With many marketers focusing their efforts on affiliate and influencer marketing, referral programs have been relegated to the backstage. However, with consumer insights showing that personal recommendations from friends and family significantly impact their purchasing decisions, marketers must reconsider putting more effort into their referral marketing initiatives.
A global survey shows that almost 90% of consumers consider recommendations from people they know as their most trusted advertising channel. This indicates that word-of-mouth advertising remains relevant today. To spur growth this year, revive your referral program and incorporate it into your overall marketing strategy.
How do Referral Programs Work?
Referral marketing, also known as word-of-mouth marketing, is a strategy that leverages customer advocacy. It employs a structured referral program where customers share referral links and gain rewards for every referral who completes a purchase. The rewards could be discounts, cash credits, free products, and other incentives that motivate customers to recommend your brand to their families and friends.
By incentivizing satisfied customers to share their positive experiences with your brand, you gain new leads and drive more traffic to your site. Most importantly, you build traction and credibility as a brand that provides real value to consumers.
Referral Marketing vs Affiliate Marketing vs Influencer Marketing
Before we delve deeper into how you can improve your referral program, let’s make sure you truly understand what makes referral marketing different from affiliate and influencer marketing. The lines between these three marketing approaches tend to be blurry, but they do have their distinct characteristics.
| Referral Marketing | Affiliate Marketing | Influencer Marketing | |
| Participants | Existing customers | Content creators | Influencers, Celebrities |
| Audience | Family, friends, social media network | Followers, viewers, subscribers | Followers, viewers, subscribers |
| Channels | Social media platforms, email | Social media platforms, blogs, podcasts, videos | Social media platforms, blogs, podcasts, videos, other forms of media |
| Method | Share personal experiences with a brand | Create brand-centric content about products and services | Create brand-centric content about products and services |
| Rewards | Discounts, freebies, commissions, reward points, or other incentives for every successful conversion from referral links | Affiliate fees or commissions for every successful conversion from affiliate links | Commissions, free products, or upfront campaign fees |
| Edge | Authenticity | Consistency | Reach |
Before you engage in senseless debates on which of the three marketing approaches is the best one, understand that these need not be exclusive of each other. You can optimize your marketing outcomes by integrating these three approaches into a holistic marketing strategy.
How Influencers Improve Your Referral Program
While they are ranked lower than personal recommendations when it comes to trust ratings, opinions about brands from influencers are trusted by 71% of consumers worldwide. Their ad placements and product reviews have an impact on purchase decisions. As such, they can play a key role in improving your referral program. Here are some of the ways influencers impact referral marketing.
They give you wider reach on lower budgets.
One challenge small businesses face is a limited budget. Often, funds are allocated to more important expenditures that directly impact sales. With influencers charging around $50 to $100 per post, influencer marketing can be quite costly.
A cost-efficient alternative to this is inviting influencers to join your referral program. Because referral fees are taken as a percentage of sales from actual conversions, your ROI is ensured, and you do not have to be setback with huge upfront campaign fees.
They help raise brand awareness.
An Oracle and Brent Leary study shows that 28 percent of consumers discover new brands and products through influencers. This comes as no surprise, as a majority of consumers browse social media platforms on a daily basis. By aligning yourself with influencers in your niche, you can raise brand awareness and improve brand recall through their channels.
They offer greater engagement with consumers.
Getting the reach you need when you are a new or small business can be challenging. With influencers, you can leverage an already engaged audience. They can put you on equal footing with bigger brands by helping you increase engagement with your target audience. Influencers typically share referral links on their social media channels where you can also interact with their followers. This allows you to enhance engagement and drive traffic to your own social media channels.
They help establish your credibility.
Influencers have a solid follower base who have confidence in what they say and do. Whatever they say about your brand is usually taken without a grain of salt. And since influencers in referral programs typically use the products or services, their positive feedback about your brand can boost your credibility.
They help build trust and loyalty.
Consumers are more inclined to trust brands they frequently see from the influencers they follow and trust. In fact, a recent study shows that influencer trust positively affects brand trust. By partnering with influencers, you also gain the trust and loyalty of customers who follow them. Moreover, the influencers who earn from referrals are also more likely to continue doing business with your brand.
Brands that Work with Influencers for their Referral Program
Most brands today have worked or are continuously working with influencers. It may be a one-off paid project or a recurring campaign ,with sponsored content. But some brands have gained successful outcomes by getting influencers on board their referral programs.
Hotel Tonight is a booking app that offers deals at top hotels worldwide. Users download the app to find the best last-minute deals on accommodations with over 10,000 hotels in over two dozen countries. Their referral program is tiered based on the HT Perks Level of users. Level 1 and 2 users are eligible for the Give $25/Get $25 program, while level 3 users and higher are eligible for the Give $50/Get $50 program. Users generate a referral code by tapping “Invite” on their mobile devices. The rewards are given whenever a new user books and spends a minimum amount on a qualified booking using the referral code.
Hotel Tonight partners with influencers of different follower counts. Seasoned marketer and travel blogger @bianca.montalvo has listed the app as one of the top four travel apps she loves. Influencers @traveline_adventures, @aashhhhlee, and @clemencefalewee have also shared unique codes and special deals for Hotel Tonight on their Instagram accounts.
Touted as the most popular meal kit in the world, Hello Fresh promotes healthy eating by democratizing access to high-quality and sustainable food choices. They offer ready-to-eat meals, easy-to-follow recipes, and the freshest ingredients. To promote their brand, they have a referral program with two options. Customers can send a free HelloFresh box to a friend or give a friend $110 off their first box. They then get a $10 credit for every friend that signs up using their personal referral code.
