Referral marketing is getting your current customer base to help you find more customers. Behind it, is the expectation that your current customers talk to their friends, family, and network and that if they're happy with your business, they'll be more likely to share an offer that your company has. It might be an offer for a deal on signup, a trial, or for a particular product. Whatever the offer is, you’re leveraging your current customer base to gain more customers.
Most of the time you'll offer current customers an incentive to participate in the referral program, like discount codes, free months of their subscription, or gift cards.
If you aren't already running a referral marketing campaign, you should: referred customers are some of the easiest to convert and some of the cheapest to attain in the market.
And because a referral marketing program involves so many moving parts, it's a good idea to add automation—so your team can focus on the parts that require their attention, and the rest can run seamlessly in the background.
There are platforms available to help you manage your referral marketing programs—like GrowSurf, Rocket Referrals, and Referral Rock—and several of them have a Zapier integration, making it easier to automate things.
The anatomy of a great referral program
When dissecting a great referral program you’ll find that there are always five core elements that act as the building blocks of the overall campaign. With these components in place, the campaign will run smoothly and easily scale with your business, keeping your participants happy and leading to increased revenue for your business. Win, win, win, win.
1. Referral incentives
Even the best companies with the best offers get asked the same rhetorical question by their customer base, “What’s in it for me?” There are very few people in the world who will refer customers to you purely out of the goodness of their hearts. People are in it for the rewards, for the incentives.
There are two types of incentive-based referral programs; one-sided incentives and two-sided incentives. A one-sided incentive program only rewards one party in the referral, usually those participating in the program. Those signing up receive nothing except the usual product or service. An example might be that for every customer that signs up following a referral the participant gets a month of their subscription for free.
A two-sided incentive program rewards both parties. For example, for every new customer someone refers, the new customer gets one month free, and the referring customer gets two months free.
2. Referral emails
The email system behind the referral program is incredibly important. When we refer to referral emails we typically are talking about company-to-customer emails. These emails are (usually automatically) sent out at the start of the process and share the details of the program with prospective participants. A great referral email can massively increase the number of participants, referrals, and customers. A bad one can lead to the stagnation of the program.
Other emails could include updates to the referral program (such as rewards being unlocked) and customer-to-customer emails, where a participant can share their referral code or link by email.
3. Promotion channels
This applies to how you promote the program and how your participants can promote the offer. Some channels will work very well for some companies, and not well for others. Selecting the right promotional channel is important for the growth of your business. Social media, email marketing, SEO, paid advertising—there are many channels to consider using.
4. Tracking and analytics
In-built tracking and analytics are must-haves in any referral program. You need the ability to identify, evaluate and adapt your program based on data and trackable metrics. There are many different KPIs and metrics that you might choose to track but at a minimum, you need to be able to track:
Referral programs can create a lot of administrative work to manage. Between sending referral emails, sending out referral links or codes, fulfilling rewards, managing tiers, the list is long and the hours required extensive. Automation makes all of the difference and can hugely help when it comes to scaling your referral program following growth.
Referral program automation explained
In order to properly automate a referral program, it’s first important to understand the terms used throughout the process. Here, we explain the types of platforms best suited for referral triggers.
What is a referral trigger?
A referral trigger is an event that triggers or begins a referral reward being fulfilled to your participants. For example, if you wanted to send a reward to the participant for anyone who signs up following the use of their referral code or referral link.
Common referral trigger types
email service providers
How to automate referral marketing with Zapier
There are four different types of Zap that you might use when automating your referral marketing using Zapier and referral program software like GrowSurf, Rocket Referrals, and more. One of them will automate referral emails, the other three will help automate the referral reward.
Automate referral emails
Zaps like these ensure any referred leads are contacted, without you having to manually send any messages. With the integration, an email will automatically be sent when a new referral participant is added.
The trigger happens when a new participant is added, the action is that the new subscriber is added to the audience tag.
Subscribe new Referral Rock members to a MailChimp list.
Send emails in Mailchimp when new GrowSurf participants are added
Automate referral reward management
Printful and SwagUp are great for those offering a physical reward as one of their incentives. This could be a t-shirt, sticker or any number of things. The automation creates a draft order for you whenever a reward is unlocked.
The trigger in your referral app would be when a participant achieves a reward and the action is that an order or item is created in your fulfillment platform.
Create Printful orders when GrowSurf participants unlock new rewards
Create SwagUp contacts and send packages to new participant rewards in GrowSurf
You could also send rewards based on Google reviews using Rocket Referrals. When a customer leaves a review in the Rocket Referrals account a gift is automatically sent through Printful.
You might also consider Genius Referrals, another referral platform with a Zapier integration.
Why you should launch your first referral campaign
Launching a referral campaign can be daunting at first, but the long-term rewards hugely outweigh the initial investment and time that it takes to set up. In fact, the initial time that it takes to set up can be easily mitigated with the right referral software.
MainStreet, a B2B SaaS platform that helps startups with tax credits, added referral marketing after a period of significant growth. They found their campaign, run with GrowSurf and automated with Zapier, drove millions of dollars in new ARR in its first few weeks.
These are just some of the benefits that you’ll receive following the launch of your first referral campaign:
Cost-effective growth: Referral programs offer a considerably lower cost per acquisition rate than traditional lead types. The leads or customers that come through from referrals offer a much higher return on investment versus, for example, paid advertising leads. Furthermore, there’s a very low churn rate of those that are referred and those who are participating in the scheme. Plus, you’re only ever paying for referrals that actually convert as the main cost is within the reward itself.
Builds brand awareness: The majority of the time your referral campaign will be shared by either email or through social media channels. However, your participants choose to share the campaign it’s a surefire way to stimulate word of mouth brand awareness among your most loyal customers. This will not only increase your potential referral participants but also your customer base as a whole.
Identify your most loyal customers: Finding and working with your most loyal customers can have a huge impact on the growth of your business. Those customers that choose to participate in referral programs are some of the least likely to churn. Not only that, those same loyal customers who become part of your referral program are also most likely to become long-term brand advocates, far after a referral program bears fruit.
Launching and automating your first referral program can take a bit of work, but it’s work that massively pays off in the long run. With a well-run, automated program you’ll have a tool that not only facilitates but encourages growth within your business. Using a referral program software tool such as GrowSurf and automation integrations provided by GrowSurf, the sky's the limit for what you can achieve.
Consider each stage of the referral process—there are usually ways to automate parts of it, connecting your apps and reducing manual work.
Ensure that you have the five core elements that make up a great referral program in place before launching. It’ll save considerable time and work in the future.
Don’t underestimate the benefits that a referral program can have for your business.
This was a guest post by Chris Tweten, CMO at GrowSurf. GrowSurf is a referral software platform for B2B and B2C tech companies. Want to see your work on the Zapier blog? Check out our guidelines and get in touch.