Referral program

A referral program is a way to promote a product or service through recommendations. The company offers clients to recommend its product to people they know and get a reward for this: a discount, money or points to a bonus account. Simply put, it’s a way to stimulate word of mouth.

How the referral program works

There are three participants in the program:

The company – it’s looking for new customers;

An existing client – he uses the company’s product and is ready to recommend it. This participant is also called a referrer, or an Ambassador;

A new customer, or referral – a person who starts using the product on recommendation.

The company says to existing customers: “Do you like our product? Recommend it to your friends, and we’ll give you bonuses.”

Customers go to their friends and say, “Friends, we have this great product. Try it and tell them you’re from me-you’ll get a discount for it.”

A new customer comes into the company and says, “I want to try your product, a friend recommended you to me.

The company can track exactly whose recommendation the new customer came from manually by searching for him in the database. This option is suitable for small businesses or at the first stage of developing a referral program.

More often than not, clients receive an individual referral link. They can send it directly to a friend or post it on their social media page. When a person clicks on it and makes a purchase, bonuses are awarded automatically.

Another option for linking an old and new customer in the system is an individual promo code. The referral enters it in a special field when making the first purchase.

Often a company offers both links and promo codes.

The referral program often has an important condition – the referral receives bonuses not just for a recommendation, but for a new sale. The friend must pay for a package of lessons, sign up for a bank card, or buy plane tickets.

Some companies do not allow for bonuses if a new client pays with a gift certificate. This is how companies protect themselves from overspending.