Mention - Me - Run Successful Referral Marketing Programme R
Mention - Me - Run Successful Referral Marketing Programme R
com
The Referral Marketing Series
How to run a
successful
refer-a-friend
programme
2nd Edition
Hello, we’re
Mention Me
We’re on a mission to put trust back into the heart of
marketing.
Too many brands invest significant time and money into acquiring new
customers, only to lose them after their first purchase.
We’re striving for a world where brands connect with the right audiences,
consumers choose brands with confidence, and loyalty is recognised.
Ready to join us?
Turn the page to learn how to launch your referral marketing channel – this
could be the start of something exciting!
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How to run a successful
refer-a-friend programme
CONTENTS
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First things first.
What is referral
marketing?
Have you ever sent a friend an offer for one of your
favourite brands? Or been sent an offer by a friend and
bought something from a brand for the first time as a
result? That’s referral marketing.
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Consumers trust their friends’ recommendations more than any other
source – including their partner, parents or influencers – yet many brands
are missing out on these valuable opportunities.
But don’t just take our word for it. Here are some statistics on what could
soon be your new marketing channel.
Getting excited about the potential of referral marketing for your brand?
Read on to discover the essential elements to getting started.
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Part 1:
Develop a strong
case for referral
Before we go into detail about how to make your referral
programme a success, let’s check it’s the right channel for
you. This section covers the essential information you
need to know before preparing your business case.
We’ve already shared the powerful stats on referral, but let’s go into a bit
more detail on its key benefits.
The benefits
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2. Increased average order value
10-25% Since referred customers approach your brand with a positive outlook,
they’re likely to spend between 10 and 25% more on their first order than
The increase in first order other customers.
value expected from a
referred customer
They may visit your website for the first time looking for their friend’s
fabulous new pair of shoes, but chances are they’ll also end up browsing
through other sections, too.
Not only are referred customers likely to spend more; they’re likely to keep
coming back, too.
This is because referred customers are likely to sit within your target market
and therefore connect with your brand messaging once introduced. This in
turn converts to actions such as subscribing to your newsletter, which keeps
them highly engaged.
Referred customers are also three times more likely to recommend your
brand to their friends and continue the virtuous circle of referral.
The drawback
We know what you’re thinking: if referral is so great, why isn’t everyone doing
it? That brings us on to its potential ‘drawback’: it requires work.
It isn’t something that can be ticked off the to-do list once launched. To fully
reap its rewards, you must continually test, optimise and develop your
programme.
Fortunately, our Client Success team is on hand to help you do just that.
Having worked with more than 450 brands around the world, our Client
Success team is highly experienced in running effective referral programmes
for businesses of all sizes across every sector.
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The 7 questions to determine if referral is right for you
The higher your Net Promoter Score (NPS), the more likely customers are
to tell their friends about your brand. (If you’re not sure how happy your
customers are, get in touch. We have an NPS survey tool which can help
you better understand how satisfied your customers are.)
Referral works for any demographic but can perform better for some than
others.
Generally speaking, women and those aged between 24 and 35 years old
are most likely to recommend brands. However, those aged 45-plus are
more likely to act on their friends’ recommendations and convert to
customers, implying that the infrequency of brand recommendations
among this demographic makes them more impactful.
Your loyal customers are more likely to recommend you than first-time
purchasers.
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Gender also influences the likelihood of your brand coming up in
conversation. Men, for example, are more likely to recommend tech
brands, while women are more likely to recommend those in the fashion
and beauty sector.
You need sufficient gross margin for the referrer and the referee incentives
to fit within your Cost Per Acquisition. If you can’t offer a compelling
incentive out of the margin you have available then incentivised referral
won’t work.
25%
Since European GDPR legislation came into force in 2018, businesses have
to be more rigorous about how they handle and process customer data. It’s
The average email opt-in likely this has reduced the size of your prospecting database.
rate from referral
programmes Against this backdrop, referral is a great way to reach your target audience
through existing customers. Our referral schemes are fully GDPR compliant
and, on average, see 25% of recommended friends to opt-in for further
information.
