Word-of-Mouth and Referral Marketing Blog

To Turbocharge Your Referral Program, Bake In Your Value Proposition

How do you improve your referral program performance?

The most important thing you need to do, even before you start setting up your referral program, is understand the central value proposition of your brand.

Why do your customers buy from you?

Kurt Elster from Ethercycle pointed this out – even successful business owners don’t always know the answer to this. Sometimes they’ll say, “my best guess is…”

If you’re looking to grow your business, this won’t do. You’ll want to talk to your customers and find out for sure.

Image: Medallia

You could send out Net Promoter Score surveys, are you could even just informally ask your customers in person or over the phone: Why’d you buy? Who’d you recommend this to?

As Peep Laja from ConversionXL puts it, your value proposition …

  • explains how your product solves customers’ problems or improves their situation (relevancy),
  • delivers specific benefits (quantified value),
  • tells the ideal customer why they should buy from you and not from the competition (unique differentiation).

What is it about your value proposition that appeals to your customers?

Once you have a decent understanding of this, you’ll want to craft all your messaging, your emails, your images around this central idea.

Goldieblox is a great example to study here.

Technically, they’re selling toys for young girls.

But their value proposition is something greater – it’s about empowering the next generation of female engineers.

They understand this well, which is why they make it a part of all of their marketing collateral and messaging – on their website, in their newsletters and so on.

When Goldieblox customers receive a referral email (see above), they’re reminded of the reason why they bought the toy in the first place.

This makes it much easier for them to know who they’re going to make a referral to.

Their personalized referral link then becomes a gift that they can give to friends who they know will appreciate it.

“Which of my friends would care about this message?”

It’s long been established that referred customers tend to spend more, and buy more often.

This is likely because advocates know to make referrals to their friends who’re a best fit for the business they’re referring.

One of the interesting paradoxes of marketing is this – being hyperfocused on a small niche is often precisely what you need to do in order to get broader, mainstream appeal.

Kurt Elster mentioned that some retailers he’s spoken to are afraid of being too specific in their marketing, in case they’re turning away customers – but there’s an 80/20 rule at play here, and serving some customers very well is what leads to the word-of-mouth phenomenon that then snowballs.

A core group of excited insiders is often exactly what you need in order to get interest from more mainstream consumers.

Besides the messaging and visuals, you also want to use in the right incentives.

Image: Greats

You don’t actually need to give a discount coupon or cash-back as a referral reward. It might be a donation to a charity, or a ticket to an event.

Think about the complete customer experience.

Go back to the core reason why they’re telling their friends in the first place.

You might even want to think of it as a community-building effort.

As Elina Furman (who did some tremendous marketing for companies like Dockatot) observed, successful referral programs are not just about the economic incentives, but also about personal attachments and altruistic motives.

Of course, it ultimately depends on your business and your customers.

Read next: How to setup your referral program incentives (with 12+ examples)

Once you’ve baked in your value proposition into your referral program, focus on optimizing your funnel.

Learn more: IHow to increase your referral rates

Conclusion

Word-of-mouth is the main way that small-medium businesses grow. So anything you can do to accelerate that process has an insane return-on-investment.

So – make sure you’re always looking for ways to get their customers and advocates to tell their friends about your store!

Visakan Veerasamy

Visa is ReferralCandy's Blog Editor. He also co-founded Statement.sg, a fashion ecommerce label selling witty t-shirts. He's been thrice named a Top Writer on Quora. He hopes to enjoy a glass of whiskey onboard a commercial space flight someday.

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