Beneath the surface of any successful referral program is its supporting technology. Word-of-mouth marketing (WOMM) has been around for decades, but today’s digital approach to WOMM uses innovative software tools and real-time analytics to unlock scalability and positive ROI.
Successful referral programs can decrease your cost per acquisition (CPA) to as low as $1, depending on your average order value (AOV), while also doubling your average customer lifetime value (LTV). The ceiling for this success is largely determined by the referral program software you choose and how you manage your referral program.
Your brand needs a robust and flexible platform that can handle the referral incentives and rewards for you.
Here’s what to look for in referral software for seamless and robust customer acquisition channel for your brand.
Reputation matters. Has the referral program software in question achieved success for other brands? Has it demonstrated an ability to maintain years-long partnerships with businesses like yours?
Friendbuy has been an industry leader for over a decade and works with big brands, like Walmart, Sam's Club, and Macy's.
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Successful referral marketing is a long-term effort. Your brand needs a partner that can continue to support you as your business grows. Look for a referral marketing vendor that provides a dedicated customer success manager and has proven results from businesses that match your profile, both in terms of size and industry. If a platform can offer success stories for brands comparable to yours, it speaks to what they can do for you.
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As part of this initial review, you should look for signs that the vendor is tenured in referral marketing and has invested in innovative referral tracking software and methods to stay ahead of the curve. Referral marketing is a fast-evolving strategy, and a good referral platform will be constantly rolling out changes to address security and privacy issues, expand platform features, improve ease of use, and deliver better value.
Your business needs referral marketing software that can help you achieve your desired results. To identify the right referral marketing solution, you should determine which KPIs you will be using to drive and track referral program performance.
Common referral program KPIs include CPA, ROI, customer growth, and LTV. Your ability to achieve your goals and track these KPIs will depend on the capabilities of your chosen referral software.
Campaign management is a crucial component of any referral platform. In reviewing campaign management, ask the following questions:
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The right referral marketing platform will enable and encourage A/B testing—and offer guidance along the way—to help you hone in on what resonates with your existing customers. This kind of testing capability means that you can constantly improve your referral campaigns in real time.
No matter how great your initial referral program launch may be, every day is a new opportunity to iterate and improve upon your original referral marketing strategy. Over time, A/B testing should lead to increased sharing and conversion rates.
The referral program software should enable optimization to take place across the Advocate and Friend conversion funnel. Examples of ways you should be able to optimize through A/B testing include:
A critical component of any sophisticated referral program software is its reporting and analytics capabilities. A successful referral program depends on activating and understanding both the referrer (Advocate) and the referee (Friend).
To understand and optimize both sides of the referral funnel—the Advocate and Friend activity—you need referral software that allows you to report on and optimize this two-sided funnel and drill down to the key metrics on both sides.
These referral program metrics include referral widget impressions by placement as well as share rates, referral clicks, and conversion rates across placements and channels.
When sophisticated campaign management capabilities are combined with A/B testing and robust reporting, referral program software enables you to drive your desired KPIs and continually optimize your referral program.
If your brand is already multinational or has hopes to expand its customer base globally, your referral software should offer additional support to enable these international aspirations.
This includes providing support for foreign languages and currencies, as well as widget targeting that can filter audiences by language and geotargeting data. Your business may need referral software that offers single sign-on to manage multiple accounts and/or subentities, making it easy to manage multiple international properties within a single account.
As your business grows, your company will face more regulations and compliance demands. Your referral marketing software should be able to ensure compliance with all major regulations across all of your referral assets.
For example, your referral marketing program may be subject to compliance with the American Disabilities Act, as well as consumer data privacy regulations such as GDPR and CCPA. Other regulations, such as the Canada Anti-Spam Law (CASL) and patient privacy laws like HIPAA, may also be relevant, depending on your company’s region of operation and/or its industry.
Rather than chasing these regulations, look for referral marketing software that stays on top of them for you.
Referral software should not only drive growth but also provide rewards management automation that lowers your overall marketing costs. This efficiency provides an enticing referral program to your existing customers, thus allowing your brand to efficiently scale your referral marketing campaigns.
Your referral program software should be able to seamlessly automate reward fulfillment for any incentive that your brand wants to provide, such as referral coupons, account credit, gift cards, a free gift with purchase, or custom rewards. Automatic reward fulfillment further reduces your operational costs of providing a referral program while providing faster service that improves your customer’s experience.
