Following in the footsteps of PayPal, many other startups launched epic referral programs to drive growth. Some other successful referral program examples include Airbnb, Starbucks, Tesla, and Evernote.
You can find (and copy) the exact referral strategies of these startups by using their templates to create your own. Take a look at these referral program examples:
Fast forward a decade, and the referral marketing trend has grown even more. Startups led the way, but now we’re seeing all kinds of businesses launching referral programs to generate more high-quality leads.
Solar companies, plumbers, yoga studios, insurance companies, education platforms, and other niche industries are joining the trend. Some even launch customer loyalty tiers, although this type of referral program idea’s success depends on the particular product or service.
There is no perfect time to launch a referral program, but the right time to start asking for referrals is when you have at least 100 people in your network to ask. This could be 100 customers, 100 fans, or 100 supporters of your business.
If you’re starting out and you don’t have any customers or fans yet, it will be hard for you to see a lift in your customer acquisition by asking 0 people to refer. This is why we suggest launching a referral program as a secondary marketing tactic. First, launch your business, wait for your product to mature in the market, and then strategize your referral program once you’ve gotten at least a bit of traction.
Waiting for your product to gain traction is crucial, but you don’t want to wait too long. It will become difficult to integrate your referral program into the marketing stack you’ve built.
But, if you have a referral program integrated into your business as your product is rising up the ranks, you can build your marketing stack around it so that everything can remain integrated and automated. Basically, all your leads (including your referrals) can flow into the same workflows.
This is yet another reason that we suggest using plug-and-play referral program software over building your own referral system from scratch. This software offers built-in integrations that come with an out-of-the-box solution.
By using automation software for your referral campaign, you’ll be able to connect your referral program directly to your CRM without writing a line of code. What a win!
Every industry is different, so it’s hard to say exactly how many referrals you could generate by launching a referral program. However, there are some benchmarks that you can use to forecast how many new customers you could potentially acquire by adding referral marketing to your overall growth strategy in 2024.
We’ve pulled data from our top-performing 1000 referral programs. Upon gathering the needed information, we then averaged the results to create this graph. Below, you can see how many referrals were generated on average, based on the number of customers that were asked to refer friends.
The three biggest factors that influence how many referrals you can generate are quite simple. Take a look below:
1. How many people can you ask for referrals?
The more loyal customers you have to ask for referrals, the higher your success rate will be. For this reason, you need to establish an excellent reputation for both your business and your product.
2. How good is your reward structure?
A great incentive means people feel comfortable promoting your business to their friends. They can say, “Hey, use my link and you’ll get 20% off on your first order on this wonderful product.”
Essentially, the person referring is getting an ego stroke because they are helping their friend, along with the fact that they will get a reward (like a store credit) if their friend makes a purchase. This kind of motivation is sure to make your referral program work.
3. How much do people trust your brand?
If you have a great business and you look after your customers, they usually will be more than happy to spread the word about your business. Basically, it’s like this: happy customers = more referrals.
On the flip side of that argument, though, is a harsh reality. If your business has a bad reputation and gets lots of complaints and negative reviews, then you probably will find out that most people won’t be comfortable referring you to their friends.
Challenges in Managing a Referral Program
Managing a referral program requires effort, but it doesn’t have to be overwhelming. With the right tools and strategy in place, you can streamline the process and make it a relatively painless task.
The amount of work required will depend on the size of your program, the complexity of your reward structure, and the level of automation you have in place. For example, if you’re manually tracking referrals and sending out rewards, it will be more time-consuming than if you have an automated system that handles everything for you.
Here are some of the critical tasks involved in managing a referral program:
1. Tracking referrals
You’ll need to keep track of who referred whom, and whether or not they completed the desired action (such as making a purchase or subscribing). This can be done manually or through automated referral program software.
Moreover, you’ll also need to track who your top referrers are, along with the reach of each of your customers’ unique referral code . This will help you know which of your customers are pushing to promote your business the most.
2. Sending out rewards
Once a referral is confirmed, you’ll need to send out a reward to the referrer. This could be a discount code, free product, or cash reward. Again, this can be done manually or through automated referral software.
If you have a large base of customers that you’re launching your referral program to, we don’t suggest doing this manually as it will take a lot of time.
