It looks like a simple, straightforward proposition: incentivize the customers – who love your brand – to drive in new customers. It’s a win-win situation, right? But not necessarily. For example, Worldwide101, a remote virtual assistant platform, stated that their Referral program failed not once, but thrice — undermining their brand value while wasting both time and effort.
Their experience isn’t uncommon: businesses of all sizes have a hard time creating referral programs that work. While they focus on every little aspect, they forget to pay attention to the core of it, which is referral rewards and incentives.
The psychology of referral rewards is rooted in the concept of social influence and motivation. People are social creatures that are influenced by the opinions and actions of others in their social network. Referral rewards tap into this social influence by providing an incentive for individuals to share their positive experiences with others.
To help you make the most of this referral marketing strategy, we have put together a detailed guide that explains the importance of referral incentives, their significance, best practices, Reward ideas for customers, employees, and channel partners, and more.
What are referral rewards?
Referral incentives can take many forms, including cash bonuses, discounts, free products or services, loyalty points, contest entries, exclusive access to products or events, and charitable donations. The goal of referral incentives is to motivate people to refer others by offering a tangible reward or benefit for their effort.
Referral incentives can benefit both the referrer and the person being referred. The referrer receives a reward for their effort, which can increase their loyalty and engagement with the brand. The person being referred may receive a discount or other incentive to try the product or service, which can increase their likelihood of making a purchase and becoming a loyal customer.
How referral rewards drive engagement?
Referral incentives can be a powerful tool to drive engagement, as they motivate existing users to bring in new users and increase the overall user base.
Here are a few ways incorporating the right referral incentives can drive engagement:
