Referral marketing. You’ve no doubt seen the term in your efforts to grow your business. You want to craft the best possible marketing strategies for your content and products. Referral marketing can be highly effective and is a great way to build hype around your business.
But what exactly is referral marketing? How is it used? And is it really that effective?
The truth is, referral marketing is one of the most powerful tools in your marketing toolkit when it comes to increasing conversion rates and building revenues. With 82% of Americans seeking recommendations from their social networks for all types of products, you can’t afford not to capitalize on that market.
Woorise is the easiest way to create viral contests, giveaways & competitions, landing pages and engaging forms such us surveys and quizzes. Generate more sales, increase traffic, social engagement and followers. See examples
Here, we’ll define referral marketing with real-world examples of how it’s used to ultimately take you through referral marketing best practices. By the end of this guide, you’ll have actionable strategies on hand that you can apply to your own marketing approach.
What is referral marketing?
The answer is relatively simple, though it can take many forms. Referral marketing is the process of incentivizing and encouraging satisfied customers to share your brand with their friends, family, colleagues, and acquaintances.
The act of receiving a personal referral from someone you know is a powerful force in encouraging your business. Wouldn’t you be more likely to patronize a company that your friend recommended rather than one you’ve only seen banner ads for? Studies show that people act on referrals, making them a wonderful strategy for business growth.
Referral marketing tends to feel organic, even if it’s tracked and managed by automated systems complete with rewards. When you hear about a product from someone you know, it carries greater power than many other forms of advertisements. That’s because referrals carry with them natural risks and rewards.
Those who take advantage of a business’s referral program and promote products and services across their own social networks need to actually believe in what they’re promoting. If one advertises something they’ve never used or know little about, they run the risk of losing credibility and face. Referral marketing works because an individual is often much more believable than a company with a clear agenda.
But referral marketing only works with products and services that are truly worth the hype. Getting people talking requires quality, otherwise, your marketing strategy will hit a dead end. Step one of any referral marketing strategy comes down to crafting a business model that people want to share in their social networks: products and services that truly make life better.
Then, to encourage shares and word-of-mouth recommendations, businesses can offer incentives and loyalty programs to show appreciation for loyal, passionate customers. At Woorise, for example, users earn a 30% recurring commission for referring business to the platform.
In short, referral marketing creates a win-win-win scenario. Businesses win by growing their user base. Customers that refer their associates win by receiving incentives. New users win with a product that satisfies them.
This makes referrals a valuable marketing strategy, one many businesses have taken on to great success.
Best Referral Marketing Tools
Once you’re on board with referral marketing, the next thing you must do is ensure that advocates who successfully refer new customers to your business get the reward they deserve. Tracking each referral sale becomes difficult, mainly if you oversee hundreds and thousands of customers and employees in your referral marketing program.
In this case, you will need software tools to help advocates manage their referrals and rewards in one place. This way, they can keep track of their progress and empower them to do a much better job moving forward.
In this article, we have compiled a list of some of the best referral marketing software tools in the market to help you generate more sales and revenue with help from people who love promoting your products.
- Referral Rock
- Mention Me
- Genius Referrals
- Viral Loops
- Referral Factory
Woorise is an all-in-one lead generation platform and referral tool that allows you to create not only referral campaigns but a wide range of interactive campaigns such as viral giveaways & contests, landing pages, forms, surveys, quizzes, accept payments and more to collect leads and engage your audience.
Woorise offers ready to use templates run highly engaging referral camapigns where users rewarded with bonus entries for sharing the campaign to their friends.
Features include a modern landing page and form builder, 40+ fields and thousands of social actions, 100+ interactive templates, conditional logic, real-time email notifications, multi-language support and built-in analytics. Woorise also integrates with popular marketing platforms such as Mailchimp, Hubspot, ActiveCampaign, Aweber, Google Analytics, Bitly, Zapier, PayPal, Stripe and many more.
Woorise offers a frea forever plan and also you can enable a 7-day free trial of any plan. Premium plans with more features start at $29/month.
Referral Rock automates every step of that recommendation process to help businesses scale and measure their effective marketing channels. It makes joining your program and sharing your product and service to people in just a few clicks.
