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February 25, 2016

9 Steps to Run a Successful Referral Campaign

According to the New York Times, 65 percent of new business comes from word of mouth or referrals.

As per the finding by Nielson, people are four times more likely to buy when the item is recommended by a friend or an acquaintance, while referred customers spend 13.2 percent more time evaluating your product than regular customers. These stats make it clear that referral marketing is a powerful marketing strategy.

Here are nine of the most effective steps to create a successful referral campaign for more traffic and increased conversions.

1. Identify target for the campaign

This might appear to be as simple as targeting customers who have made a purchase or given good rating for your service, but research says only 14 percent of satisfied customers actually refer your service, where as 100 percent of engaged customers talk about your service to others. This means you need to engage your satisfied customers to actually identify the target for your referral campaign. Even before this, you need to know who your satisfied customers are.

Get responses from your customers about your service/product through testimonials or a rating poll/survey or ask personally for feedback. This will give you an insight into your customers experience with your service or product, both good and bad.

Once you know who are your satisfied customers, try engaging them by asking for suggestions for your next offering or how to improve your service. You will be able to zero in on your target segment by monitoring who is engaging with you.

2. Decide on the reward

The key to running a successful referral campaign is the reward and who is rewarded. You can plan to reward both referrer (who is already your customer) and those who have been referred (that incoming traffic which you would love to convert).

Research shows that rewards only for referrers work better for weak brands and for both sides work for stronger brands. You also need to decide on the type of reward, like coupon codes for discounts or free access to your service for a period of time.

3. Decide the channels for distribution

Depending on your service/product, you need to decide the channels you would like your referrers to share on: Facebook, Twitter, Pinterest, LinkedIn etc. If you need more social shares, you should ask your referrers to share on social media. If your intention is to increase your mailing list, you should ask your referrers to invite their friend through e-mail.

4. Decide time and place to open referral campaign

To make your campaign successful, you need to capture audience attention at a suitable time. A customer who has received a value-added service or some extra discount is happy — so that is the right time to ask for the favor of referring to his/her friends. You also need to understand the seasonal customer behavioral pattern to decide on the timing of running a referral campaign.

5. Create a buzz

Obviously you would like to launch your referral campaign only when you have created buzz around it. You should use all the available medium to create that buzz such as social posts or ads, promotional e-mails or on-page notifications.

6. Launch the referral campaign with an expiry date

It is a human tendency to be attracted to something that is scarce. Mentioning a clear timeline to avail the referral reward pushes your customers to take action. The closing date for the campaign should be well planned. It should not be so short that participants don’t know about the campaign, but it should not be so long that interest in the campaign wanes.

7. Track and analyze the impact 

Make sure to track all the referrals and incoming traffic to understand the impact of the campaign on your business. When your campaign is running, you need to keep track of all the traffic and conversions. This will prompt you to take action if things are not happening. You might need to make changes to your promotional strategy.

8. Deliver reward to winners smoothly

At the center of all this attention from your audience is the reward. Set up an automated process to pass on the reward to the winners easily, like an auto responder to send mail with coupon codes to the winners.

9. Get feedback from your customers at the end of the campaign

Along with all the analytics that you get from running the campaign, you should also get input from campaign participants at the closing of the campaign. Ask for feedback/testimonials from winners. This will give valuable insight about your customers’ mindset.


Nivedita Kalaga is product manager at Tropix technologies. Nivedita has 20 years of experience in the IT industry as developer, QA manager and now product manager. She loves to learn new skill sets and explore new challenges.