13 Recommended Loyalty or Referral Programs to Use for Your Business
What successful loyalty or referral program have you used that you would recommend?
The following answers are provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Predict When Customers Will Need to Order Again
At Company Folders, we have tried many loyalty and referral programs over the years. However, one has stood out above the others. We estimate the time when a customer will run out of folders, then call them at that time and offer them a discount to reorder with us. This works well because it’s personalized to each customer, rather than being a mass marketing effort.
2. Follow a “Buy Three, Get One Free” Model
Some of the best referral programs come with a good jingle and make it as easy as possible for the referrer. Living Social has a good “Buy Three, Get One Free” program that is as easy to participate in as sharing a deal on social media with a unique trackable URL. You can set up your own similar system by generating unique URLs for a user that shares. Then reward them after X redemptions are achieved.
3. Offer Two-Way Incentives
Make sure that not only the person doing the referring gets compensated, but also make sure that they can offer their leads a nice incentive as well. It should be a win-win. For example, we offer bonus VIP memberships for both the person that does the referring and for the person that accepts their referral. They each get something free that we normally charge for. It motivates everyone.
4. Form Partnerships With Similar Companies
As a B2B company, it’s important to develop and foster healthy relationships with competitors. While this may seem counterintuitive, it’s quite valuable. Larger companies can refer clients that are too small, and you can refer clients that are too small for you to smaller companies. You can incentivize by giving and getting a commission as well. It grew our business by more than 150 percent year to year.
5. Open a Freemium Model
We spent too much time and money cold calling and emailing leads. We prevented interested users from using our product until they signed contracts. And then one day, we opened up a completely free, limited version of the product. Within 12 months, we went from 100 customers to over 20,000. Make your product easy to use, try and buy, and consider whether freemium might make sense for your business.
6. Use Referral Candy
I like Referral Candy because it is a seamless, easy-to-use online system for leveraging the power of referrals. It allows for custom referral and reward systems that fit your business and budget.
7. Have Ambassadors Compete
I host networking events for young professionals and one successful referral program we’ve created involves having our ambassadors utilize trackable links and compete against one another to refer the most people to attend. It piggy-backs on our loyal and excited attendees to spread our message while also leveraging their competitive spirit.
8. Capture Email Addresses in the Process
Capturing email addresses in the referral loop tripled the conversion of our referral program. We have an otherwise standard referral program: both customer and guest get credit when guest purchases. But for the guest to claim the referral credit, they need to provide their email address. This allows us to provide timely reminders and product updates, increasing conversion.
9. Set Up Product Experience Sharing
Your loyalty program doesn’t have to be a pay-per-referral model. One of the best ways to make your clients feel valued and bring in new ones practically for free is by setting up product experience sharing. Let your client know that if they post photos or video of them using your product, they’ll get a discount on their next purchase. Shared experience sells better than shared opinions.
10. Offer Recurring Referral Revenue
When a client or non-client sends us new business that our digital marketing company closes, the referrer will earn a monthly recurring revenue (10 percent) for as long as the referral remains a customer (we work on monthly retainers). That’s pretty good motivation if you ask me, and our referrers seem to agree.
11. Give Gift Certificates
We sent gift certificates to everyone who had worked with us for a full year to reward their loyalty. The gift certificates could be applied to any of our membership levels, and they were a huge hit that got people talking. We achieved a high retention rate, and we will definitely do something like this again in the future.
12. Use Tiered Programs
The core of our business is structured by using tiered programs. The tiers are set with milestones that a client must pass to move on to the next tier. Clients like to see where they stand relative to those in a group or similar situation. This exclusivity makes the client feel valued. Tiered programs are a great way to enhance a company’s client engagement by challenging them to reach new levels.
13. Provide Personalized Attention From Senior Company Leadership
We run a service industry business, meaning that personal relationships with our customers are a critical component of our marketing efforts. Generally speaking, I’ve found that the most effective way to build and sustain a referral program is to invest some time with our referring customers. A lunch or a dinner goes a long way — and each person will refer customers for years to come.
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