The platform integrates perfectly with any business (even if you’re not running an e-commerce site). You can track SaaS sales seamlessly as you leverage your digital marketing tools ranging from CRM to email marketing if you have a SaaS site. This way, you can maximize your referral marketing performance and get more advocates to refer your business.
For at least $200/month, Referral Rock lets you launch a minimum of one (1) program with at least 500 members who can refer your business as many times as they want.
ReferralMagic is a referral marketing solution geared towards developers. Using this tool, they can build a referral program that’s right for their businesses using its full-featured API. Thanks to its white-label feature, developers can also create referral marketing campaigns for their clients using their respective branding.
ReferralMagic’s customer-centric approach will help you overcome any issues you encounter using the platform so you can deploy your programs and achieve your goals faster.
The platform offers a 7-day free trial. Once you’re ready to use the tool and unlock its premium features, such as unlimited referrals and campaigns, you must sell out at least $245/month.
If you want to run a referral program that requires little to no effort, ReferralCandy will help you achieve it. This online referral marketing software lets you set up the program with your marketing stack via one-click integration with tools like Shopify, Google Analytics, and others. This way, you know how many visitors who converted into customers were referrals from your program or are direct traffic.
More importantly, you can automate your referral marketing program to make it easier for existing customers to refer your business to others. You can invite them to join your program after checkout, identify successful referrals and send them their rewards days after, and detect suspicious referrals that go against your program rules.
ReferralCandy is free to use for the first 30 days. You can then sign up for its premium monthly subscription at $49/month plus commissions. The plan includes unlimited customers, advanced reporting and fraud detection, and more.
SaaSquatch not only lets you create referral programs for your software business but also loyalty and rewards programs so you can maximize sales and revenue in a single place.
You can launch multiple programs, each with different tiers for your campaigns with segmented rewards. These are then triggered dynamically depends on which actions and activities you assign for each. You can review the results of your referral campaigns from its comprehensive analytics to garner insights for your upcoming programs.
Using this referral marketing software tool, you can use template designs and pre-made programs in a few clicks so you can focus on generating results from the get-go.
SaaSqautch’s Pro plan costs $1,750/month, supporting 200,000 participants and three reward triggers, as well as a single module for your program or marketplace.
6. Mention Me
Mention Me is a referral program software that takes customers on a journey as part of your referral marketing strategy. You can encourage them to refer their family and friends for every transaction they make with your brand. This ensures that you maximize referral at every opportunity you get, whether via your email campaigns or social media content.
More importantly, you can optimize your referral marketing program regardless of the lifecycle stage your customers are in. Mention Me encourages you to experiment and develop customer segments to get customers to refer. From there, you can monitor the results from each segment and gain insights on how you can improve their performances.
Mention Me is fully aware that each business has different needs for its referral program. As a result, you need to reach out to them individually to receive a quote.
Word-of-mouth marketing offers one of the highest growth potential and one of the lowest CPA. Therefore, it only makes sense for everybody in the organization, from marketers to customer support, to get their hands on referral marketing. And with FriendBuy, you can expect to generate more customer referrals regardless of your role in the company.
The platform’s beauty comes from its excellent support from onboarding referral experts. Regardless of how much you know about referral marketing, they will hold your hand and guide you on your way to building and developing programs and campaigns guaranteed to make referring your business easier.
From here, you can weave your magic as a marketer by running tests and observing campaign results to help you strengthen your customer acquisition strategy. There’s also API access that your developers can use to interconnect different marketing tools to simplify workflows and processes regarding your referral program.
The plan starts at $249/month with unlimited campaigns, third-party integration, and email support.
Genius Referrals makes your advocates as smart as the customer referral software’s name. Upon signing up, your customers have access to its dashboard, giving them complete control of their data and analytics. Its easy sharing feature lets them send their referral link across different online channels like email, social media, and messengers.
You can give advocates an option to receive their rewards in cash via different payment gateways from the dashboard. They can also set automatic payments, so they don’t have to worry about logging in all the time to receive the payments.
