Boost your Loyalty Program with a Successful Referral Program

In today’s world, companies are constantly working to build brand awareness as they compete for consumers’ attention. There are many avenues to market your business to customers, but some measures are more effective than others in expanding your customer base. A combination of advertising and retention strategies are employed to gain new business and keep current customers happy, but a referral program is one method that actually combines the two. 

What is a referral program?

Referral programs use existing customers to recruit new ones. According to HubSpot, 81% of consumers are more likely to trust a company when they receive a recommendation from a friend or family than through any other form of advertisement. The problem is that consumers are not that likely to recommend a company to a friend or family unless there is some form of incentive. In fact, consumers are more likely to share negative information about a company as opposed to positive information. To combat this, an essential piece of your customer loyalty initiative should be a customer referral program. This rewards your current customers with extra benefits for bringing new customers into the fold. 

Why referrals are important?

Referral customers are inherently starting off on a better foot as their source for enrollment was a trusted associate. As Nielsen reports, 84% of consumers trust referrals more than any other source. This layer of trust is an important step in every relationship between a business and its customers, and having that established from the start gives you an added advantage of converting this new prospect into a long-term customer. Other benefits include:

1. Rewarding customers new and old

A successful referral program will include bonus incentives for the existing member as well as the newly recruited member. This two-way reward system has a number of great benefits over standard recruitment marketing. For one, you are able to give members individual rewards for recruiting new customers, something they might organically do without the referral program, but now have a greater motivation to do so.

2. Referral marketing

Another great benefit is that you are only paying for recruitment that actually succeeds, instead of the potential for recruitment as found elsewhere, as customers only receive those incentives when the enrollment and additional referral program qualifications are completed. This translates to a much lower customer acquisition cost compared to your other forms of marketing. This plays into itself and allows you more freedom in your referral marketing strategy, as you can afford to give greater benefits than you would normally.

3. Identify key demographics

With referrals, you can track a new level of activity among your members and see who some of your most loyal customers are. Take it a step further and actually segment these customers into a brand ambassador type category.

4. Active customers

Ideally, customers will invite like-minded consumers into the program, which will generally translate into customers who are more engaged with the platform. Non-engaged customers do not generally participate in referral programs, so those that do will be more prone to carry out activity within the program.

5. Customer relationship

Constantly rewarding your entire customer base, both existing and newly joined, will lead to stronger relationships with your customers. In today’s economy, people typically are less loyal to brands and more engaged with what deals or benefits are being offered. Customers who feel valued are more likely to continue their business with companies, and this referral program will add another layer of value between customer and company.


Best ideas for a customer referral program

Referral programs sound great in theory, but their success will depend on the decisions made during design and implementation. You want to ensure your members are feeling valued for recruiting new customers, but at the same time you want a simple and easy program for members to use. Some customer referral program ideas and areas to consider are:

Referral rewards

In order to get your customer to want to share your company with others, it helps to give them some rewards and incentives for doing so. Generally, it is more likely for an unhappy customer to voice displeasure and dissuade others from using your company or product than it is for a happy customer to recommend your company or product when there is no reward or incentive for them to do so beyond satisfaction. When you are able to provide some type of reward in the form of a discount, cash/points bonus (when combining your rewards program with a loyalty program) or free merchandise, you are much more likely to see engagement from your customers and their willingness to refer others. By adding incentives for new and existing members, you keep both parties engaged and continuing to use the referral program after joining. 

Sync to your platform

If you are already using a wider-range platform beyond just the referral program to service and reward your members, it is useful to tie this program into the overall landscape. One example would be allowing referrals to generate progress towards the next rewards tier in a members recognition scheme. This doesn’t have to be the only requirement for that tier, but giving your members as many options as possible to engage and be rewarded within your platform will boost your overall engagement. 


As an added engagement measure to your referral program, it can be useful to add elements such as a progress tracking bar that looks at the number of new customers a member has brought into the referral program combined with additional layers of incentives for a certain number of members brought into the program with that customer’s referral code. This gamified dashboard will increase customer participation in your program.