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REFERRAL BY SECTOR
of all respondents of all respondents of all respondents of all respondents of all respondents of all respondents
of all respondents of all respondents of all respondents of all respondents of all respondents
50% 61%
41% 45 41% 45
% %
34% 40
%
38%
19%
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Part 2:
The psychology
of referral
All too often marketing teams focus on elements like
incentives and sharing options while overlooking a key
component of referral: social considerations.
This is a complex topic, so for now we’ll focus on the most important
element: your customers’ relationships with their friends.
The image on the left demonstrates this. Too often, brands focus on the left
side, but the right is just as (if not more) important.
Imagine your favourite brand is offering you 25% off your next order if your
friend makes a purchase. Sounds good, right?
But there’s a catch: your friend won’t receive a discount. Would you still
recommend them? Chances are, no. Even though the incentive is appealing,
its outweighed by looking self-interested to your friend.
You’re much more likely to recommend a brand offering both you and your
friend 15% off. Even though your discount is lower, introducing your friend to
a brand they’ll love and giving them a great offer will increase your social
capital.
Making sure your customers’ perceived social capital outweighs any risk is
key to a successful referral programme. This ultimately comes down to how
you position your referral programme.
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Everything from your brand messaging, incentives and sharing options can
have a big impact on how your customers perceive the social risks and
benefits of making a referral. A generous incentive, for example, may be
overlooked if your brand isn’t positioned in a way that encourages
customers to recommend you.
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Part 3:
When to
encourage referral
We always recommend encouraging referral at the point
of delight. The challenge lies in identifying when this is
for your customers.
You know that buzz you get when you’ve just made an online purchase?
That’s when you’re most likely to act on a brand’s referral offer – not hours or
days later, when you’re already thinking about your next shopping spree.
We call this the point of delight; the moment your customers are most likely to
recommend your brand.
We’ve carried out extensive research into the optimal moments to promote
referral to customers. As you’d expect, this varies from sector to sector.
In the food & beverage sector, the point of delight is right after customers
have placed their order; in finance, it’s when they receive confirmation of their
successful application; in travel, it’s during the holiday itself.
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Points of customer delight
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Popular touchpoints
Referral can be promoted in lots of different places. These include:
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Emails - including your referral programme in email cycles like newsletters
is a good way to remind customers of your offer
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Offline/ printed material – including in-pack inserts in deliveries is a great
way of connecting with people at the greatest point of delight: when they
open their order. Your insert could even include a card customers can
share during word-of-mouth conversations, without needing to find a link
on your website.
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Increase promotion over time
ON SITE EMAIL
Partners In store
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Part 4:
Make it easy
to share your brand
Every customer is different, so providing options for sharing
your referral offers with their friends is key.
Sharing options
• Name share
Our unique feature lets customers share using just their name, which
referred friends can enter at checkout to receive their introductory
offer. This allows us to capture the 93%1 of brand recommendations
taking place offline in face-to-face conversations. On average, 30% of
referrals come via this method
• Unique URL
Customers receive a unique URL to share, whether that’s via email,
social media or on a blog (or all three)
• Email
customers can send an email two ways: either directly from the share
page with the option to look up friends’ email addresses, or as an email
they can forward on to friends later
Example of share options
• Social
via channels like Facebook, Whatsapp or Weibo (for the Chinese
market).
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Optimising the referral funnel
Of course, sharing a referral offer is only half the story; you need to convert
these shares into new customers.
Referrer Referee
journey journey
See the referral Share the brand Collect the reward Make first
screen purchase
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Part 5:
Find the right
incentives
Incentives aren’t the sole driver of a referral programme’s
success, but they’re an important factor.
Testing different offers to find the ones that work can double
your referral programme’s performance. But it’s important to
be strategic when running tests.
Examples of
Test, test and test again
incentives to consider:
A/B testing by cohort is one way of doing this. This lets you present one
• Discounts - % or $/£/€ offer to one cohort that they and their friends can benefit from for the next
• Gift cards six months, while showing the next cohort a completely different offer. This
• Third party vouchers will give valuable insight into which offer best resonates with customers
• Free delivery without disrupting the user experience.
