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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.

To drive engagement, take the proper measures to determine a fair and motivating incentive. Rewards should recognize both the value of customer behavior and the effort of the action. Most customers respond to monetary compensation, including discounts, cash, free services, gift cards, and loyalty currency. Let your program reflect that you have their interests in mind.

Finding the perfect incentive takes time. Don't be afraid to test different rewards and see what drives the best results. Perhaps more important than the reward itself, however, is its delivery: Participants should be compensated in a timely manner—the sooner the better.

The Orbitz Rewards "Refer a Friend" program is an example of an initiative with clear-cut goals and an incentive that's attractive to the consumer. The program was designed to drive incremental bookings on Orbitz.com and motivate both referrals and signups. Members are invited to refer others via social channels and are given a unique ID that allows tracking all referral activity online. Orbitz Rewards uses a dual incentive: those referred receive a $25 promo code upon signup, and the referrer earns $25 in loyalty currency toward an Orbitz booking.

To expand your program's longevity, strive to keep content timely. Refresh the site design in accordance with seasonal updates and special occasions, and tie in promotional overlays when appropriate to drive participation and engagement.

2. Keep it simple: one-click sharing

Throughout each phase of a referral program, the experience should be both user-friendly and readily accessible.

Digital and social channels give marketers the ability to create one-touch referral programs. It's easier than ever for advocates to share a program socially or by email with instant access to their personal contacts across channels.

Making the referral opportunity available across multiple sharing mechanisms such as email, Facebook, and Twitter, allows your audience to join on their channel of choice and optimizes the number of potential participants.

One more best-practice: allow referrers to track their referral conversions. Activity inspires future participation and drives engagement throughout the program.

3. Dive into data: analytics and research

Hard work and thorough research are the backbone of successful campaigns.

Before launching a referral program, understand the value of a customer. When marketers define their success metrics up front, they're given the ability to determine future ROI and understand the offer value for rewards.

Similarly, brands should monitor and get to know their greatest influencers. These key figures are essential players in converting new audiences, and their efforts should be rewarded using surprise-and-delight tactics.

After each initiative, brands should take measures to learn from their program, using key insights to nurture and adapt ongoing efforts.

  • Optimize the program by learning the communication techniques, audience, and incentives that demonstrate the greatest success.
  • Determining which entry points bring the greatest number of referrals will help marketers create stronger content centered on those mediums, thus bolstering the program.
  • In addition, track which referral incentives work for different groups and types of referrals requested.

Pay attention to the metrics so you can modify your program in the future.

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By inserting a referral program into their marketing strategy, brands can encourage meaningful interactions with their customer base, strengthening ties with current consumers while converting new fans.

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ABOUT THE AUTHOR
image of Matt Kates

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

LinkedIn: Matthew Kates