Genius Referrals offers a free 30-day trial of the software to try out its premium features. After which, you must subscribe to its monthly or yearly plans starting at $49/month for 10,000 advocates for a single program and campaign.
InviteReferrals is a flexible yet straightforward referral software solution that lets you create a multi-step reward system to generate more conversions. You can create events asking customers to refer your business to their family and friends when they subscribe to your email list, register for an account, download a file on your site, and more.
You can launch different campaigns and analyze the results of each. Its in-depth analytics will provide your customers with information on which channels the referees came from, the number of people who clicked on the link, and more.
The customer referral program lets you try out its feature free for 30 days. Once you’re ready, you can subscribe to its paid plans starting at $99/month for 1,000 new referees from three campaigns.
10. Viral Loops
Viral Loops is a referral tracking software designed not only for referral marketing but also for pre-launch, newsletter growth, and more. The great thing about this software is choosing from multiple pre-made campaign templates depending on your goals and objectives. This way, you can spend less time building the campaign from scratch and worry more about executing the campaign to a tee.
Launching campaigns is made even easier as you can easily customize widgets for your campaign to feature on your site pages. You can also create landing pages using its drag-and-drop builder that is sure to encourage your customers to sign up and join your referral program.
Viral Loop is one of the more affordable referral marketing programs on the list, starting at $49/month for 1,000 participants with integrations to Zapier and Pabbly so you can connect to other marketing tools like Sendinblue, Landingi, and more.
Extole has the features you’d need from a performance marketing software for enterprise brands looking to scale their referral marketing efforts. It allows you to create advocacy programs that are easy to implement and have fraud protection to prevent you from rewarding members with bogus and low-quality referrals.
Extole allows your customers to hand out gift cards, coupons, and loyalty points using the platform’s rewards engine if you want to hand out different rewards across different campaigns. You can create campaigns using its on-brand sharing page that you can build even without any design experience. Choose from various templates guaranteed to look great regardless of device and edit as you see fit.
To try out Extole’s advocacy program solutions, you must book a demo to see the platform at work.
Tech companies would want to jumpstart their customer base by gathering leads and prospects interested in their software. For this purpose, GrowSurf is arguably the top referral marketing software around.
Whether you’re a B2B or B2C SaaS or app company, the tool helps you run referral programs and develop multiple marketing campaigns with ease. Its automatic link generator allows your customers to create links to share with their family and friends without signing up for an account. You can embed the link generator on any page of your site in seconds so you can mobilize people to refer others.
You can set up automatic rewards from the platform once somebody signs up using the referral link generated from your widget.
After using GrowSurf’s 14-day free trial, you must sign up for its paid plans starting at $200/month for 10,000 participants, two campaigns, and two team members.
As a performance marketing platform, LinkTrust caters to multiple masters. If you want to create an influencer marketing platform to connect influencers with brands, LinkTrust provides you with the features to make that happen without the technical mumbo-jumbo. The same goes for affiliate marketing, partner marketing, lead distribution, and more.
However, LinkTrust helps you mobilize your customers and employees to share your business with other people as a referral marketing software. And to help them promote your products and services correctly, the software lets you create custom incentives and payouts depending on the number of referees they’ve made in a period.
You can try LinkTrust free for 14 days.
14. Referral Factory
SMEs and marketers can’t go wrong with Referral Factory as their referral marketing platform. Thanks to its pre-made campaign templates, almost anyone can launch a referral campaign with just a few clicks and no programming experience. The best thing about Referral Factory is that any business should expect to find a campaign template that fits their needs, thus saving them the time to develop one from the ground up.
Making customers share the link quickly is another high point of this platform. Aside from the actual link they can copy and paste, you can create a one-click button that shares the link directly to their social media or messenger of choice. From here, you can set the type of rewards people can receive for every successful referral.
Referral Factory is available for 15 days free. Then you’ll have to subscribe starting with its $95/month plan that consists of up to 2,500 users, unlimited campaigns, page builder, and more.
Rounding out the list is Talkable, one of the more formidable referral and loyalty program platforms in the market. Launching campaigns is just as simple as a few clicks of a button, but its comprehensive analytics and customer insights set Talkable apart from the rest. You can drill down the data to show the performance metrics of both advocates and friends, as well as the different channels where your link is shared.
