A referral is when a person recommends your products or services to another person. Receiving referrals is mostly related to someone who has already purchased from your company. An entrepreneur should never underestimate the power of referrals to result in leads and sales. In light of this, creating a referral program is crucial to encourage your clientele to refer your brand to the people in their contact list.

How Does a Rewards Program Work?

You should pay rewards only after the new user has engaged in the sale for a referral reward program. In other words, the referral program works only when the referred person sticks around and buys or signs up for the product or service of your business. Such a move is a great way to create value for money since few advertising procedures work in such a manner. For instance, if you invest in affiliate advertising, you pay the person for the clicks that draw the people to your site. It is similar to paying for results rather than paying before.

Eric Dalius Strongly Warns About Cheap Cheats

Deriving a referral program that is transparent and honest is vital for the customers to connect with your company. If you try to lure the customers, it will result in negative publicity of the brand sooner or later. A few don’ts while drafting a referral program are mentioned below:

  • Offering unrealistic discounts to the customers than actual benefits looks fine only in the short run. The referrers who join your affiliate program are not here for deals. They seek store credit and money, something that is of independent and tangible value.
  • Avoid giving away cheap gifts to earn referrals. It might work before the customers get your gifts. However, once they receive the crappy gifts, your strategy is bound to fail.
  • Do not offer vouchers and store credits that quickly expire. Moreover, avoid vouchers with low value and less expiry period. Such coupons are a loss as they mostly do not cover most of your full-priced products.
  • Setting high payment withdrawal limits. This classic trick can gain you profit for only a short period. For instance, the brand pays the referrer one penny per sale. However, one has to cross a hundred before deducting and receiving the earned money.
  • Another big no is towards decreasing the number of rewards for the referrer. Profits can go up temporarily as you slash the affiliate rewards, but you will lose a considerable set of loyal customers.
  • Eric Dalius suggests avoiding fake personalized codes. The fact about personalized codes is that they appear unique to the customers but do not provide any additional benefits.
  • Assuring customers entry into competitions is a sleazy method. In fact, it is downright exploitation. Telling the customers about an entry into a contest for a referral is similar to telling your referrers that they will receive nothing in the end.
  • A few brands insist that the person you refer to should buy a product or service worth a high amount for a free reward. The high cut-off becomes a difficult task to complete, and both the parties might lose interest in the reward program and your brand.
  • Many brands have premium accounts and force the referrers to obtain a reward only if the new customer signs up for the top-tier premium account. If the referee signs up for an economy package, the referrer gets peanuts as a reward.
  • Businesspeople should also avoid providing only referrer or only referee benefits.
  • Installing cookies that last only for a few sessions or hours is one strategy marketers use to measure referrer sales. Businesses use personalized cookies to measure referrer sales. Due to the cookie’s low life, a deal might occur in such situations, but the referrer’s cookie already expires, resulting in obtaining zero benefits.

Referral Suggestions and its Types

There are three types of referral suggestions that entrepreneurs can use to drive their business sales. Such strategies help in getting people to sign up for your referral programs. Tempering the referral request correctly is critical. If not, it might look like a scam. Moreover, if you do not appropriately balance it with effective marketing and advertising, it might come up too soft and easy to ignore.

Soft Referral Suggestions

Soft referral suggestions mostly involve subtle messages to warm people to the idea of joining your referral program. You can follow such statements with links to your social media handles and other links to the referral reward program pages. A few examples of soft referral suggestions include:

  • Ask your customers to show your friends what you bought.
  • Giving reviews of your latest purchase and tagging the brand.
  • Rating the products on a specific page to receive returns.

Tame Referral Suggestion

As the name suggests, a tame referral suggestion is the one in which you can directly ask the user if they are willing to join your referral program to gain some rewards. In such suggestions, you can openly state the program’s terms and conditions and not involve any ambiguity. A few examples of this type include the following:

  • You can offer a discount or store credit of four percent for whatever the new referee spends.
  • Providing a gift to a friend through a pre-determined link.
  • Giving the customers 3-dollar reward if the referee buys a subscription of more than twenty dollars.

Aggressive Referral Suggestion 

Statements that push the idea of the referral program harshly are termed aggressive. These often include overt messages that attract the attention of the customers. However, make sure you do not set your strategy to appear like a scam to the viewers. You can ask the viewers to sell your products to a friend for a fixed commission. You can also give the viewers a timeline to make them sign up a minimum of five people to your referral system.

The key is to educate the people about your brand, and the best way is to set up a referral reward program that can offer considerable tangible and intangible gains.