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How to Build Trust and Get More Revenue Using Referral Marketing

Until recently, most people turn to social media platforms like Facebook to learn about the latest news and updates about brands and current affairs. One study shows that 85% of Americans point to Facebook as their leading source for news and information.

Then came the rise of “fake news and the recent Facebook – Cambridge Analytica scandal. In the weeks following the scandal’s outbreak, people’s trust level towards Facebook plunged by 66%.

As a result, people have become increasingly skeptical about online content published by brands, news agencies, and other institutions. 

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Referrals: Word-of-mouth marketing has gone digital

While trust towards branded content may be declining, the 2018 Edelman Global Trust Barometer report shows that the level of trust given to content shared by individuals is rising.

This supports earlier studies showing that 90% of Americans trust product and service recommendations from friends and family, with 29% deciding to purchase within the day.

It’s for this very reason why brands are now tapping into the convincing power of their current customers to get new ones at the door through a strategy called referral marketing.

Referral marketing is a type of word-of-mouth marketing where customers are encouraged to share a link to people they know in exchange for some form of incentive. 

Why should your company use referral marketing?

High level of trust

Instead of merely publishing the information on a website or social media news feed, your customers now become the medium that delivers your message to people who know and trust them. That personal connection will make them more willing to listen to what your customers have today.

Increase sales conversions

Referral marketing involves giving your customers an incentive for every referral that takes the right action. 

“Since they will already do the heavy lifting for you by choosing which of their friends and family will most likely purchase your products or services,” he explains. “And because people are four times more likely to buy a product or service, you can significantly increase your sales conversion and ROI.”

Quick and easy implementation

Referral marketing software programs like Viral Loop guide you by creating your referral marketing campaigns, making the whole process more straightforward.

At the same time, these software programs provide you with analytic reports so you can track your campaigns and see how it’s helping you and your team reach your set business goals.

Why use emails for your referral marketing campaigns?

Larger user base

According to Radicati, they’re three times more email accounts than Facebook and Twitter users combined! Of these, 76% are email accounts belonging to consumers.

Higher click-through rates

One reason why visitors give you their email addresses is that they want to stay updated on the latest deals and discounts you may offer. In fact, 70% of email subscribers open their emails if they know if a deal or discount waiting for them.

That is why click-through rates from emails are significant compared to click-through rates generated by social media posts. It’s also the reason why email marketing delivers the highest return of investment (ROI)

A huge time-saver

Email marketing campaigns are automated. Once these are set up, it will mostly run on its own. That way, you can devote more time to nurturing and delighting your new customers that come on board as a result.

How to set up a referral program?

Set your goals

Before you launch your referral program, you must first be clear about what goal you would like to achieve. This is crucial as your goal will serve as your guide in creating your referral program mechanics and your terms and conditions.

When crafting your goal, make sure that it’s measurable by setting the proper metrics and benchmarks to monitor. These will help you determine whether the program is a success or a failure.

Segment your email list

Not all of those that sign up to your email list will be a good fit for your referral program. For your referral program to be a success, you’ll need to find those on your list who would be willing to refer their friends and family.

The quickest—and most effective way—to find out is by conducting what is called a Net Promoter Score survey or NPS, which looks something like this:

As you can see, this survey asks only one question: On a scale of 0-10, how likely are you going to recommend us to a friend or colleague?

Those that answer a 9 or a 10 are the ones that will be the best fit to invite to your referral program.

Choose an incentive relevant to your product  

Sites like Slickdeals help consumers receive discounts at their favorite stores to provide a great experience. All businesses should offer an incentive that will heighten your customer’s experience based on your product or service.

Perhaps the most famous example of this is Dropbox’s referral program.

Free users that sign up for Dropbox get limited cloud storage space. Dropbox understood that the one thing that would entice them to refer their service to others was more free storage space. So that’s what they did.

First, they got their free users hooked, getting more free space by connecting their social media accounts to Dropbox. They then offered even more storage space to them by sharing a unique referral link to others however they wanted: embedding it in their blog post, sending it to their email contacts, or sharing the link on their social media account.

Not long after launching this referral program, Dropbox’s user base grew by 3900%, with many of these eventually upgrading to their paid packages.

Use the double-incentive method 

A double-incentive referral program means that you don’t only reward your customer when they successfully refer someone to your business. The ones receiving the referral link will also receive an incentive for taking the prescribed action.

Doing this increases the virality of your referral program without risking it becoming too spammy. At the same time, you can be sure that the incentives you offer won’t cut too deeply to your profit margins since they need to do something that will generate revenue for you.

When using the double-incentive method, make sure that you match the incentive you offer with what you’re asking your customers to do for you. The more you ask, the more valuable your incentive you have to offer.

Take GetResponse’s referral program, for example.

Each time one of their existing customers successfully gets someone to buy one of their packages, both the current customer and the one they referred automatically get $30 off on their next payment.

But wait! There’s more!


If their existing customer manages to get three people to sign up for one of the packages, they get a $30 discount for each of them and enroll in one of their premium certification courses for free.

Be clear on the mechanics and conditions

This is the most crucial part of creating a referral marketing program.

You need to be crystal clear about these details to ensure that your customers don’t feel cheated or misled. Otherwise, they could turn your referral program against you. Instead of bringing in more customers, they could use it as proof that you can’t be trusted and scare potential customers away.

Some of the things to include in your referral program mechanics and conditions are:

Who can sign up for your referral bonus?

  • Are there specific products or services that need to be purchased to get a reward?
  • Is there a limit on the bonus a customer can earn as part of the referral program?
  • How will their earnings be affected if someone they referred cancels or asks for a refund?

Personalize your emails

The importance of ensuring that you personalize the emails you send for your referral program can’t be stressed enough.

Personalizing your email from the subject line to the words you use in the content can affect its open and click-through rate. If you need to develop your brand identity, I recommend checking out Designhill.

Besides adding the person’s name in the subject line and greeting, including a picture of the person who referred them can increase conversion rates. 

In the case of Airbnb, this helped increase the number of new signups and bookings by over 300% per day!

Track and monitor your results

The last step you’ll need to do before launching your referral program is set up a way of tracking it to see if it’s actually helping you reach your set goals.

On top of the analytics provided by your chosen referral marketing software program, you also need to have Google Analytics or a similar program in place that will help you see where people visiting your site are coming from.

Ensure that you also have metrics in place that will help you get a clearer picture of your referral marketing program’s performance. Some of the performance metrics to watch for include:

  • Conversion rates
  • Email click-through rates
  • Lead generation rates


Referral marketing programs are an effective way to gain your target market’s trust and confidence by tapping into the power of word-of-mouth advertising. Only when you’re able to get this would you get them to do business with you.

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