Using the data from the insights, you can launch A/B testing that pit variants of the same campaign to see which one generates the most conversions.
There’s also a wide variety of third-party integrations you can use with Talkable to help make your workflow even more accessible.
Talkable offers three plans: Self-served, Managed, and Enterprise. You must schedule a call for each to learn how they can help you achieve your referral marketing goals.
How Referral Marketing Is Used
Referral marketing exists in a wide variety of forms. Companies from all kinds of industries find ways to bridge gaps, incentivize customers, and generate the word-of-mouth press they need to scale their business. In the highly online, social media-driven landscape of modern retail, referral marketing means exploring platforms and promotions to perfectly pair offerings to services.
Companies have had great success with all sorts of approaches to referral marketing. Here are just a few real-world examples of how businesses are using referrals to generate leads and build revenues.
Affiliate marketing is an offshoot of referral marketing that uses the power of social media to generate buzz around products and services. Social media is a powerful means of connecting with people within and without our personal networks. Through its use, we build greater networks of friends and acquaintances that may benefit from the products we use.
Affiliate marketing channels the organic advertising opportunities of our social networks to offer methods of earning for both businesses and the everyday consumer. In the software-as-a-service (SaaS) space, this is especially valuable, as the revenue generation opportunities can be long term, resulting in passive income for savvy users.
ConvertKit is one example of a business making good use of affiliate referral marketing. The platform offers webinars and email marketing tools on a subscription basis. To help draw in business, ConvertKit created an affiliate program that rewards users for recommending the tool to others. Affiliates in the referral program can earn a 30% recurring commission for as long as referred users stay subscribed.
Affiliate programs offer opportunities to partner with customers and community members. The potential of this approach makes for a dedicated user base and a self-sustaining marketing system that continuously generates new leads. Any business looking into the power of referral marketing should look into affiliate programs to explore the potential benefits.
Referral marketing is commonly used in combination with bonus offers for customers. All kinds of incentives can be built into a referral program, making the joy of sharing a great product even greater. For passionate customers, incentive programs may even become a lucrative source of secondary income or discounts, keeping them dedicated to your product as an active ambassador of your brand.
Done correctly, referral marketing can be a cheap method of advertising that offers greater value to your customers. While there is a virtually unlimited number of ways to incentivize likes, shares, and word-of-mouth promotion of your services, certain approaches may make more sense for your particular business model.
Common types of referral incentives for effective marketing strategies include:
- One-sided incentives. Determine whether the new customer (the referred) or the existing customer (the referrer) gets the incentive. Choosing one over the other comes down to immediate business goals and your product type. For example, one-sided incentives to existing customers can be great for maintaining a dedicated user base. Alternatively, incentives for new customers can be excellent for business growth.
- Two-sided incentives. This entails rewarding both the referrer and the referred upon successful business growth and can be difficult to achieve in terms of resources and tracking. However, if your business has the ability to offer two-sided incentives, few strategies are as valuable.
- Tiered incentives. Building up the rewards your customers get upon successful referrals can be a great way to maintain their interest in your product. By starting with lower-quality incentives that rise in value the more your customers refer new business to you, you can gamify the referral process for great success.
Each of these incentive options encourages passionate customers to spread the word and get rewarded. Your choice will come down to your business model and the resources you have available to you, but any approach has the potential to grow your brand.
For example, Harry’s shaving company used a tiered referral incentive approach as a growth strategy to stay competitive and generate new subscriptions. By offering free products for referrals—the more referrals, the higher the product value—Harry’s incentivized their customers to grow the company while creating a useful and feasible client experience.
The success of referral marketing often comes down to the hype businesses are able to generate for a product. There are many ways to make a product appealing. Successful marketing strategists will understand their target audience and craft all kinds of appeals in order to make an experience worth sharing.
A fantastic example of this was the marketing strategy employed by fashion company Girlfriend Collective. This clothes retailer offered a limited-time promotion in which it was giving away $80 leggings for only the cost of shipping. In the process, the company shared its message and commitment to sustainability, resulting in a shopping experience some labeled “too-good-to-be-true.”
