A strong referral incentive should attract customers and inspire them to recommend others. There are many kinds of businesses, and equally as many kinds of bonuses and incentives for referrals. Incentives are important, but not all businesses are the same, so certain things may work better for one industry than another. If you offer a store discount or a cash reward/gift card, will more customers buy from you?
Knowing how to pick the best referral incentives can challenge business owners. Incentive deals for referrals have a financial cost, but if done correctly, you can ensure positive ROI. There are many ways in which you can set up incentives for your referral program.
Here’s a guide to walk you through the right incentives to kickstart your referral program.
Cash and Gift Cards
You’ve heard the expression “Cash is king?” There’s a reason that saying exists. Most research shows that people are highly motivated by a cash incentive. Cash bonuses create a lot of excitement and can piggyback off of a newly satisfied customer’s good will to amplify their positive feelings toward your company.
We find that customers are motivated by cash, and it doesn’t even have to be an enormous sum. Typically, a $100 gift card is the most effective, but we also see that people are much more willing to share if you offer a double-sided incentive. Giving some sort of discount to your customer’s referral makes everyone a winner. When you combine the power of giving a discount to your friends with the draw of a personal incentive for making the referral, you’ll find a lot of success.
The nice thing about gift cards is that they make people feel like they are getting something they can actually impulse buy with. Versus cash, which people often feel they should use for bills or pre-existing debts, a gift card allows them to have fun with the incentive.
Every industry and business is different so it often takes time and testing to determine what the best incentive or the correct amount of an incentive will be for your business. That’s part of what WarmUp can help you with!
Store Discounts and Credits
Offer discounts if your customers make regular purchases. Discounts are ranked as the most coveted incentive by 51% of global customers. Repeat customers enjoy discounts, particularly if a brand needs their customers to make repeat purchases. Not only does this help increase sales, but it builds brand loyalty.
Discounts can work, but you need to be cautious on how it fits your business. You can give a discount on paid or future services for repeat customers such as discounted heating services for the winter season from an HVAC company.
On the other hand, discounts may not work for products with a long lifespan, such as bicycles, mattresses, or furniture. Unless buyers expect to make another purchase soon, they are unlikely to be interested in store discounts.
Uber and Airbnb give credits to customers who refer them to their friends and we’ve all seen the success those businesses have obtained. Product or service discounts are a perfect way to build customer loyalty and make it easier for customers to keep buying from your business.
Exclusive Access to Unique Products or Services
The best programs have an element of surprise, wonder, and mystery. Ideally, the rewards should get better as your customers become more loyal. Pull out all the stops for exclusive access by providing unique experiences and rewards. The trick is tailoring these experiences to suit your business and your desired referral partners.
Before you open this incentive in your referral program, make sure you have the right people to share any new and upcoming products and services with. When people feel they have exclusive access, they are more willing to give feedback on these products to help make the brand better than ever before.
For example, if you have a coaching program that offers business-related coaching services, you could create an exclusive monthly meeting for referral partners who met a minimum number of referrals. If you have products, create a tiered referral program where the top referrers receive exclusive products or services.
Start the Right Incentives Within Your Referral Program
The best referral incentives will make a major difference in your market performance. Cash rewards and gift cards, store discounts and credits, and exclusive access to unique products and services can be great, depending on your business and industry. Pick the incentive that helps you get customer referrals yet fits your business and target audience. This can sound quite intimidating, but with the number of referral programs we’ve helped launch and optimize, we’re here to help! Book a demo with us today to learn more about how WarmUp can make your referral program successful!