How to Offer Referral Rewards That Motivate Customers to Share

How to Offer Referral Rewards

While referral marketing programs can be highly effective, the types of referral rewards you offer to motivate and thank your customers can significantly impact your program’s success. If the offer isn’t compelling, your customers and advocates won’t spread the word, and your program will fail.

Below are the best practices to ensure the referral rewards you offer are on target with what your audience cares about.

1. Know Your Audience

You can’t motivate brand advocates to refer you to others unless you understand what makes them take action. Would they prefer a $ off reward they can use on your site or an e-gift card they can use somewhere else?

It may take a little research to uncover the answers to your questions. Consider sending surveys to your customers to better understand the types of offers that will motivate them to spread the word.

2. Give Them Options

For your rewards, a one size fits all approach may not work for your referral marketing program. What motivates one customer to tell her friends about you won’t compel another to lift a finger.

Make everyone happy by offering a curated gallery of referral rewards they can choose from. (By the way, our new integration with Rybbon lets you do just that.)

Letting your customers select, for example, an Amazon, Visa, or Sephora e-gift card ensures that you offer what each and every advocate wants and that you motivate them to get others to buy from you. For the charity-minded influencers, providing the option to donate their reward can create goodwill toward your program and brand.

3. Calculate What You Can Afford to Offer

But how much is enough to motivate influencers? How much is too much? It may take some testing to find the perfect balance between investment and results. But start by understanding what the average customer lifetime value is for your brand. If that value is high and there’s a good chance that a new customer will be back to buy from you again and again, you can afford to offer higher-valued referral rewards.

If a brand advocate refers a customer to you who will, over the course of the relationship, spend $5,000 with you, offering a $25-50 e-gift card reward is a mere drop in the bucket. Calculating your CLV (Customer Lifetime Value) will help you determine what incentive is worth the investment, even if every customer doesn’t end up spending that much over time. And keep in mind, every new customer you attract through your referral program may also refer more business to you!

4. Pay Attention to Results

You’ve got the data built right into Talkable and our rewards partner, Rybbon, to understand exactly which rewards attracted the most advocates, so use it to your benefit. You can tweak your curated gallery and measure results against your benchmark until you find that sweet spot that maximizes the number of referrals you’re getting.

Putting effort into the referral rewards you offer can pay off in a big way when you see an uptick in the number of referrals you get!

Jignesh Shah is the CEO of Rybbon, a digital gifting platform that helps marketers use incentives, rewards, and donations in their campaigns. Jignesh has been building and marketing products for over 18 years at start-ups and enterprises and was previously the CMO at Metalogix and Vice President at Software AG/webMethods.