Category Archives: Referral Marketing

Getting The Most Out of Your Referral Program

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So you’ve got your referral program up and running. Sweet!referral-program-setup
How do you get the most out of it, though?

1. Write great referral emails.
When a customer buys a product from your online store, she receives an email from you (powered by us), with a coupon link for her to share with her friends. You can customize this email however you like.

Keep this email succinct.

After you’ve written it, read it from the perspective of your customer. Better yet, ask a friend (or ten) to read it. Ask them what they found confusing or tedious – they know better, because they don’t know your product as well as you do. (You know your product too well to know what throws people off.)

The clearer the email and the call-to-action (“Share this link now to earn ______!”), the better your conversion rates will be. Here’s how you do it.

2. Structure your rewards well.
Rewards are better than no rewards. But who should you reward more, the customer or the friend she makes the referral to? How much should you reward them, exactly? (Ideally, you’ll want to reward them as much as possible, but you’ve got a business to run, too. Otherwise it’s free goodies for everyone!)

Most specifically, how should you distribute the reward that you’re willing to give?

As it turns out: If your brand is new, you should reward the customer making the referral. If your brand is more established, split the reward between the customer and the friend she refers to you. Here’s why.

3. Make it more visible.
We often overlook this because it seems so obvious, but a customer can’t make a referral if he’s unaware that he has option to do so. Not everybody checks their email. It’s worth reminding your customers (through social media, or on your site itself) that they do have that option, and that it benefits them.

The keyword is “benefit”. Why should he do it? You have to tell him! (Remember, you get to choose how the benefits are structured.) Are you rewarding him directly, or his friends, or both? Make it loud, make it clear. Here’s how.

4. Tweak constantly.
There’s no magic pill, or we’d all be using it already. Every business, market and customer base is different. You can’t know what works best until you evaluate the results that you get.

So don’t be afraid to experiment. Do your customers respond better to cash incentives or to discounts? You can’t know in advance! Try one, then try the other, and check your stats to see if your referrals go up or down. You might even find that your customers respond better to lengthy, heartfelt emails. Who knows? Go find out.

5: Don’t forget your fundamentals.
Referral programs don’t magically create customers out of thin air or summon them from a mystical alternate reality. They simply accelerate the natural, organic process of sharing information (“Wow, this is great, I gotta tell everyone!”) by rewarding people for doing it.

Your customer must still like your product enough to want to refer it to his friends. Few people will refer a lousy product to their friends even if rewarded, because doing so would diminish their “social currency”.

So make sure you’ve got a great product to begin with, and that you focus on making your customer’s retail experience a great one- and then you can reap some truly delectable  returns from your referral program.

Still not seeing results?
Relax! It can take time for your customers to get around to using your program, and it can take even longer for their friends to use their coupons. You may experience a sudden spike in referral sales after a lull period. Tweet or Email us if you have any questions, concerns, anything!

Candy Tips – How to Write Great Emails Asking for Referrals!

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Merry Christmas in advance! It’s time for another Candy Tip, this time on how to write emails asking for referrals that work. Most marketing and sales folk know that word of mouth is a powerful tool to generate new sales, and that the old adage goes  ”If you don’t ask, you won’t get.” That’s why it makes sense for salepeople to ask for a referral if they have just made a successful sale of say a lawn mower, property or car.

In the new economy of the Internet and eCommerce, online stores can also ask for a referral from a customer immediately after a sale. That’s what ReferralCandy does with an automated email to your customers. Assuming they like your product (and a good product always comes first), they’ll be happy to share it with friends that might want it too. But what to say in the email? Here are some tips and best practices that we’ve found through our interactions with numerous online retailers who are our clients.

Candy Tip #1 – Keep Emails Short and Sweet

So your customer has just bought that hot new item from your shop and is happy and excited by their purchase. She opens an email from you, only to find that it’s a long and winding road without a clear call to action which tells her what you would like her to do. So she quickly closes the email, moves on, and the opportunity is lost.

While there are certain cases where long and complex emails are better (e.g. you are telling a great story and building it up slowly), in general, you want to keep your emails asking for referrals short and sweet. Thank the customer for their purchase, and be clear in your call to action. Of course, you are free to add a bit of spice and colour in your email to suit your brand. Just not too much!

For example, in the sample email below, we’ve kept the email short and made a simple call to action “forward this coupon link” in a prominent colour and position at the bottom of the email.

Keep your emails short and sweet with a clear call to action.

Candy Tip #2 – It’s All About the Customer, so use “You” more than “I”

A simple rule in marketing is to demonstrate value to the customer. In other words, it should be about “You”, not “I”, “Me” or “We”. Demonstrate how your customer can benefit (e.g. get $10 cash!). As a general rule, if your email contains the words “I” or “we” more than the words “you” or “your”, you might want to look closely at rewording it!

Put yourself in the shoes of the customer. If you were reading your email as a customer, would you like what you are reading?

Candy Tip #3 – Have your Email Design Suit your Brand.

If it’s at all possible, you should use emails designs and text that suit your store’s character. What colours, fonts and designs best fit the message and image of your brand?

