Loyal customers are not only of great value to a business, but they also serve as excellent points-of-contact to their network of family and friends. By integrating a referral program with a Loyalty Rewards Program, businesses can increase sign-ups and enrolment to the program with great ease. Let’s take a look at why referral programs are effective and how should a business go about establishing them.


Why Referrals Still Work

Customers are smarter than they get credit for. They understand that marketing and publicity gimmicks play a big role in deciding the success of a product. Being bombarded with advertisements virtually everywhere and all the time – on social media, while driving, on the radio, while reading the news, using an app – has reduced the efficacy and impact of traditional forms of advertisement. A reader or viewer is least likely to pay attention to an ad today – even if it is relevant to them. This puts a lot of value on word-of-mouth publicity. When a friend or an acquaintance ‘refers’ a product, it is viewed as an honest recommendation and not an advertisement in disguise. This was proven in a 2015 Nielsen survey, which says that recommendations from friends remain the most trusted form of advertising.


Integrating a Referral Program with a Loyalty Rewards Program

Most intelligent loyalty software solutions have inbuilt tools and features to allow customers to refer friends. Businesses need to, however, incentivize existing employees to get his/her friends and acquaintances onboard. The easiest way to do so is to offer a discount or bonus loyalty points. This works as an effective motivator for existing customers to spread the word. Furthermore, customers should be provided with the right tools and information on how to go about referring the loyalty program others. The message they share must be simple, crisp, and customized for the potential referrals. The message should be persuasive enough to influence, but not be intrusive.

Another critical aspect of a successful referral program is to offer value to new members and encourage them to join. This could be in the form of a flat X% discount on the first order or bonus sign-up points. Businesses can also design referral programs to incentivize second, or even third level, of referrals. In other words, an existing customer gets a reward each time his/her referral is able to successfully bring others into the fold.

Last, but far from least, make the referral program easy to understand and execute. Ambiguity or confusion regarding the eligibility for referral bonuses, technical glitches in the processes of redeeming referral points, or an unnecessarily complicated process is likely to decrease the success of referral programs.

A referral program, if done right, is an effective strategy to increase the enrolment rate of a customer Loyalty Rewards Program. Businesses can use this tried-and-tested method to build a community of loyal customers by leveraging the strength of their existing ones.How else can a business make a referral program successful? We’d love to hear from you!

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