3. Monitoring program performance
You’ll want to keep tabs on how your program is performing, including how many referrals are coming in, what the conversion rate is, and how much revenue each referral is generating. If you choose the right referral software, you should get referral analytics out of the box and your tracking process should be automatically set up.
4. Promoting your referral program
If you want to keep people referring over time, you’ll need to continuously promote your referral program to your customers. You can do this by installing widgets on your website so that your customers get reminded every time they log in.
If you have a business with physical stores, you can promote your referral program using posters on the wall. You do this by creating referral landing pages where people can register to join your referral program, then you create posters to print and hang up in your stores that say “Scan this QR code to refer friends!”
Also, you can consider sending once-off emails to your customer base at least every two months, re-issuing their referral links, and reminding them of the various incentives that come with the program.
How Much Does Referral Software Cost?
The cost of referral software can vary depending on the provider and the features included in the package. Some providers offer a free plan with limited features (free trial), while others charge a monthly fee that can range from $50 to $1000 or more.
Below, we’ve listed a breakdown of the top referral program software on the market right now, along with the range of pricing in their various plans. This comparison shows the review scores of real reviews from real people, across trusted review sites like G2 and Capterra.
When choosing a referral software provider, it’s important to consider the features you need and the budget you have available. Some providers offer a pay-as-you-go model based on the number of referrals or rewards issued, while others offer a flat monthly rate.
It’s also important to consider the potential ROI of your referral program. A well-executed referral program can bring in high-quality leads and increase customer loyalty, resulting in a higher ROI than the cost of the software.
Keep in mind that if you’re new to referral marketing, you need to choose software that offers great support. Chat and video support are recommended as you’ll probably have lots of questions as you get started.
Below is a feature comparison of the most popular referral software being used right now. The features being compared are those on the entry-level plan for each of these referral program software providers.
Examples of Referral Programs Built Using Referral Factory
Finfuture referral program (Finance industry)
Share your referral link with friends, inviting them to get a free financial consultation. Referrals are a great way to grow your business if it’s in the finance industry, as people are far more likely to trust a financial advisor who they know handles their friends’ money.
Optimus referral program (Education industry)
Refer a friend and get a discount on your future courses. Your referred friend will get a discount too, so it’s a win-win!
Education is the perfect industry to launch a referral program because like-minded people stick together. If you’re in marketing, you know other marketers right? If you’re learning to code, you know other junior developers right?
Angel’s Cafe referral program (Food and beverage industry)
This is a classic referral strategy: you offer a coupon to your friend if they try the service. This campaign performed extremely well because people love to offer free food to their friends! Having a great incentive was key to their winning referral strategy.
Ourbus referral program (Travel industry)
This is a classic give-and-get strategy. Share your referral link with a friend and you’ll each earn $15! We all know that people are addicted to sharing their love of travel, and this referral program leveraged that fact to its fullest.
Radius referral program (Insurance industry)
Now, this is another give-and-get campaign that took the UK by storm. In times of economic recession, people need basics more than luxuries. This is why Radius used a reward and an incentive that would encourage their customers to get involved with fuel. Give £50 of fuel and get £50 of fuel.
iKhokha (B2B SaaS)
This is a B2B referral program where businesses have the opportunity to help other business owners succeed. Business owners received a cashback reward for referring other entrepreneurs to switch to iKhoKha for all their payment processing needs. On top of that, the business they referred received a 10% discount on their card machine, plus a chance to apply for funding after three months.
The reason this was so successful is that entrepreneurs have a tight community and are very driven by helping other businesses overcome similar struggles that they have faced. This brilliant campaign gave business owners a chance to help others just like them.
Auspac Solar referral program (Solar industry)
This is a big reward for a big referral. Get $250 for every friend you refer who installs solar panels. If you’re going green to save the planet, it makes sense that you’d want your friends to join the party too.
This is why the solar energy niche is such a great industry to launch a referral program. People are naturally motivated to spread the word, and they just need to be promoted to do so.
Referral Factory referral program (B2B SaaS)
This is another classic B2B referral program where you can earn $100 for referring another business. This referral program leveraged cash as the reward and an extended free trial as the incentive. These are the most popular rewards and incentives being used in B2B referral programs.
What’s Next?
There you have it – we covered not only the step-by-step guide on how to create a referral program but also shared specific examples and best practices. Decide on what works best for you and implement it in your business.