How to Build a Customer Referral Program

When we want to find the next show to binge-watch on Netflix, a new coffee place, or a new book to read, we all turn to our friends, don’t we? Before doing our research, we usually ask our closest ones for recommendations that come with a high level of trust!

This is precisely why many businesses and companies have referral programs. They know word-of-mouth marketing is still a powerful marketing strategy to attract new customers and increase sales. Plus, it doesn’t cost much, so it’s ideal for almost any business.

Whether you’re a startup or a big company, offering a referral program can help you reach a bigger audience and increase your sales without doing anything. Well, the only thing you need to do is to create the program. The question is, how to build a successful customer referral program?

Before we explain what you need to create one, it’s essential to understand what they are and how they work. We’ll also show you a few examples of some of the best referral programs on the market to inspire you, as well as a few ideas to ensure the success of your program.

What Is a Referral Program?

A referral program is a marketing strategy that encourages current customers to refer new customers to a business. They usually offer incentives or rewards to customers who successfully refer new customers.

The rewards can come in many forms, such as discounts, cash rewards, free products or services, or loyalty points. A referral program aims to tap into the power of word-of-mouth marketing, where satisfied customers spread the word about a business to their friends, family, and colleagues.

This marketing strategy can be a highly effective way for businesses to acquire new customers because potential customers are more likely to trust recommendations from people they know and respect than traditional advertising.

Moreover, they are cost-effective because businesses only need to pay rewards when a new customer is acquired through a referral rather than paying for advertising that may or may not result in new customers.

Benefits of Customer Referral Programs

Having an effective customer referral program can be beneficial in many ways. For starters, letting your customers do the marketing for you allows you to focus on growing your business.

Here are the key benefits of referral programs:

• Attracting new customers

Referral programs can help businesses attract new customers through word-of-mouth marketing. This is especially valuable because potential customers are more likely to trust recommendations from people they know and respect.

• Cost-effective marketing

Referral programs can be a cost-effective way to acquire new customers compared to other digital marketing tactics. Businesses only need to pay rewards when a new customer is acquired through a referral rather than paying for advertising that may or may not result in new customers.

• Improved customer loyalty

Referral programs can improve customer loyalty by incentivizing current customers to continue doing business with the company and refer their friends and family.

• Increased brand awareness

Referral programs can increase brand awareness by encouraging satisfied customers to share their positive experiences with others. This can lead to increased credibility and visibility for the business.

How Does a Referral Program Work?

A referral program works by incentivizing current customers to refer new customers to a business, with the goal of increasing their customer base and improving customer loyalty.

Current customers are notified about the referral program through various marketing channels like email, social media, or the company’s website. Those who want to participate in the referral program share a unique referral link or code with their friends, family, and colleagues. The link or code identifies the customer as the referrer.

When a new customer uses the referral link or code to make a purchase or sign up for a service, the business tracks the referral and attributes the sale to the referrer. The referrer receives the reward specified in the referral program guidelines. Rewards may include discounts, cash rewards, free products or services, or loyalty points.

The new customer may also receive a reward, such as a discount on their first purchase or a free trial of the service. The business continues to provide high-quality products or services to both the referrer and the new customer to turn them into long-term, loyal customers.

Full Examples Review

Now that you know the benefits of customer referral programs and how they work, it’s time to look at some of the most successful programs out there.

1. Pawns.app

Pawns.app is a bandwidth-sharing and survey site or app that gives people a chance to earn some side money in their spare time. The company has a great referral program that rewards both existing customers and new ones who join the app.

As a customer, your referrals get a $1 bonus as soon as they register on Pawns.app, which is a great way to attract them. You, on the other hand, get 10% of their payouts for life. So as long as your referrals keep using the app to share their unused bandwidth or take paid online surveys, you’ll get your share. 

Recommending Pawns.app to your friends or family as an easy way to make some extra money is a nice way to ensure a lifetime passive income for you. Plus, the company has you covered when it comes to promotional assets so you can attract more referrals.

• Commission rate – 10% of the referrals’ payouts for life.
• Getting paid – you’re eligible for payouts 30 days after your referrals join and start using Pawns.app.
• Payment methods – PayPal, crypto, banks, and more.

2. MarketAgent

MarketAgent is a legit survey platform that allows you to take surveys for points that can then be redeemed for cash. It’s a nice way to make some passive income, so you can easily recommend it to your friends, family, or co-workers.

As part of the referral program, you can earn 150 points for each new referral that uses your unique link to sign up on the platform. To give you an idea of how much this is, 100 points equal around $1.20, so 150 points are probably worth around $.1.80.

MarketAgent’s free referral program allows anyone older than 13 to join it. It also provides promotional banners that will help you attract more referrals. But there’s a catch – your referral has to complete at least one survey so you can get your bonus, which is fair enough.

• Commission rate – around $1.20 per referral once they complete one survey.
• Getting paid – N/A
• Payment methods – Skrill and PayPal, after reaching the minimum payout limit of 200 points.

3. OnePoll

OnePoll is another survey site that lets people in the US and UK earn some money on the side by completing online surveys. It may not offer much, but it’s still a better way to use your free time than scrolling on your social media. If you decide to join its referral program, you can do it for free.

