How to Run a Referral Program Successfully: A Conversation with Buyapowa’s Gideon Lask

Absolutely, Shane, we often ask how to promote your referral program, and you need to consider two things: discovery and activation. As a user, I’m in one of these states.

Let’s talk about discovery. Discovery is when I’ve decided I want to refer. I love the Shane Barker Podcast and want to tell my mates. What do I do? I’ve been trained as a user to go to your website or app, and it’s important that the referral program is referenced in the navigation and in my account area. The third place is in the help areas, such as the frequently asked questions or the help bot. These are the three places where you need to be discoverable.

Then there’s activation. I’m not a natural referrer—I don’t wake up planning to refer. I refer friends when I’m asked. For example, the brand in the earlier example, Tozone, might think, “He’s engaged because he’s been watching our product,” and trigger a message. A retailer might note that I have just spent a lot of money for the third time this month and decide to trigger another message. If a customer has spent 20 minutes on your website, even if they’re likely to leave, they’ve engaged enough to trigger a pop-up or floating call-to-action asking them to refer a mate.

We spend a lot of time discussing discovery and activation and integrating these into your customer touchpoints. This is a glimpse into some of the science behind referral programs.

So if there’s a common mistake, it’s the perception that you can just turn on a referral program and it will magically suck users into the top of the funnel. We view referral as a funnel because you need your existing customer base at the top—they’re going to refer their mates, and their mates are going to shop. You need to promote the program, tell people you’ve got a program, make it discoverable, and activate users when they’re most likely to refer. That is a common mistake.

The second thing is around the proposition, and here I talk a lot about the three R’s—the reward type. What is the reward you’re giving your users? What’s going to turn them on? In a luxury space—we work with lots of luxury retailers—they don’t really have to reward the referrer. If someone’s spending thousands of pounds on clothes, offering them 10% off is a little bit grubby. Instead, just say, “Gideon, you are a wonderful customer of ours. Here are five VIP invitations for your very best friends. After they shop, we’ll invite you.” All to a virtual experience together, where our stylist will attend, and this kind of stuff. Ensure that the reward type is relevant and makes sense.

The next thing when it comes to the proposition—the three R’s—is the rules. Don’t make it too complex; understand what it is you want the friend to do. Some of our clients just want lead gen, so it’s about getting the friend to come and sign up, perhaps for a sales call or to receive an email. Others want to drive a single transaction, and some actually need the friend to be a customer and maybe transact 10 times, or, if it’s a gambling company, place a very large deposit. Think carefully about the rules and what it is you want to achieve, because it’s very easy to configure the program wrongly so it drives the wrong results.

The third element is refreshing it. We always believe that your referral program should be evergreen, always on. That’s really important, but that doesn’t mean it has to get old. Once a quarter, run a booster, double the rewards, stick some gamification in there—have a leaderboard one month, or a tiered reward so the rewards get higher as you bring in more mates. We’ve got a whole gamification module, which allows you, over the course of a year, to do 12 different things every month.

So, if you follow our advice, you’re going to get it right. If you’re not working with this, just think about those things. It’s not magic—it’s a funnel that you need to promote, and the proposition needs to be relevant. I think that’s a big thing.

Well, there are one of two scenarios. The person you’ve just spoken about might be a serious buyer who has decided to do referral, is empowered to do it, and is the decision maker. From there, we will show you the technology. It’s a consultative sale. We will give you lots of ideas about what your referral program might look like. We help you model it financially. We’ll talk with your tech guys about integration and get you very comfortable with it to the point that you then work with us. There’s then a lovely onboarding experience, and you get handed over to the client success team to further optimize you.

In the other scenario, you’re working in a large enterprise, and you’re a big fan of referral, but the rest of your organization doesn’t really understand it. They just say, “Oh, it’s just word of mouth, isn’t it? That happens anyway. We don’t need to pay technology providers.” Our job there is to help our champion sell it internally. The sales team has libraries full of case studies, business cases, and evidence to help our champion go to his boss, his boss’s boss, and the finance team to justify why they should give it a go.

And I mean, the numbers really do speak for themselves. Shane, I spoke earlier about how profitable customers are that come by this and the loyalty benefits, but you also find that the cost of acquisition is significantly less than any other marketing channel. All we need you to do is get your CFO to sign off for that first year with us, and within three months, our champion looks like a complete rock star in that organization. They’re driving a new level of acquisition that they might not have seen in a stagnating business. The customers they’re bringing in have a lower CPA than any other channel, and they’re driving these profitable behaviors. It’s delightful to have this product that drives such amazing results, and it’s very warming to help these guys see the potential of it, sell it into their organization, and then get the pats on the back and promotions they rightly deserve for having the guts and the balls to actually make it a thing.