Referral – how to build referral loops and turn your best customers into brand ambassadors 

This is the final article of our growth marketing series based on the popular AAARRR or pirate funnel. This framework will help you better understand user behaviour, from the very first stage of the buying journey (awareness) and data gathering and testing (acquisition) to spurring a user into action (activation), choosing retention strategies and the right revenue model and, finally, how to drive referrals. 

In this article, you’ll learn how to turn your customers into brand ambassadors and how to create a tailormade referral programme. 

Turning your customers into brand ambassadors and getting them to refer your business to friends is what marketing dreams are made of. Why? It’s a free form of advertising that proves the strength and respectability of your brand. It’s also more likely for customers to buy from a business that has been recommended by friends, family or acquaintances.  

In this final article in our series exploring the growth marketing funnel, we look at the benefits of having a referral programme in place, some good examples of what other brands are doing, as well as best practices and the four steps to creating more customer referrals.  

What is referral in the marketing funnel? 

A customer referral programme is a marketing strategy to encourage existing customers to refer new people to the business. This is often done through incentives, such as a discount or free product. In the context of the pirate funnel, this method can be an effective way to move potential customers from the awareness to the activation stage of the funnel. By providing a compelling stimulus for existing customers to refer friends and family, businesses can effectively tap into word-of-mouth marketing to generate free interest in their products or services. 

Why is a referral programme important? 

They help increase brand awareness by getting customers to share information about a product or service with others – in turn attracting new customers who may not have heard about the business before. They also help increase customer loyalty and satisfaction by rewarding customers for their recommendations – creating a positive feedback loop. The more customers are referred, the more people they tell, and on and on it goes.   

Lastly, referral programmes can be an effective way of generating leads and sales. Because recommendations typically come from trusted sources, they are more likely to result in conversions compared to other forms of marketing. 

What does a referral programme look like in action? 

Our favourite example is that of Dropbox. The file hosting service offers existing customers additional storage space if they successfully refer new customers. This not only provides an incentive for existing customers to share Dropbox with their friends, but also increases the value of the service. 

Uber is another great example. They offer clients a discount on their next ride if they refer a new customer. Everybody wins – you get a cheaper ride, Uber gets more customers and the platform grows in reputation.   

Benefits and best practices  

There are several benefits to having a referral programme, including increased brand awareness, improved customer satisfaction and loyalty, increased leads and sales, more cost-effective marketing, and better customer insights. Some best practices to bear in mind:  

• Always offer a compelling incentive to existing customers to refer new customers. This could be a discount or a free product. 
• Make it easy to refer new customers. Think referral links or codes that can easily be shared with friends and family. 
• Tracking and measuring success will help you to understand the effectiveness of your plan to make quick adjustments if necessary. 

The four steps of a referral programme 

The steps you follow will depend on your brand and goals but can typically be broken down into four steps: 

1. Identify target customers: the ones that are most likely to refer others to the business. This may include customers who are highly satisfied with your product or service, or those who have a large network of potential referral sources. 

2. Create an incentive or reward: To motivate customers to tell a friend, think carefully about an attractive reward that would spur them into action. 

3. Spread the word: Once the referral programme has been designed and your rewards have been determined, it’s important to promote it via email, social media, in store, etc. 

4. Track and measure results: Finally, it is important to track and measure what works and what doesn’t, and help you make any improvements.  

Some thought starters for sharing the love 

Creating a tailor-made referral programme is an exciting way to grow your customer base. To get you started, we’ve listed some ideas:   

• Offer a discount or free product/service to customers who refer others to the business.  
• Create a programme where customers can earn points or other rewards for referring others. These points can then be redeemed for discounts or other rewards. 
• Offer a limited-time referral bonus, such as double rewards or an increased discount, to encourage customers to refer others to the business. 
• Create a referral contest or competition, where customers can earn prizes or other rewards for referring the most people to the business within a certain time period. 
• Implement a referral tracking system, such as a referral code or unique link, to track referrals and make it easy for customers to refer others to the business. 

In conclusion 

A well-designed referral programme can help to drive growth by increasing brand awareness, customer satisfaction, and lead generation – all through word-of-mouth! This is the final step in the growth marketing funnel, and with good reason. It’s a tried-and-trusted way to see if your customers are happy with your product or service, and the perfect way to continue your relationship with them (a win-win). 

 Now that you’ve explored the growth marketing funnel in full, you might have some questions or thoughts about how to implement it for your brand. If you’d like to continue the conversation with the expert growth hacking team at Emakina, don’t hesitate to reach out, and let’s see how we can nourish and grow your brand beyond expectations in 2023.