Customer referral programs are ranked among the top drivers of sales growth. They are also a great method to expand the number of recommendations you get from existing customers. Once you encourage your customers to start talking about your brand, your customer base will grow exponentially.

With so many brands offering referral programs to customers, it is essential to set yours apart. This article will help provide some ideas for your customer referral program that can help you get the process started.

Step 1: Customer Referral Program Ideas

When it comes to ideas for designing your customer referral programs, it can feel like building a puzzle. All the pieces must fit perfectly to be successful. The main components at hand include the goals, the messaging, the incentives, and the presentation of the program.

To get going, it can be beneficial to analyze what other companies have done to go about building their referral programs to get ideas and make sure to set your customer referral program apart from all the others.

Goal Setting

Before you start constructing your customer referral program, you must ask yourself, “What am I trying to achieve with this referral program?” To develop your customer referral program strategy start by setting a couple goals, these can include:

  • Referral sales
  • Number of participants
  • Recommendations posted
  • Brand mentions

This step should not be overlooked because without a set of goals, your customer referral program is likely to lose focus and lose sight of the benefits you want it to drive for your company and customers. Once your goals are selected, you will want to identify a way to measure the progress of your customer referral program against those goals.

Two friends shopping at mall

Customer Referral Program Best Practices

When turning your ideas into a customer referral program follow these best practices to ensure a successful start to your program.

  1. Enticing – Your customer referral program needs to be enticing and stand out from other programs. This can be done by how you position your program and the rewards you offer for referrals.
  2. Passionate – Formulate messaging that showcases your business’s enthusiasm to offer such a fantastic customer referral program! Make them get excited to be a part of your program.
  3. Valuable – There’s a good chance your customers are looking for a trade for their referral; this is where the value proposition comes in. Ensure your referral programs benefits are front and center. When choosing incentives and rewards to grab your customer’s interest, you need to make sure you offer worthwhile compensation for their time.
  4. Focused – Customers only have so much time so make sure your message and what you ask of participants in your referral program are focused. Make sure you are clear on what you expect, what you’re offering them for generating referrals.
    • How the program works
    • What customers must do
    • Instructions for how to do it

Coffeeshop checkout using mobile phone

Customer Referral Rewards Program

Choosing customer referral incentives and rewards is key to persuading your customers to participate in your referral program. Customers are more inclined to give a referral when they get something out of it. Here are a few ideas for different rewards and incentives:

  • Cash
  • Charity Donation (i.e., Children’s charity)
  • Exclusive Event
  • Discount (i.e., 15% off next purchase)
  • In-store Credit (i.e., $10 off a purchase of $50 or more)
  • First Access to New Products
  • Third-party Credit (i.e., $25 Gift Card)

When deciding upon incentives for referrals, keep in mind that rewards such as discounts and in-store credit, promote future purchases and improve customer retention. In addition, according to a study done by The University of Chicago  non-cash incentives are 24% more effective at boosting performance than cash incentives. They also help you avoid wasting money that makes customer referrals unprofitable.

Unsure about what the value of incentives and rewards should be? One factor to consider is how much does your business usually spend on customer acquisitions. This value could give you an idea. One thing to watch for is too small of a reward. The last thing you want to do is to offend your customers. Remember, you are asking THEM for a favor!

Another route you could take to solve this issue is to ask your customers and participants in your referral program! Feedback is your best tool to determine if your incentives and rewards motivate your customers, which means better odds of a successful referral program.

Customer Referral Incentives Program Design

One-Sided Customer Referral Incentives

A one-sided incentive is when either the referring party (the existing customer) or the recipient (the new customer) receives the reward. In most cases, the existing customer who is referring someone else to your business will be more open to doing so when they are inventivized for doing so. On the other hand, if a new customer is offered an incentive, it will increase the chance of them pursuing a purchase with your business.

Two-Sided Customer Referral Incentives

A two-sided incentive is the most successful reward strategy to increase customer referral sales. In this situation, both the referring party and the recipient receive an incentive. These incentives don’t have to be the same. Rewarding both sides can incline both parties to join your program, which means even more success in growing your business.

Tiered Customer Referral Rewards Programs

A tiered reward structure for your customer referral program is an excellent way to motivate your customers to stay active and engage! More referrals equals more rewards for them. In exchange, participants in your referral program will receive better rewards as they refer more and more new customers.

When using this structure, keep in mind that customers enjoy instant gratification. When determining your referral reward tiers, ensure that there’s not too much of a delay before receiving the first reward. This will keep your customers engaged and more wanting to participate. By using software to track referral sales, provide tiered rewards and issue rewards in real-time you can drastically increase the performance of your customer referral program.

Step Two: Add Customer Referral Program to Your Website

Make your customer referral program easy to find! We can’t express this enough. Whether the referral is through email, social media, or a link, the referring party will want a page to reference the program and see their referrals.

No customer wants to dig to find information. You want the landing page for the program to be obvious, so customers know exactly where to go. Some items to include in your referral program page should be the application form to join, testimonials, incentives and rewards!

Referral Program Application Form

An application form is used for customers to apply to join your referral program. You want to collect data and make sure they are a good fit, but you don’t want to ask too much to push them away. Ideally the application form for your customer referral program should be integrated with a referral management software to make it easy to review, approve and onboard new applicants.

Testimonials and Social Proof

Provide social proof of the value of participating in your customer referral program. Once a customer reads how other customers earned reward and the value they received from participating, they will be more inclined to apply to join.

Three guys walking on street after shopping

Step Three: Promote Your Customer Referral Program

Last but not least, the final AND MOST CRUCIAL step of them all, promoting your customer referral program. Any business can start a customer referral program, but it’s the one who successfully markets their program who see the growth it can provide a business.

You need to make your customer referral  program known! You should market your referral program on social media, blogs, and emails.

Two tactics that work perfectly for marketing your customer referral program include advertising it on your homepage and order confirmation pages.

Add to Website Homepage

The homepage is one of the most effective ways to create awareness about your referral program.  If a customer is on your website and sees information about your customer referral program there’s a good chance they will click to learn more about it. You could even hook them by showing them the referral reward and incentives they could receive.

Add to Order Confirmation and/or Thank You Pages

The order confirmation or “thank you” page is another very effective way to market your customer referral program. At this point, your customer has ordered your product, they like your brand, and are well aware of what you have to offer. They are all buttered up and on cloud nine because of their recent purchase from you. At this moment, they will be very likely to be willing to refer their friends to your business (and what they bought too!).

Other Customer Referral Program Marketing Ideas:

  • Ad Space
  • Newsletters
  • Direct Messages
  • Press Releases
  • Invoices
  • Flyers

Step Three: Monitor Customer Referral Program Analytics

Once you have your  program up and running, you will want to start tracking the success and progress of your customer referral program. By monitoring analytics, you can keep tweaking and improving your referral program by identifying what’s working and what’s not working.

A few of the customer referral metrics you’ll want to consider keeping an eye on are:

  • Total Value of Referral Sales
  • Number of Participants with Referral Sales
  • Average Number of Referrals Per Participant
  • Average Dollar Value of Referrals Per Participant
  • Number of New Applicants
  • Number of New Participants Accepted

By using analytics, you can track engagement, referrals and the impact of each participant’s contribution to your referral sales. Most referral sales software provides analytics and tracking to help you monitor the performance of your customer referral program and the contribution of individual customers.


Ready to get serious about building a successful customer referral program? Reach out to our referral marketing experts to learn how BrandChamp can help.