many referral programs hope to raise brand awareness, initiatives are often powered by objectives that harken to more immediate company goals. Overall, 45% of digital marketers say referral programs have generated valuable new customers while 32% say referral programs have helped them capitalize on their social network base, according to the Gigaom research.

Brands looking to launch referral programs or fine-tune their current efforts must embrace best-practices that help guide audiences through three distinct phases of engagement—site development and access, effectively providing incentive and reward, and measuring in ways that optimize future efforts.

1. Show me the money: incentive and reward

Any referral program has two key parties: the referrer and the referred. Brands move from the "what's it in for me?" consideration when targeting a single consumer to a "what's in it for us?" consideration in a dual-incentive program. Before either party dedicates time to learning about the specifics of your offer, ensure the payout is worth the effort they'll invest—starting with the referrer, of course.

To catch the referrer's eye, marketers must lead with the value proposition and clearly define the rewards that both audiences will receive for their participation.

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image of Matt Kates

Matt Kates is VP of strategic services at HelloWorld, a digital marketing solutions company.

LinkedIn: Matthew Kates