Whenever some of your friends or family members use your referral link to join OnePoll, you’ll get $0.50. There’s a chance to get a bonus if your referral reaches a specific earning milestone. Anyone that makes $20 will bring you a $1 bonus, and those who reach $40, which is not easy, will bring you a bonus worth $2.50.

Overall, the more active your referrals are, the more earnings for you. However, the program doesn’t allow you to invite more than 15 people per month, so it’s a bit limiting.

• Commission rate – $0.50 per sign-up, plus bonuses.
• Getting paid – you can redeem your earnings once you reach the minimum payout threshold of $40 or £40.
• Payment methods – PayPal for US and UK users, and check only for UK users.

4. Toluna

Toluna is one of the most popular survey platforms that gives you rewards for spending your time completing online surveys. Every time you complete a survey, the platform will give you points which can be exchanged for vouchers or cash.

Joining Toluna’s referral program is a good idea if people close to you want to make some side cash in their free time. Whenever someone uses your referral link to register on Toluna, you earn 500 points which are worth around $1.6.

Keep in mind that you can only refer up to ten new users on the survey platform per month. Toluna tends to check all referrals to ensure they are real people.

• Commission rate – 500 Toluna points or around $1.6 per sign-up.
• Getting paid – N/A.
• Payment methods – PayPal.

5. PrizeRebel

PrizeRebel is a well-established survey platform that has provided people with an opportunity to earn passive income for over 15 years. The platform uses a point system, so whenever you complete a survey, you earn points that can later be redeemed for gift cards or cash.

Recommending it to your friends and family aged 18 and over can help you increase your earnings while you sleep. You can share your referral link on any platform you want and get anywhere between 15% and 30% of your referrals’ cash rewards as long as they are active.

If you’re a member of the Bronze level, you get 15%. The percentage will increase to 25% when you reach the Gold level, and 30% at Platinum. To reach higher referral rates, you need to obtain a specific number of points.

• Commission rate – 15% to 30% of your referrals’ payouts.
• Getting paid – N/A
• Payment methods – PayPal or gift cards.

6. Fiverr

As one of the largest online marketplaces for a wide range of freelance services, Fiverr is popular in the freelance and business communities. This means you can recommend it to anyone in web design, content writing, graphics, and similar sectors.

So if you have friends and family you think can benefit from Fiverr, you can join its referral program and get a unique referral link to share by email or social media. Every time someone registers on the platform using your link, you earn 10% of their first order amount, up to $100. Your referral also gets a 10% discount on their first purchase, so it’s a win-win for everyone.

• Commission rate – up to $100 per order.
• Getting paid – N/A.
• Payment methods – PayPal, bank account, or Payoneer.

How Do I Create a Referral Program?

By now, you’ve probably realized the importance of having a referral program for your business. Here are the steps you can follow to create one:

• Set your goals and determine your rewards

Determine what you want to achieve with your referral program, whether it is to increase sales, grow your customer base, or boost brand awareness. Decide on the type of reward you want to offer to customers who refer new customers, such as discounts, free products, or cash rewards.

• Create a referral program landing page

Create a dedicated landing page for your referral program that outlines the benefits and rewards of participating. Include instructions on how to refer friends and family and any terms and conditions that apply. And don’t forget to tell them that you only need people interested in your product, not just any friend or family member.

• Choose a referral tracking system

Choose a referral tracking system that allows you to track and monitor referrals. This will make it easier to manage your program and reward customers.

• Promote your referral program

Promote your referral program through your website, social media channels, email marketing campaigns, and other advertising channels to encourage customers to refer new customers.

• Monitor and measure your results

Monitor and measure the success of your referral program regularly. Analyze the number of referrals, the conversion rate, and the return on investment (ROI) to determine whether your program is working and make any necessary adjustments.

• Say thank you and follow up on referrals quickly

Don’t forget to thank your customers for bringing new customers to your business. Once you land a solid deal, try to make a great impression ASAP so you can close the deal.

Customer Referral Program Ideas

Now that you know the basics of building a referral program, let’s see how you can bolster its success.

• A surprise gift

Surprise gifts can keep your customers excited and ensure they refer again and again. You can use your excess or under-purchased products to reward them or offer a service-based mystery box if you’re a service-based business.

• Social gifting

The reason why social gifting is so effective is that people like to give and get something in return. So, you can offer them a chance to share a gift coupon with their friends. If their friends redeem the coupons, they can get their own reward.

• Giveaways or contests

Host a giveaway or contest for customers who refer new customers. For example, customers can be entered into a drawing to win a prize for each successful referral they make.

• Tiered rewards

Offer tiered rewards for customers who refer multiple new customers. For example, customers can earn a small reward for their first referral, a larger reward for their second referral, and so on.

• Points-based system

Create a points-based system where customers earn points for each successful referral. They can then redeem these points for discounts or other rewards.

Conclusion

Having a customer referral program is one of the best and most cost-effective ways to get more traffic, leads, and customers to your business. Plus, it’s an excellent way to reward your existing customers for recommending you to their friends and family.

As long as you follow our advice on building a referral program and implement some of our ideas to ensure its success, you can expect more sales and higher ROI.

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