Influencers on Instagram and Twitch are among those who participate in their referral program. These include @saucyjohnnyboi, @theawkwardeva, and @moniquenoell. Aside from their referral program, Hello Fresh also has separate programs for partners, affiliates, and influencers.
Casper, an innovative company that creates products based on sleep studies, has been working with influencers for several years now. When the company was launched, it focused on mattresses and pillows that improved sleep quality. Over the years, it has expanded its product offerings to include other sleep essentials such as bed frames, sheets, duvets, and blankets.
Its Refer a Friend program allows customers to earn $10 or more. When a new customer uses their referral link to make a purchase, the new customer gets 25% off their first order, and the referrer gets a $75 Amazon gift card.
Casper has also worked with influencers, one of the most notable of which is the NerdWriter Evan Puschak. During one campaign, influencers created YouTube videos highlighting the Casper mattress. The clout of the influencers enabled Casper to drive traffic to their website and gain new leads.
Madison Reed is a hair color company that strives to provide its clients with the best hair color products and services. Their proprietary hair color is made with quality ingredients and carefully crafted in Italy to ensure that their formulation adheres to strict EU safety standards.
To drive growth, Madison Reed rewards loyal customers with cash credits whenever they refer new friends. For every friend they refer, they get $15 credit that they can use online or in any Madison Reed Hair Color Bar. Madison Reed also works with beauty influencers and bloggers by giving them custom links and commissions on new purchases. Some of these influencers, including @fairfaxconerva and @gitanastyling, share referral links and special deals on Insta.
MeUndies empowers self-expression and promotes body positivity through their creatively designed underwear and intimate apparel. They have an affiliate partner program where prospective affiliates go through an application and screening process. They also have a brand ambassador program for content creators and influencers on Instagram and Tiktok.
Along with these marketing campaigns, they also have a referral program for customers. Customers can get a referral code to share with their friends. When used to make a purchase, the referral code entitles the friend to 20% off their first purchase. The existing customer who shared the code gets $20 credit on their next purchase.
How to Integrate Influencers in Your Referral Program Strategy
Every referral program is unique. It is tailored to the specific needs of each brand. When creating one, you must align it with your business goals. If you are all set on integrating influencers into your referral program, here are some steps you should take to lay a strong foundation for your influencer referral strategy.
Connect with the right influencers.
Choosing the right influencers is an essential step to building your influencer referral program. Your influencers must embody your brand values and have an audience that fits your target persona.
Look for influencers in the same niche as your business and genuinely interested in your brand. Their interest in your brand will ensure authenticity and help establish your credibility as a reputable brand. Then make sure that their voice resonates well with the audience you want to reach. This will make it easier for you to get your brand message across. Once you have found the right influencers, ask them directly if they would like to join your referral program.
Provide influencers with unique referral codes.
Make it easier for influencers to attract new customers by providing unique referral codes. Use codes that are memorable and that viewers can associate both with the influencer and your brand. This helps establish your relationship with the influencer and build a connection with their followers.
Encourage influencers to invite their followers to earn rewards too.
In any referral program, the more people there are who actively participate, the higher the chances of generating leads and increasing revenue. So, you’d want to turn followers into brand advocates too. You can encourage influencers to get their followers in on the action. As followers see their favorite influencers earning rewards by recommending your products, they will be enticed to reap the rewards as well. Make sure, though, that these followers can easily sign up for their own code and be part of your referral program.
Create a genuine relationship with influencers.
For influencers to boost referral program success, your relationship must be genuine and lasting. Your goal is not to launch a one-off marketing campaign to trigger a surge in sales. It is to build a consumer base that grows steadily. This is possible only if you value influencers as brand partners and not just as paid promotional adverts. Ensure that your partnership is mutually beneficial so that your influencers grow and develop just as you do as a brand.
Make rewards and incentives appealing.
Anyone who joins your referral program will have to dedicate some of their time and effort to help market your products and services. Make it worth their while by offering rewards and incentives that give them high value. You can provide multiple referral options to give them choices on what they want to receive as rewards or perks. Doing so gives them more incentive to participate in your program.
Empower influencers to get the most benefit out of your referral program.
Make influencers feel more empowered by enabling them to track and measure their performance. Provide them access to marketing automation tools that allow them to monitor the referral codes they share. Equip them with content creation tools that can help enhance their referral strategy.
Influencer Clout + Solid Referral Program = Powerful Marketing Strategy
Combining influencer clout with a solid referral program makes for a powerful marketing strategy. With these two elements integrated into your marketing stack, you can propel your brand toward success. Executed correctly, this strategy can help you attract new customers, retain existing ones, and boost revenue in a cost-effective way.
FAQ
Are there specific industries or types of businesses that benefit more from integrating influencers into their referral programs compared to others?
While influencer marketing can be effective across various industries, those with highly visual, personal, or lifestyle-oriented products or services, such as fashion, beauty, and fitness, often see greater benefits from integrating influencers into their referral programs.
How do influencers and brands navigate the potential challenges of authenticity and trust when influencers are paid or receive benefits for their referrals?
Influencers and brands often address challenges related to authenticity and trust by ensuring transparency about the partnership, selecting influencers whose brand values align with theirs, and fostering genuine engagement with the audience.
What are the common challenges or pitfalls companies face when incorporating influencers into their referral marketing strategies and how can they overcome these obstacles?
Common challenges in incorporating influencers include finding the right influencer fit for the brand, managing collaborations effectively, and ensuring the authenticity of the influencer’s content. Overcoming these requires thorough research, clear communication, and setting specific, measurable goals for the influencer campaigns.
