Word-of-Mouth and Referral Marketing Blog

Best Practices for Setting Up Referral Rewards

Let people know about your referral program

The Referral Reward is the reward you give to your Advocates for successfully referring their Friends to the store.

Before you decide on a referral reward, it’s important for you know this: there’s no “perfect” reward structure. As you learn more about your Advocates, you can then fine-tune your reward structure to make them more appealing.

Here’s a quick decision-making process to help you choose a Referral Reward:

1) If your Advocates are likely to make repeat purchases, give discounts.

The reasoning is simple: your existing customer is now primed to make another purchase!

To do this in ReferralCandy:
In the Referral Rewards page, click the “Edit” button for the Referral Reward box, and choose the “Coupon” option.

How to choose between fixed discounts ($10 off) and percentage discounts (10% off):

Consider the Rule Of 100:

If your product costs more than $100, use cash discounts. “$15 off sound like a better bargain than “10% off”.

If your product costs less than $100, use percentage discounts. “15% off” sounds like a better bargain than “$5 off”.

2) If your Advocates are unlikely to make repeat purchases, give cash.

If your product is something that your customers are only going to buy once in a long while (a mattress, budgeting software etc.), then giving them discounts on future purchases will simply annoy them. It makes more sense to give them cash instead.

To do this in ReferralCandy:
In the Referral Rewards page, click the “Edit” button for the Referral Reward box, and choose the “Cash” option.

3) How much discounts or cash should I give?

Allow new visitors to refer customers

Again, there is no hard and fast rule about this. Generally, we observe that retailers who give at least 10% in referral rewards enjoy higher referral rates.

4) Can I give out custom rewards instead?

Sure you can!

Do note, however, that you will have to manually fulfill the custom rewards (e.g. free teddy bear, gift cards etc.) yourself– ReferralCandy cannot do that for you.

ReferralCandy will inform you each time your customer makes a successful referred purchase via email, and you’ll then have to send your reward to the customer yourself.

To do this in ReferralCandy:
In the Referral Rewards page, click the “Edit” button for the Referral Reward box, and choose the “Custom” option.

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Read Next: How To Set Up Your Referral Program Incentives (With 12+ Examples!)

Yu Sheng Teo

Yu Sheng is a product designer at ReferralCandy. He's constantly working to tweak and improve the ReferralCandy product to serve retailers better.

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