Additional requirements beyond enrollment

In today’s world of online engagement, the subject of fraud is not one to take lightly. You should take steps to safeguard against potential fraud from your customer base. Some referral reward programs combat this fraud by requiring some type of action by the user after enrollment in order to complete the referral process. These actions could be as simple as making purchases worth a specific amount, or as advanced as entering payment details. In this way, you know your members aren’t creating fake accounts on their own and you are truly generating new members. 

Engaging influencers

With the explosion of social media and the rise of influencers on these platforms, customers are now giving near the same level of trust to influencers they follow on these sites as they do to their close friends and family. Engaging with influencers in your industry can lead to an explosion of not only referrals, but also basic word of mouth that the referral system contains. 

Referral software

When you are creating this referral program, it is important that it is paired with software that can handle your vision for the program, including tracking, rewarding, promotion, etc. One of the best ways is to pair this program with fully-fledged loyalty program software. This will give you all the tools for design and tracking, but with the added level of engagement for new users after they complete the referral progress. If you are not constantly engaging your new customers brought into the program, you may find they do not convert into long-term customers. 


How Comarch can help design and implement your referral program

Comarch’s loyalty platform is constantly evolving with new features, one of which is an in-house referral program. This referral program software is embedded in the main loyalty platform, and provides a range of functions that complement the overall loyalty scheme for your customers. Below are some features that are crucial for any customer referral program:

  • Communication: Comarch’s loyalty platform contains multiple forms of communication channels (email, SMS, push notifications and more) to alert your current customer base to this new referral program and all of its great benefits. Communication timing is also controllable with our AI engine to ensure optimal interactions with your end users.
  • Terms and conditions: All programs have certain terms and conditions, but referral programs can include specific conditions that must be met in order to gain the promised rewards. These conditions might be in addition to completing the enrollment process.
  • Additional requirements: In order to ensure you are getting real, active new members through your referral program, it is wise to set some additional actions after enrollment. These actions can be based on the number of transactions made, the amount spent on transactions, or specific external events such as signing up for a credit card, enrolling in auto-pay, attending a live event, etc. These additional requirements will help prevent fraud and confirm that your new member is not some form of bot or fake account.
  • Bonus incentives: Don’t just settle for giving your customers a reward every time they bring one person into the program, set bonus rewards for every “X number” of new members referred. This acts in two ways. The first is that it will drive members to invite everyone they know so they can get those bigger rewards. The second is that,  if a member is close to their goal of “X number” of new members, but does not have anyone else to invite, they will seek out new referrals thereby performing some extra marketing for you at their own expense.
  • Tracking: Not only can you see who your members have recruited, but members can also see who they have recruited. Comarch has gone a step further and allowed the tracking of those additional qualifications beyond enrollment for their referrals so they can follow up and ask their friends and family to complete all necessary steps in the referral program.
  • Reporting: In addition to the tracking new referrals, you can also report on the engagement with your different referral promotions and use these reports to tailor the future of your referral program to fit your clients’ preferred rewards. 

Our strategy and consulting experts are constantly learning the newest trends of referral programs and helping our system evolve to meet those needs. Learn more about this process and learn whythe Comarch Loyalty Management System could be right for you, here.




Frequently Asked Questions about Referal Programs

What is a referral program?

A referral program uses your existing customer base to recruit new customers to your business.

Why are referrals important?

Referrals are more likely to be more engaged, long-term and have higher customer lifetime value than non-referred customers. 

How can you ask customers for referrals?

Incentivize your current customers to refer your business to others by offering a reward scheme for new referrals. 

How can you create a referral program?

The technology you use to implement this program is crucial, as you want to be sure the program can continue to support your customer needs and desires. That is why pairing a customer referral program with other software such as a loyalty program will increase your program’s odds of success exponentially.  

How does a referral program inspire brand loyalty?

Referral programs work by rewarding your current customer base for recruiting new customers to your business. These programs work because your customers are actually gaining something from their recommendations, and their word of mouth recommendation is translating into real rewards. These rewards can be in the form of discounts, points, extra features, exclusive products, or more. As members continue to get rewarded for their recruitment, they begin to see themselves as brand ambassadors, which can help them feel they are sharing in the success of the brand as it expands and grows. 

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