• Loyalty points
• Cash or rebate
• Free product
• Donations to charity
• VIP access How much to offer
• Competition entry
When deciding your incentive, consider these three questions:
Many of our clients offer their most generous incentive in their referral
channel. This is because referred customers tend to spend between 15%
to 25% on their first order and have double the lifetime value, so brands
can afford a higher cost-per-acquisition. To check this is the case for your
brand, you can run tests to prove it before implementing deeper discounts
and/or experimenting with other offers.
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Splitting your incentives
Remember the balloons and weights analogy earlier in this guide? This
comes into play again here. Your incentive should make customers feel
confident sharing your brand. The best way to achieve this is by offering a
balanced reward between the referrer and their friend.
A referrer is unlikely to share an offer that clearly benefits them more than
their friend, and one that benefits their friend more may make them question
why they’re remaining a loyal customer.
But that’s not to say the offers need to be the same.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
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If a discount wouldn’t work for your business model, third party vouchers can
be a strong-performing incentive. Vouchers for a broad retailer works best,
like Amazon; followed by national brands like M&S in the UK; and lastly by
national brands with regional bias, like John Lewis in the south of the UK. In
most cases, these vouchers can be supplied online or as physical cards by
post.
Interestingly, we’ve found that cash incentives don’t convert as well as other
rewards. This is because they cause confusion; customers don’t understand
how’d they receive the money or why a business would offer it over store
credit. This confusion may prevent some customers from sharing the
referral offer.
BEST FOR CONVERSION
Cash
£ / $ / Euro
But, as with all referral programmes, there are no hard and fast rules – your
decisions should be made based on what’s right for your brand. You may, for
instance, consider it inappropriate to offer a supermarket voucher and prefer
to offer another incentive.
We recommend testing different offers to discover what works best for your
business and resonates with your different customer segments.
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Part 6:
Plan for the
long-term
Ready to launch your new referral channel? Excellent!
Launch it
Get your referral channel up and running as quickly as possible (ideally, we
recommend launching in a single day).
At this stage, we advise limiting your number of touchpoints and upfront
work so you can get up and running and start learning.
Prove it
Once launched, you’ll start to see performance and metrics that you can
improve. Typically there are a couple of places in the funnel where the
numbers are weaker after launch, so the team can focus on testing different
variants to improve those specific metrics.
Promote it
Once your referral funnel is looking healthy, it’s time to ramp up your
promotion. By this stage you’ll be bringing in a good number of new
customers so will have a strong business to present to stakeholders for
building referral into different parts of the site and email lifecycles.
The launch is only the start. The real value comes from optimising the
channel over time. This requires doing a number of things differently.
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First, everyone required to manage the channel should be involved from day
one. Product teams often hand over to marketing once the referral
programme is up and running; this can cause tension and makes it hard to
further develop the channel since marketing teams don’t feel full ownership
and product aren’t on hand to make any necessary changes.
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How Mention Me can
Easy to set-up help launch your
referral programme
Just two tags to set up
our SaaS platform
• A/B testing by cohort - testing different offers against each other while
providing a consistent customer experience
Word of mouth • Easy configuration for offers – to let you change key variables, like
Customers share in incentives, share options and offer validity periods, for tests without
conversation using their name
development support
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• Mobile experience – present a seamless user experience across
devices
Easy to set-up
• Tech support - our integration is light (based on JavaScript tags) so
Just two tags to set up
our SaaS platform places little demand on your technology team. Our tech engineers are
also on hand to provide support as needed.
The above is just a snapshot of what we do. To find out more, get in touch
with us at [email protected]. We’d love to have a chat!
AB testing
Unique optimisation and
segmentation technology
Word of mouth
Customers share in
conversation using their name
Expertise
Expert advice, shared learnings
and hands-on management
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About Mention Me
At Mention Me, we’re on a mission to put trust back into the heart of
marketing. Our world-class programmes have delivered more than 1.5
million referrals totalling £500m revenue (and counting!) for more than 400
brands around the globe.
[email protected]
+44 203 813 4460
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