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Refer-A-Friend Program Best Practices

By Jamie Beckland | Posted on August 30, 2012

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Refer-a-friend

Most modern web users are comfortable sharing content recommendations to their social networks, and activating their social graph . But, having easy to use sharing capabilities is not always sufficient to drive buzz and excitement around specific marketing initiatives, like new product launches, hot content, or promotions.

In those cases, incentivizing your website visitors to share with others by offering refer-a-friend participation bonuses can concentrate many users into sharing all at once. This creates momentum in social channels that can drive awareness within those channels, and create a virtuous circle of interactions. Facebook’s EdgeRank algorithm, for example, uses interactions on posts to determine what to show in a user’s feed. If more people interact with a post, it is more likely to be shown higher in the feed.

So, when considering how and when to use a refer-a-friend program, keep these best practices in mind.

Create value for both the user and their friend

Giving incentives to users for their advocacy is a no-brainer. People love to get something for their ability to influence. But, their friends and other relationships will not participate solely because someone they like asked them. Those second-degree connections need something more compelling than social pressure to engage with your brand on your timeline.

Daily deals sites employ this model effectively. LivingSocial gives a credit to the user if their social connections respond to a deal. That’s great motivation to share in the first place. What makes the program successful is that the second-degree connection gets an outstanding bargain – 50% off a massage, with a fast expiration, prompts those new customers to convert quickly.

Make the incentive relevant

Discounting your product is the first thing that comes to mind when considering potential rewards for refer-a-friend program participants. But, discounting hurts the long-term value of the customer, who comes to expect discounts as a normal part of the buying experience.

There are times when discounting makes sense, of course, for refer-a-friend programs. When the purchase is for a group activity, the discount provides a way for more friends to participate. This aligns your first customer – the referrer – with all of their referrals. The goal is for everyone to have a shared experience, and the discount becomes a mechanism to catalyze group action. Some examples include golf tee times, theater tickets, or books for a reading club.

If your product is not group-oriented, consider other types of incentives, such as increased reputation or status within your community context. These separate the quest for participation from the transactional element, and help customers feel like they are not trading on their personal relationships.

Decide what comes next, first

Combining both a discount and a strong word of mouth recommendation is a marketing one-two punch. These are two of the most powerful, and most widely exploited, marketing tactics. But, they are only good for a short-term boost unless you have a plan in place to turn the new customer into a repeat customer quickly, to cement the emerging relationship with your business.

A refer-a-friend program is not a marketing strategy, it is a new customer acquisition tactic. In order to use it effectively, you must plan out the next several customer touchpoints. This could include inserts into the delivery packaging to encourage repeat visits around a specific product category; a multi-touch email campaign to continue building mindshare; or a personal follow up from the referrer to thank the new customer.

Regardless of the specific next steps, you must determine them as part of the launch of a refer-a-friend effort. Once a campaign begins, you will be busy with the tactical elements of running the campaign, and won’t have time to build out the ongoing strategy. Advance planning is the only way to capitalize on success.

Janrain’s Strategic Services team offersRefer-a-Friend programs with these best practices in mind, and with easy tracking and reporting to keep you focused on program success.

Have you set up a similar program? What type of incentives did you use to increase shares?

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About the author

Jamie Beckland

VP of Product

Jamie has been delivering custom web solutions for more than 10 years, and built his first social media community in 2004. Prior to Janrain, Jamie led the emerging media practice at White Horse, and has worked as a marketer and technologist with clients including Coca-Cola, Financial Times, Samsung, Wells Fargo, L’Occitane, The Brooking Institution, and many others. He frequently speaks about technology trends and writes for Mashable, Social Media Examiner, iMediaConnection, AdAge, and other publications.

View all posts by Jamie Beckland