A referral is when some recommends your products or your services. We refer people to other people almost every day of our life. An incentivised referral rewards both the giver and the receiver. No doubt you will have seen online offers such as this: “Sign up a friend and receive money off your next purchase with us.”
3 Real World Examples of successful companies offering incentivised referrals online
Dropbox is a very successful company that started no more than 3 years ago and they essentially offer web space to store your files (documents, pictures, presentations, music) within a ‘cloud’ environment which can be synchronised to your computers.
Dropbox offer two types of incentives: refer a friend, and an offer to upgrade to more space.
The first offer is clearly designed as a “gift” (or benefit) for both the receipient and the one making the offer, with both parties receiving a free 250MB of online storage. Note the clever use of the gift imagery:
Dropbox’s second offer creates an incentive with a sense of urgency based on a fear or worry that the customer might be running out of space.
You can see when you’re about to run out of space. They very conveniently place a solution just above, which doesn’t cost any money!
Graze provide natural fruit, nuts, snacks and nibbles in a handy sized box that can be posted to you and fit through your letter box.
They encourage referrals by offering money £1 off your next box. More importantly they also give the person on the receiving end (the referee) a free box. This referral now becomes wrapped up as a free gift voucher. What before was a one way favour to one friend has now become a present that can be given out.
This offer demonstrates some very good practice:
- time bound (limited time only)
- social media integration on Facebook and Twitter
- quite clearly an offer with a free box code
- the ability to send the offer via email
- and details of how to find out more about the offer
Groupon is a popular provider of electronic voucher codes for receiving discounted products, services and experiences. Examples include everything from going out for a meal at a restaurant to entire spa days.
Groupon promote their incentive through a distinctive call to action on their city home pages highlighted in Orange and clearly stating Recommend now and get £6 for every recommendation!
However, unlike Graze, Groupon makes its business terms clear right from the start: you that you won’t receive a penny unless the person you refer becomes a paying customer.
From a personal perspective, the reason I dislike this is that they’re bluntly reminding you that they’re a business out to make profit. Whereas Graze disguises the fact they are also a business with a rather more altruistic approach, they don’t place further expectations on you.
Again, the different channels (Facebook, Twitter) to share their referral offer are unmistakeably prominent.
Even small businesses and SMEs can start to provide referrals and incentives. You don’t necessarily need a slick referral process involving up-front development to your site in order to test the water.
Why are referrals good for business?
Unlike strangers, you already like and trust your friends and family. For this reason we typically value what they say more than any other group of people. We can be sure they’ve usually got your best interests at heart and aren’t going to give you overly biased information or unuseful suggestions. For this same reason we will regard their recommendations much more highly.
How do you encourage referrals?
You can actively encourage referrals by introducing incentives that reward the person referring your product or service. You can encourage them even more by making them super easy to share with others.
What are the problems with the traditional idea of referrals?
The problem with traditional referrals is that work one way in the sense that only the person who is referring you is being rewarded. What they get from the deal is quite apparent; however the person on the receiving end typically gets nothing out of it if they were to accept the referred product or service.
So by accepting they’re effectively just doing their friend a favour, so their friend can benefit, however it often comes across as a burden and it can sometimes even be quite annoying to be on the receiving end of referrals from other people.
What mediums should I use for other people to share my incentive?
Previously I also mentioned it was important for a referral offer to be super easy to share with other people. Ideally they should be setup in such a way in which they can be communicated easily, quickly and ideally through social channels such as Facebook and Twitter if you would like it to spread viraly. The examples in this post illustrate some of the methods other companies are using.