But it was true. Girlfriend Collective, for about the cost of a traditional marketing experience, built a word-of-mouth campaign that resulted in 10,000 orders on day one. They achieved this by understanding their audience, their concerns, and their belief in a quality product. Then, they leveraged the hype they created to let customers advertise for them across the internet.
Through examples like these, we see how referral marketing can be used to generate powerful advertising that few other strategies can match. People trust and look to the people they know for recommendations. Making use of this trust by encouraging your customers to share information about your products and services can mean revenue boosts and unprecedented lead generation.
But is referral marketing really that effective?
How Effective Is Referral Marketing?
When it comes to the power of referral marketing, the data speaks for itself. According to Social Media Today:
- 78% of B2B marketers say referral marketing creates leads of good to excellent quality
- 60% of marketers say referral marketing generates a higher quantity of leads
- 54% say referral marketing comes with a lower cost-per-lead
- 88% of marketers make use of referral and loyalty marketing software
The use of referral marketing is widespread and developing all the time as marketers across industries look to reap the benefits of a successful approach. As we have demonstrated, when companies put together a working strategy for referral marketing, they often achieve greater results than they might from a traditional marketing approach.
The effectiveness of referral marketing, however, can depend entirely on how well you understand your audience. With the right insights and innovative approaches, the sky’s the limit with referral marketing.
Consider these referral marketing best practices when considering your own referral marketing strategies.
Gather and Analyze Data
No marketing strategy is complete without data analytics. That goes for referral marketing, as well. Data analytics is the process of gathering and analyzing data for actionable insights regarding a customer base and business practices. It is a staple of modern business, promoting business growth, enabling informed decisions, and helping to predict business trends.
In referral marketing, data use is essential in two key areas: ensuring your product or service offering is worth a recommendation and understanding what incentivizes your customers.
Collecting and analyzing data—whether it be through Google Analytics or social media insight platforms—allows you to tap into how your customers are receiving your content. You can even directly reach out with surveys and questionnaires aimed at informing your choices for a referral marketing strategy.
In a 2019 survey, 91.7% of Fortune 1000 companies indicated that data use was necessary to remain competitive. For a competitive referral marketing strategy, you’ll need to apply customer data.
Without experimentation, the business world would remain static. The same goes for marketing approaches.
You may have gathered all the data in the world and painted a comprehensive picture of your target audience. Still, that is no guarantee for a successful referral marketing strategy. You will never truly know what aspects of a campaign take off and what elements don’t until your content is out there in the world.
Companies like Harry’s or Girlfriend Collective may have had data and competitor experience on their side, yet their successful referral campaigns still required a great deal of experimentation. In the case of Girlfriend Collective, neglecting traditional marketing for product giveaways came with a lot of risk and little assurance that the approach would be effective. Yet, the web traffic they generated crashed their site and Facebook’s share feature.
Companies looking to emulate success like this will need to experiment based on their own data-driven information and audience insights.
Constantly Assess and Review
Finally, your efforts to produce effective referral marketing techniques will come down to consistent assessment and review of your information. From your data application strategies to your customer incentive program, you need to balance the books and craft worthwhile processes for generating leads and retaining business.
For example, one key strategy to employ in managing incentives for SaaS sales is to create a documentation plan for incentive information that is easy to track and manage. Without helpful platforms for financial data, it can be easy to lose track of incentive information and create problems with your customers. This will undermine the usefulness of your referral marketing strategy, potentially negating your gains.
Review all your data, practices, and budgets at set intervals throughout a fiscal year. In turn, you’ll have the information you need to craft an efficient referral program.
Are You Ready to Launch Your Referral Program?
From the list of referral program software above, your choice boils down to how big your business is and what you wish to achieve from launching a referral program.
For instance, Woorise and InviteBox fit smaller brands and marketers due to their affordability and function. On the other hand, Enterprise solutions found in tools like ReferralRock and Referral Magic for more prominent brands ought to do the trick.
Regardless, managing customer and employee campaigns should be more convenient once you use the right tools above to meet your needs.