5 Mistakes to Avoid While Planning Your Next Referral Marketing Campaign - Duct Tape Marketing Consultant

5 Mistakes to Avoid While Planning Your Next Referral Marketing Campaign

5 Mistakes to Avoid While Planning Your Next Referral Marketing Campaign

By Guest Post

The more things change, the more they remain the same.

This is especially true of marketing. Despite the advances in technology and consumer experience, the basic fact remains that the more people talk about your product, the more popular the brand is.

In short, word of mouth is the best brand advocate out there. Social media campaigns are nothing but an effort to spread the word of mouth among large sections of the population.

One of the ‘simpler’ marketing techniques that return back to the roots is Referral Marketing.

By its very name, it is apparent as to what it involves. Basically, it refers to a method of promoting products or services to new customers through references by existing customers, usual word of mouth.

Referral marketing is a multi-purpose strategy that uses your existing customer base to expand further and consolidate loyalty among existing customers at the same time.

However, like in any endeavor, mistakes are bound to happen. In this article, we will share with you some of the common mistakes made by beginners so that you can save yourself the hassle of learning from your own mistakes.

Some of the mistakes include:

  1. Making referral programs complicated and inaccessible
  2. Not giving sufficient and clear incentives
  3. Not implementing the referral program in a planned manner
  4. Asking for too much and giving too little
  5. Having a complex reward structure

After all, learning from your own mistakes counts as experience, but learning from other’s mistakes is wisdom.

So let us dive into the meat of the matter right way.

The first mistake is:

Making referral programs complicated and difficult to find

Your referral program is an important part of your marketing and should be treated as such. Burying it within the depths of your website won’t do it justice.

It will only make it difficult for consumers to access your program and make them less likely to participate in it.

Another important factor is conversion rates. The more people you get to click on your program, the more chances you have of your campaign going viral.

Increasing the number of fields in the signup form causes a drop of 3% in conversion rates for every extra field added. And the bad news is that this drop gets compounded each time your signup shares the page.

So how do you work your way around this mistake?

  1. Give your referral campaign a highly prominent place on both your offline and online presence especially your landing page, homepage and social media handles
  2. Have a ready call to action in each of your displays that will prompt customers to immediately participate.
  3. Ask only for name and email address or any 2 pieces of information vital to you when people are signing up for your program. Better yet, let them sign up using their existing email accounts and social media handles.

Another bonus tip to ask for a referral is after the first user experience, capitalizing on the user excitement which translates to a higher likelihood of referrals.

Take the example of Dollar Shave Club.

They have neatly embedded the call to action for referral in the most visible place, the user account page. This ensures that the likelihood of the customer referring them each time they log in to check their shipment.

According to data from the company, the referral program has been quite successful with almost 50,000 people referring their friends to the ‘club’.

Not giving sufficient or clear incentives

Customers are not selfless people. When they have invested the time to refer you, it is but natural for them to expect incentives or rewards.

Also, the incentives should be clear to the consumers, namely, they should be aware of what they can expect from you for their troubles.

An even better step is to know your customers well so that you can have different incentives for regular customers and occasional customers.

For instance, offering account credits and discount on purchases will work well when incentivizing regular customers. But will the same move work for occasional customers? Nah, not so much.

In this case, it is better to offer tangible rewards that can be utilized immediately like gift cards or cash. It serves a dual purpose. One, it feeds into the people’s need for instant gratification and two, it enhances your brand association in their minds in a positive way.

Giving clear incentives in referral programs is something that can be done by any brand, whether big or small. In fact referral programs have catapulted several brands to the top. Think AirBnB, Uber, Dropbox and PayPal. (PayPal actually paid its customers for a new signup and they later extended it to merchants as well).

It was the power of referrals that catapulted PayPal to its now iconic status, enabling it to achieve a daily growth of 7 to 10%, yielding better ROI than traditional marketing.

Not being organized in implementation

If you are just starting on a referral program, it is almost criminal to organize it in a slipshod manner, being inconsistent in giving rewards and implementing it on a limited scale.

Your referral program should be planned, strategic and should align to the overall business goals. It is advisable to have a time-bound program with a clear definition of incentives and rewards and tracking customers to send tailored rewards.

So what are the steps you should follow?

  1. A well-defined outline of goals and referral program delineated by time
  2. Marketing schedule for the entire duration such as web push notification, email promotion and all manner of offline and online outreach
  3. Keeping track of the referral campaign throughout and using the results to modify and course correct your campaign

The key metrics to track in your referral program are referral page visits and referral sales, with 1 to 5% clicks considered normal. These figures can rise with good content and a well-designed referral program.

Make sure that your business is geared towards meeting the challenges of increased referrals and subsequent growth in business. A rewarded customer is a happy customer and a happy customer is a brand advocate.

One more important thing to keep in mind is that going small serves no purpose. Referral marketing by its very nature is a numbers game. The more people refer you, the more your business will grow. So ditch any ideas of rolling out a small pilot project before expanding. It’s all in or nothing.

After all, as your referral program grows, so will your business.

Being inconsistent in asking and rewarding

Perhaps this should have come at the very top. Being inconsistent in your referral marketing campaign not only hurts your customers, it also hurts your business and brand value.

Just because customers don’t refer you when you ask them doesn’t mean they never will. Maintain consistency on your part (without being too pushy) and then your brand will be on top of their mind should they find someone who can benefit from your brand to refer.

It is also important to keep in mind that customers like to rewarded for referring you to their friends and it serves no purpose if they log into their accounts and don’t see the incentives they were due.

Asking for too much and giving too little

This is one of the common mistakes committed during the beginning of referral programs. Asking a user to sign up more than they can do for the reward you offer can put him/her off.

For example, if a brand offers a pair of sunglasses for 20 referrals, you can be sure that you won’t be referred at all. Most of the people are comfortable with referring you to single digit number of people. Have a look at this graph.

As you can see from the graph, most people prefer to refer 1 to 5 people. Beyond 10, the referrals drop substantially.

Also, make sure that you are offering sufficiently motivating incentives and rewards in your referral program. The key is to offer something of value to people for their efforts to refer you.

Having a complex reward structure

The more time it takes for the customer to figure out the reward structure, the fewer chances are them clicking on the program.

Referral programs involving multiple steps in participation are too complicated for the customer to invest their time into causing a significant loss to the spread of the referral program.

So how do you work you way around this?

By having a simple reward structure.

The best way is to demonstrate in the form of an example.

Check this example of Airbnb.

The visible call to action with the simultaneous presentation of the favor and benefits in an easy manner, along with a convenient sharing process, gave the referral program virality.


Like all marketing efforts, referral marketing requires a systematic plan, alignment with business goals and customer centric approach.

The beauty with referral marketing is that it enables your business to both consolidate and expand at the same time. So don’t miss out on this powerful channel.

And lastly, there is one tip that will be a staple advice for all your marketing campaigns, not just referral marketing.

Constantly test and adapt your campaign.

Your customers are constantly giving you feedback while interacting with your business. Be open to it and incorporate their suggestions to fine tune your campaign and see the referrals pour in.

About the Author

Vaibhav Kakkar is Co-Founder and Chief Growth Officer at RankWatch and NotifyFox, Software Solutions that help digital marketers perform better. Apart from helping businesses succeed online and writing about Internet Marketing, he spends time digging deep into the beautiful world of search engine algorithms. You can connect with him on LinkedIn

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