Whenever we are rolling out a new referral program for a customer, the topic of incentives is always brought up. Do I need to reward referrals? How do I do that? What’s the best incentive that will drive conversion?
To be honest, most often people make referrals because they believe in your business, product, or service. The incentive is just the piece that lets them know their effort is appreciated. Incentives can come in the form of a thank you letter, simple recognition, or a monetary reward. It’s important to be creative when thinking about how your advocates will appreciate being rewarded.
For example, a business executive is likely not looking to make a referral so they can receive a $100 visa gift card. They might, however, react well to a donation to a charity of their choice or a handwritten letter. Additionally, a $100 Visa gift card might be the best incentive for a homeowner who just made a referral for your roofing company.
So, how do you determine what the incentive should be? What will work best for your audience? Let’s dive a little deeper to find the answers.
Ask your advocates what they want
When creating an incentive it’s important to know who your advocates are and listen to them. If you are looking to implement a formal referral program it’s likely that you know referrals work and would like more.
Make a list of the people who have made referrals or been huge advocates for your brand in the past and contact them. Find out what inspired them to make a referral and listen to what kind of incentives they would appreciate.
While we might have a lot of ideas about what has worked historically, there’s no better information than the thoughts and opinions of your customers.
Often, a simple $100 gift card is the most effective reward for a referral. However, there are situations when a monetary reward is not appropriate or allowed and we need to get creative. People naturally like to help people but they also want to know that their effort worked and that they were in fact helpful.
One thing to consider when monetary compensation isn’t an option is to offer some sort of special or discount to the people who your customers are referring. For instance, maybe the person making the referral doesn’t get an incentive because they can’t or wouldn’t be interested in it, but you give a 10 or 20% discount off your product or services for the people who are being referred. That makes the person making the referral feel like they’re providing value to their peers or friends and makes it worth their time to share your company.
In the financial industry, there is a lot of regulation, which severely limits one’s ability to incentivize people for making referrals. In instances like this, a good idea might be to create a special event night for people that make referrals. Offer up some free food and entertainment and make it a fun evening! Everyone wins, you can use it in future marketing to get people excited about making referrals and joining the event, and it makes you stand out from other competitors that choose to simply ignore the value their customers’ referrals bring.
Make the ask easier with incentives
As you’re selecting your incentives, make sure that you are thinking about how it will help you make the ask of your customers to make referrals. If the incentive is something that you don’t think will excite them, then it’s going to be a lot harder to ask them to put in the effort.
When asking your customers what they want and then getting creative to come up with your final incentive, keep in mind how it’s going to build excitement for the program and make asking customers for referrals easier.
If you keep these three things in mind, determining incentives can be pretty easy. Don’t overthink it. Don’t make it overly complicated. Instead, think about your customers needs/wants and keeping it fun so that you can get more people to sign up and actively refer people to your business.