Get more referrals with incentives

Last updated
Jul 30, 2024
Do incentives help get more referrals? The data says yes. Learn why and how to implement it yourself.

You want your existing customers telling their friends and family about your business, and just how great you are, right? It’s probably the most fruitful and cheapest marketing tactic out there. Proven over hundreds of years.

The challenge is, customers aren’t always inclined to tell others about you – but they would if you wow them beyond their normal expectations. And these days, customers’ expectations are high – so we must think outside the box a little. We need to deliver a "whole experience" to stay in their minds. 

After all, there’s a “what’s in it for me” attitude and that’s why an incentive program works so well for getting more referrals. 

In this blog post, we’ll talk you through how you can set up your own incentive program to increase your chances of getting more referrals for your business. 

Why create a referral system?

Referrals can help businesses grow faster. They can contribute to the success of businesses. Of course many survive without referrals, but layer on several ways to get clients, and you’re well on your way to thriving consistently. 

Just like other marketing techniques which drive leads and potential customers your way, referrals play a big role in a person going from interested to bought in – i.e. from lead to customer. 

Although we now live in an altogether more digital and technological society, we still trust brands and companies that our friends and family recommend. 

When we get referrals from people we know and trust, it means we’re more likely to trust that company. 

This way, you already start on the front foot, with leads and potential customers that already trust you. 

How to get more referrals

There are several ways to get more referrals to drive leads and potential customers to your business. Just remember to run it all through legal so you're providing the correct disclaimers.

In the USA, you must disclose when a customer is compensated for a review, and you can see examples of disclaimers showing the review was incentivized on websites like Sephora, G2, and Wayfair. In fact, Amazon has banned incentivized reviews from its marketplace. Sellers may not offer a free item in exchange for a positive review.

For referrals, you can thank customers at any time for sharing your brand online or over email.

Whether you decide to also incentivize or not, we recommend you:

Ask for them at the right moment

Create a map of the customer journey and mark the times where they will be experiencing the most positive feelings about your brand – things like: some time after their purchase arrives, they move in, or after an insurance claim is resolved.

Those are the moments to set up an email asking them to share their experience online or with a friend directly.

Provide the link directly to the palce you want them to go, whether that's a referral program landing page or a review site directly, or your socials. Include the perk in the email. This capitalizes on the customer's willingness to share their experience right in the moment where they're most likely to write something positive about your brand and service.

After you automate this and baked it into your email system.

Offering incentives and perks

Reward customers when they refer others with a gift that matches the value of their effort.

How can you get more customers to refer you? Giving discounts on your own products might lower profits and make your brand seem less special. Using gift cards can be expensive.

Tailored campaigns, designed specifically for a business, can get up to three times more engagement than the average. 

Paylode offers a vast marketplace filled with valuable rewards and user-friendly tools for seamlessly slotting these benefits into customer interactions. The easy-to-use platform reduces partnership expenses significantly because it's already filled with prenegotiated and prevetted deals.

Use complementary deals to reward the submission.

Make it clear that you want their unbiased and honest review, and they'll get the perk just for sharing their feedback. Be sure to incentivize the review, and not pressure them to rate highly – maintain your customers' trust, and find ways to facilitate authentic reviews with perks.

It’s all about keeping your customers around by offering them perks to make their loyalty worth it. This way, as well as attracting new leads and customers through referral, you’ll also be able to keep your current customers engaged with your brand and keep them coming back.

Competitions work, with compliance

A common method of entry into brand competitions include signing up via email or performing some other kind of action like leaving a product review or following on social media. Customers will be entered, if they refer friends and family to your page and ask them to follow you too. It’s a good way to grow your awareness, and also to test the willingness of your audience to refer, before building and investing in a complicated referral scheme.

Here's an example of a weekly sweeps entry from Paylode:

Offer freebies to your customers for referrals

An increasing number of companies are doing this – you can offer your customers freebies and other rewards for referring friends and family to your business. Trading212 are a good example of this, as they give you (and the person you refer) free shares if the person you’ve referred signs up and buys some shares of their own. 

A screenshot of a phoneDescription automatically generated
Source: Trading212

This tactic helps customers feel like their loyalty and referral efforts are being rewarded. By giving them incentives to refer people, not only do you get new customers, it also helps retain customers and reduce customer churn by making them feel rewarded and cared about. 

Harry’s: Remember that referral campaign?

Want to know what helped this simple company that sells razors for men, shake up the market where they sell directly to customers and become worth $1.7 billion dollars in just 5 years? Well for one thing, excellent coverage on the campaign by Tim Ferris.

