How to Launch a Customer Referral Program in 6 Steps (Plus ...

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1. The reality is that although customers are generally open to giving referrals, many companies struggle to entice them to take action. “This is called the referral gap. And it can be a chasm: In a study of over 1,000 clients, 83% said they’d be comfortable providing a referral. Twelve months later, only 29% actually did.” The referral gap is one critical reason why so many businesses avoid implementing referral programs altogether.

   In Partner referral programs

2. The reality is that although customers are generally open to giving referrals, many companies struggle to entice them to take action. “This is called the referral gap. And it can be a chasm: In a study of over 1,000 clients, 83% said they’d be comfortable providing a referral. Twelve months later, only 29% actually did.” The referral gap is one critical reason why so many businesses avoid implementing referral programs altogether.

   In Referral programs and incentives

3. Requires infrastructure and effort to deliver the incentives “Will need fraud protection measures in place to ensure referrals aren’t fake” Leaderboard incentives

   In Referral fraud prevention

4. Giving away lifetime accounts can become costly if your business model depends on recurring revenue “You’ll need fraud protection measures in place to prevent fake referrals” Step 5: Grow your referral program in 3 phases

   In Referral fraud prevention

5. Incentive: Does your offer align with your business model and customer’s motivation? “Some common referral program incentives include dollar or percentage discounts; free products, product units (e.g., videos hosted, megabytes), upgrades, or time (like a week or month free); credits/points; and gift cards.” Whichever incentive you test out, it needs to align with:

   In Referral incentive models

6. Insight: Focus on value over cash “Before we discuss incentives for B2B, ecommerce, and SaaS specifically, a general rule of thumb for incentives: Wherever possible, focus on value over cash.” Most people don’t care about earning a small amount of cash. They didn’t start using your app or buying your products to make a few bucks.

   In Referral incentive models

7. Channel: How will you communicate with your customers and prospects? “Timing:When and how often should you ask for referrals?” Incentive: Does your offer align with your business model and customer’s motivation?

   In Referral request frequency

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