Look for referral software that enables sophisticated business rules and fraud prevention tactics to ensure your brand has full control over automatic reward fulfillment. This includes which customers are rewarded, when they are rewarded, and how often and how much they can be rewarded in your program.
Finally, your referral marketing software should allow your organization to view the referral activity of every customer in your referral program—and to reject or adjust any incentives when needed. Typically, this part of a platform will be utilized by your Finance or Customer Success teams.
While the referral platform is primarily used by the marketing team to drive growth, don’t overlook the operational costs of a referral program. A sophisticated referral platform will help you minimize these expenses.
Referral marketing software touches many parts of your tech stack. How that referral software integrates with your existing technologies will impact not only its ease of use, but also your capabilities in building and managing a referral program.
Compatibility matters. The better the integration, the more value you will be able to drive from your referral marketing efforts as well as the connecting pieces of technology in your stack. Your business should look for the best referral marketing software that offers seamless integrations with the following technology:
The right referral software will also offer APIs/webhooks that create flexibility in how you move data around within your tech stack. This improves the value of that data and the potential uses you may consider.
Integrating referral program software should be a company-wide initiative that earns buy-in from all key stakeholders. Before that happens, though, you’ll need to sell your team on the value of your chosen referral marketing software and answer important questions about the process of integrating and maintaining this platform—especially when it comes to onboarding and maintenance.
As you evaluate your options, assess the tech lift required by each platform. This will help you determine what resources you may need to launch your referral program and whether the time and resource demands are feasible for your internal stakeholders.
Be frank about your own resources available to commit to a referral marketing program. What does the onboarding process look like? What kind of acclimation period does the vendor forecast for your business? How closely will your referral vendor guide you through the process to ensure your success?
The faster you launch a referral program and start driving results, the faster you can grow your user base—and your revenue. Here’s how we recommend clients evaluate a referral program software or platform’s onboarding requirements:
Review each platform’s integration documentation to fully understand estimated launch timelines. Make sure that your implementation strategy and performance expectations are compatible with one another.
Make sure the referral software can offer recommendations tailored for your specific needs based on a referral process that aligns with your business model and buyer journey. Ensure the platform provides full support throughout the integration process to implement these recommendations through necessary documentation and resources as well as through end-to-end testing and QAing. This process should include QA on the pre-production site as well as a thorough internal QA.
Does the prospective referral marketing software offer adequate documentation and resources to guide the onboarding process? What about end-to-end testing? Does the vendor conduct QA on a pre-production site? What sort of internal QA is required?
Referral program assets should be fully customized and developed to match your current branding. Sharing channels, reminder emails, and other content should also be aligned with your brand. Your business should have the ability to add custom fonts, video, animation, new elements, unlimited screens, logic, different widget/email styles, custom CSS, and a domain shortener to ensure consistent branding across your referral and affiliate program too.
Once launched, the ideal referral program should have no ongoing impact on your internal technical resources. This means that the decision to add new widget placements, modify referral program strategy, or initiate A/B testing on referral campaigns can be conducted without the involvement of your own internal developers.
Your business still needs support after your referral program is launched. No two referral programs are the same, which is why you need referral software that can adapt to your unique business needs.
Any technology investment requires robust support from the vendor. Your brand needs a team of referral marketing experts that can respond to any issues during or after implementation—including cases in which you modify your buyer journey, add new technologies to your tech stack that impact your referral flow, or simply want to optimize your existing referral program. Seek a partner with a customer success team that can offer strategic recommendations relevant to the e-commerce industry as a whole, as well as to your particular business goals.
A customer success team can also help you figure out the best ways to increase your investment into your program, including how you can invest more time to drive better results, and how to approach A/B testing to identify the most valuable optimizations.
As your referral success grows—for example, as you expand into new regions or grow your product line—you may decide to add new technologies to your martech stack. When that happens, you’ll be glad you chose referral program software that can grow along with you, providing ongoing integrations that support growth and innovation rather than holding you back from greater success.
When businesses make trade-offs on performance, they end up investing in referral marketing programs that become barriers to growth and greater success, rather than supporting scalability and innovation. Don’t fall into this trap. Find the best referral marketing software that offers everything your business is looking for, both now and years down the road.
Find out how Friendbuy’s referral software lays a foundation for scalable referral marketing programs—download our Nuuly case study today.