Harry’s success story comes mostly down to the way they handled their prelaunch, with a fantastically simple referral scheme behind it. The company wanted to get people excited about their product, so they created a sense of mystery and offered rewards.

Their pre-launch website was simple and didn’t give away too much about the product. It just showed a picture of a razor and hinted that something exciting was coming. This made people curious and eager to find out more about this cool new razor.

At the time, Dollar Shave Club was also on the rise and both were in a race to shake up "big razor".

When people signed up to learn more, they were encouraged to invite their friends to sign up too. The more friends they got to sign up, the more freebies they could get. For example, if they got 5 friends to sign up, they’d get free shaving cream. If they got 10 friends, they’d get a razor handle with a blade, and so on. This motivated people to invite lots of friends, which led to Harry’s getting 100,000 email sign-ups in just one week.

The part we're emphasizing was that leading up to that launch week, the Harry's team met with hundreds of investors, thought leaders, influencers and journalists to get them interested in the story and leverage their own networks. So by the time the launch came, there was months of back-pressure that led to a big splash.

A mammoth with tusks and white textDescription automatically generated

Now, the interesting thing about this and all other referral incentive programs is, signing up is a mandatory step in the process. If the people your customers have referred don’t sign up fully, the reward is lost. This ensures that the leads who are referred your way become real customers. A good referral program gets your customers to spread the word about your brand for you, helping it grow naturally.

Want to try this out yourself?

Step 1: Start by segmenting the people in your email list that would be the top referrals of your product – from your best customers to your advisors. Design the campaign with their input and keep it simple. Create your assets.

Step 2: On launch, send them to a simple landing page with their unique shareable link, tips on how to share, and their perks. Share their progress so they can feel the motivation of gamification.

Step 3: Use incentives for every time someone invites and signs up using their unique link.

Step 4: Continually promote and celebrate milestones to encourage the flywheel to turn on its own.

Want some help setting up and incentive program like Harrys?

Compounding benefits

The Word of Mouth Marketing Association (WOMMA), which is a part of the Association of National Advertisers, says that in the United States, there are approximately 2.4 billion daily conversations about brands.

Word of mouth referrals are powerful because it brings in new customers and can reinforce brand loyalty amongst existing customers. When someone personally recommends your business, it's the most trusted type of advertisement. And it's not free – it comes from building mechanisms that continually build upon themselves: 

A referral program helps your business in many ways:

  • Grows word of mouth: It encourages people to spread the word about your business, leading to more leads through word of mouth,
  • Attracts quality leads: People trust reviews on 3rd party sites more than ads, so referrals bring in a different type of warm lead that leverages the trust of your existing, best customers to bring in more.
  • Cost-effective: You can design it as a pay-per-performance channel, meaning you only pay when you get results, making it a cost-effective way to market your business. With Paylode, you can also offer a perk just for sending out the referral invite. And a bigger one if they accept! Incentivizing both the invites and the quality of invites.
  • Increases customer loyalty: Referred customers tend to stay loyal to your business longer, increasing your customer retention rate.
  • Meets customers where they are: It allows customers to share your brand easily on the channels they already use, like social media.
  • Encourages growth acceleration: Referrals can create a viral loop, rapidly growing your business as customers refer their friends who then refer more friends.
  • Creates new engagement opportunities: It gives you new ways to engage with customers and promote your business, keeping them interested and involved.
  • Reduces customer acquisition costs: Referral marketing costs less than other marketing methods because it relies on your existing customers to spread the word.
  • Identifies your best advocates: It helps you identify your most loyal customers, so you can reward them and ask them to represent your brand more formally.

Paylode powers referral programs

Say that five times fast! If you’re looking to get more referrals from your loyal customers, check out Paylode perks. 

Paylode, at its core, is a platform where you can offer your customers a wide range of perks and discounts. Use these perks as a reward for your customers staying loyal and referring others to you. 

Everyone loves a gift or reward, which is why Paylode is a great way to give your customers the perks they deserve for referrals, driving action, engagement and retention with your brand and company. 

Choose experiences that match what your audience wants and what complements your brand. We can advise on where you can put perks widgets and information on your site around incentives and how best to let your customers know about the perks available. 

When you’re ready to launch a referral program for your brand with the help of perks, reach out and contact the team at Paylode today

About the author
Saima Omar
Saima Omar is a journalist and content marketing expert working with B2B and B2C brands. She's deeply interested in the buyer's journey and how language can affect purchasing behavior. When she's not writing content for her clients, you'll find her reading Fantasy Fiction, watching Harry Potter, and drinking frothy lattes.
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