Usually, setting up a referral program and choosing the right referral programs for your business can seem difficult. Customers ask all the time whether it’s better to offer percentage discounts, fixed values, or percentage discounts – it depends, but we’ll help you figure it out. In this article, we’ll walk you through how to choose the right referral offers to kickstart your referral program.
How to reward customers for referrals
The sponsorship reward represents what you give to your clients for having successfully referred their friends or loved ones to your structure. It pays to hang something that is attractive enough to inspire someone to take action. We can cite:
- Species: Practical, universal, usable everywhere. We’ve found that customers are more motivated by cash – and it doesn’t even have to be a large amount
- Discount coupons: The biggest benefit of in-store referral discount coupons is customer loyalty and repeat purchases. Store coupons are more valuable when you know the customer is going to make repeat purchases.
- Free Month Subscription: With more and more businesses moving to a subscription model, a free month is also a great deal for referral rewards and friend bonuses.
- Personalized rewards: These are a bit more complex to manage, but the idea is to offer something that is outside of the conventional sales transaction.
Calculating the incentive value of your referral program
- In case your product costs more than $ 100, offer a flat-rate discount amount
- In case your product costs less than $ 100, offer a percentage discount
- However, you must make sure that your referral bonuses do not cost more than your product.
The choice of sponsorship rewards
- If your customers are likely to make repeat purchases, give discounts.
If you are in fashion or a similar industry, where you have repeat customers who come back to buy more, you will almost certainly want to go for discounts. The reasoning is simple: your existing customer is now ready to make another purchase. Plus, he or she is likely to make a larger purchase to take advantage of the discount value. As a bonus, you now have a new customer in your system
- If your customers are unlikely to make repeat purchases, donate money.
If your product is something your customers will only buy once in a while, offering them discounts on future purchases will just annoy them – it will be too long until they can use it again. . Instead, you can opt for the cash rewards as they will always be in season.
- If you pre-order or get early access, you can give cash back.
If you’re doing a pre-order type product, you might want to give your customers cash back on their pre-order. For example, kitchen equipment start-up Mellow offered Defenders a $ 20 discount on their purchase for each new successful recommendation they made. It was a proposition that allowed enthusiastic customers to get their pre-orders for free if they referred enough people. In return Mellow not only had a bunch of new customers but also a lot of preorders.