How Businesses Can Improve Their Referral Programs

10/25/2022

Word-of-mouth is one of the most underrated yet effective marketing tactics today, even in the face of growing digital avenues. It’s why so many companies have a referral system or an affiliate marketing program in place. A referral system utilizes recommendations and word of mouth to grow a business’s customer base and network. An affiliate marketing program is a little more specific and is more suited for individual content creators looking to easily monetize their content via a unique affiliate link. Then, content creators make money when users purchase using that unique link.

It can be as simple as inviting your Facebook friends to download a game to get in-app purchases or adding an affiliate link in your blog post. So, it’s not surprising that affiliate marketing grew exponentially in the U.S during the pandemic, from $6.2 billion in 2018 to $9.1 billion in 2021, according to The Performance Marketing Association (PMA) and PwC. And it’s only expected to grow even more in the next few years. But just because you have a referral system in place for your business, it doesn’t mean it’s guaranteed to succeed. Referral programs only work if brands get valuable referrals and referrers get meaningful incentives to make their effort worthwhile. When done well, it can be the competitive advantage your brand has when customers are choosing which brand to go with when looking at similar products.

Components and Benefits of an Effective Referral Program

When it comes time to create a referral program for your business, the most important thing to keep in mind is simplicity. Upon looking at the page, potential customers should know exactly what they’d have to do as the referrer and what they’d gain from it. Those incentives shouldn’t only be clearly outlined, but worthwhile for customers. If customers don’t find value in your referral program, they won’t want to take part in it. Once they are part of it, open communication between everyone involved will be the key to success.

The popularity of referral and affiliate programs is largely because of how beneficial they can be for businesses. It’s much easier to generate new leads when compared to other channels. Referral programs essentially ask referrers to aid in marketing your brand and products, converting them from current customers to brand advocates. Referral programs will help increase customer engagement, conversion rate, customer loyalty, and overall brand awareness. And it’ll give your business a better idea of who your loyal customers are and how to improve their overall experience with the brand.

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