Dec 7, 2022

How to create and measure a referral program

Referral marketing is a powerful tool to build communities of early adopters. Learn how to set up your own program today.

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Businesses know the power of word of mouth. When existing customers become your brand advocates, you’re on the way to building strong engagement and long-term loyalty. This is even more important today, with recent privacy changes made by Apple and Google, making paid ads a lot less effective. If ever there was a time to try our more organic measures, now is the time!

A referral program is a way to incentivize and boost word of mouth to drive business objectives from new users. It makes it easier for customers to share their brand experiences with similar peers. Engaged users can spread the word among their contacts. The objective of the referrals can be anything from increasing levels of:

  • Awareness
  • Subscriptions
  • Product Trials, or
  • Purchase

How should marketing managers use community management to enable this? Let’s look at some steps to follow.

Steps to succeed in Referral Marketing through online communities

Setting up the objectives is the first step before drafting a referral program. It could be to generate demand, increase brand awareness, drive event sign-ups or simply join a community.

After setting up the objective, the next steps involve:

1. Identify the user ask for the referral program:

This is to clarify how existing users/community members can spread the message. For example, should they forward a link to Twitter? Should they post on their socials & which socials? Or should they talk about their own brand experiences using brand hashtags?

2. Decide Incentives:

Incentives are an important part of referral programs. Some popular incentives are e-vouchers, discounts for future purchases, and extended after-sales service periods. These can be identical or different for both, referrers and referees.

3. Identify platforms to launch:

The easier it is to share the referral by your existing users, the more reach for the referrals. Ideally, it should be simple and painless for the customer to promote the brand. Some platforms to enable sharing are WhatsApp, Telegram, Discord and Twitter DMs.

4. Track, Analyze, Reiterate:

After rolling out the referral program, the degree of success needs to be measured to check ROI. Some metrics are the click-through rate of referral asks, the branching factor (number of invites sent), and the conversion rate. Also important is the K factor. This is a measure of virality that takes into account the number of referrals and conversions. Based on the results, the program can be tweaked to improve/maintain traction.

A Referral Marketing example for gaming and web3

Let’s look at an example of a referral marketing strategy to make the above points clear. Take the case of a pre-launch stage of a new blockchain game. The objective is to create a thriving community on a Discord server ahead of the launch, which is full of early adopters.

  • The Ask: Get existing community members to invite friends to join through an exclusive link on Discord.
  • The Incentives: The referrer gets a free in-game item or NFT. The person referred gets early access to the game itself.
  • Platforms: The link can be generated on the Brand's Discord server and can be shared across any digital platform.
  • Analyze Key Metrics: Track how many people generated a link, how many clicks on the generated links and finally how many new users joined via the referral program.
  • Reiterate: Leverage insights from key metrics to modify existing incentives and messaging to make the referral program more compelling.

At Blaze, we specialize in analyzing and measuring platforms such as Discord, Twitter or Telegram to track and reward community behavior. Schedule a demo today to find out more about organic growth strategies that drive engagement and retention.