One of the main questions we get from our clients when they are setting up their referral campaign is, “What should my incentive be?”
We always tell them they have two main options, offering a discount as an incentive or giving away a free item. We’ve seen success with both. However, you should aim to offer your customers as much as you possibly can as long as it’s still profitable for your business.
There is one way to give away as much as you can (maybe even a little more!) and still remain profitable. By making your incentive something that adds value to another product or service you offer, both your current customers and referred customers will have to purchase something before being able to redeem your incentive.
For example, one of our restaurant clients didn’t just give away a free appetizer. Those customers who received their incentive had to purchase one entree at full price in order to redeem their free app.
This does two things:
- Keeps your sales up.
- Prevents you from look desperate!
If you’re just giving away a free appetizer without asking for anything in return, you’ll be teaching your referrals that you’re cheap. This is likely to lead to referral fraud, which is when someone refers your business only to take advantage of your incentive, never to return again.
Don’t Forget To Be Charitable
What can you give away that has a perceived value to both the referrer and the referral? Goodwill.
If your business isn’t in need of an immediate increase in sales, why not offer a kickback to a charity in exchange for a customer referring your business? And when the referred customer comes in, the charity will get another kickback.
TOMS Shoes is a perfect example. Whenever TOMS sells a pair of shoes, they give a pair of shoes to a child in need. They’ve extended this practice to eyewear as well. TOMS was one of the first popular socially responsible businesses. And while people were skeptical about TOMS’ business strategy, they couldn’t deny that people were talking about it and referring their friends to buy shoes from TOMS in order to be a part of something greater.
The key to making this work for your business is to be completely transparent. Tell your customers the exact amount of money being donated through their efforts. Inform them through blog posts, social media and emails why you are so passionate about the charity you’ve included in your referral program. While this type of referral program isn’t for everyone, being completely genuine will keep people from being skeptical about your campaign.
Have a great idea for a referral marketing campaign, but not sure how you’re going to execute it? Sign up for a free trial of Expect Referrals today. Our software allows you to automate your referral marketing efforts, allowing you to focus on what’s important—growing your business.