For ReferralCandy users, you can find out how to customize the design for your email based on our templates at the FAQ page below:

http://help.referralcandy.com/customer/portal/articles/792987-can-the-design-for-referral-emails-be-changed-

Bonus Tip –  Be Specific in what you Ask for

Finally, here’s an advanced tip that requires a bit of creativity and judgement. Referrals are often more effective if you are making a specific ask. For instance, instead of asking

“Do you know anyone who wants these nutrition supplements?”

You can ask,

“Brad, can you think of 3 friends who would want to get ripped with these awesome Bion-X supplements? Forward this coupon to them today!”

We think the second sentence would definitely be more persuasive as it is asking the reader to think of 3 specific friends who want to get a “ripped” physique. So long as the email is well-crafted and creative, it should lead to better conversions.

So that’s it for this week’s Candy Tips. Oh by the way, can you think of two friends who want to get more word of mouth sales online through referrals? Might want to forward  them this article.

What Powerball Mania says about People and Perks & How You Can Leverage It

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If you live in the U.S., it was nearly impossible to miss the flurry of excitement surrounding the recent Powerball.  At $550 million, the multi-state lottery was the largest jackpot in history and everyone wanted the chance to win.

According to ABC News, over 189 million tickets were sold for the final drawing and reports of people waiting in line for hours at a chance to purchase the winning numbers erupted in local reports.

Though most know that they had a higher chance of being attacked by a wild boar than winning, the idea of getting something for virtually nothing never ceases to appeal to human nature.

In ecommerce, business people would kill for the kind of power a hefty jackpot leverages.  There wasn’t a Twitter stream, news publication or water cooler conversation that ignored the millions up for grabs.  And regardless of economic status, throngs of consumers turned out their pockets to be a part of it.

But amazingly, you don’t have to offer people a half billion dollars to get them talking about and purchasing your product. The power of perks is completely scalable and your ecommerce business can leverage the lottery’s success by creating undeniably beneficial offerings.

Free is Free, Even When It’s Not

Getting people to pay for perks seems like an oxymoron, but it’s actually the norm.  Anxious consumers spent $2, $20, $100 and more on a 1 in 175 million chance to win the Powerball. Regardless of the odds, Americans indulged because the idea of “free money” is worth the risk, even when the potential to lose is so great.

In ecommerce, you can make a free-offering, that isn’t even 100% free and gain major traction. Like with the lottery, it’s all about striking a balance and determining what perks justify which actions.

For some, spending $20 at a chance to win $550 million is completely reasonable. And many of those same people would see referring a friend for a cash bonus or “buy-one-get-one” as a perfectly balanced way to gain a reward.

You already have a leg-up on the lottery when offering your customers perks because you’ve guaranteed their return and removed the gamble. You don’t have to sell the farm to get the conversions you seek. It’s all a simple matter of determining what level of “free” inspires your customers to act.

For example, discount online retailer Ideeli tells their loyal subscribers that there is a $25 cash incentive for referring a friend that makes a purchase. This offer is anything but free because it requires the customer to talk about the site, send a personalized invite or social media share and then possibly entice the friend to buy in order to gain the reward.

ideeli referral program

Favorable as the offering may seem, it requires a bit of work on the customer’s part, making it a little less than free money.  For Ideeli, $25 is the price a new customer is worth. Were the reward only $5 maybe no one would bother referring or were it $50 maybe the value of a new customer would be washed out by the referral payout.

Set your own price marker on a perk and an action so that it justifies the partnership from an ROI perspective.  Then, you can start leveraging the lottery’s ability to get people to pay for something that’s “free”.

Getting People Socially Charged

One of the most astounding results of the recent Powerball jackpot was its omnipresence within social media.  The Atlantic Wire reported that 600 tweets an hour contained the hashtag #powerball the day before the drawing and more than 5,000 players took to Instagram to share a photo of their tickets with the same hashtag.

Even more outrageous was the lottery hoax that got 500,000 Facebook users sharing a Photoshopped picture of a fake winning ticket.

This kind of online reach is an ecommerce businessperson’s dream come true.  For many Internet-based sellers, the chance to tap into the ever-elusive social media world is a constant battle.  But what business owners have to realize is that consumers see chances to hype their social status as a perk.

The best way to get your brand to boom on social media is to understand what the benefits of sharing your message are for customers.

Bragging Rights

Everyone likes the opportunity to boast a bit and what better way to do so than through Twitter?

Give your audience a reason to flaunt your business and products.  As level-headed as you may like to think your customers are, everyone wants the chance to tell people they have something better than the rest.

Sense of Community

People like to feel as if they are a part of something. Engaging the world in discussion over shared wants, needs and fears can create major social buzz.

Discover the common ground that binds your customers and get them talking.  A mutual emotion or circumstance can inspire conversation.

Just for Fun

Sometimes you just have to let fun happen on social media.

Let go of the business-only side of your strategy and let people enjoy something silly that has to do with your product or service.

Despite what many marketers have said, there is a way to get some ROI out of platforms like Twitter, Facebook and Pinterest. According to Mik Pam, CEO of Pinagency, the social media sphere is an ideal place for perks.

“We’ve 
experimented on several rewards systems and found that social sharing 
rewards are the best return for our investment,” says Pam.

Just because people don’t go straight from “liking” your posts to instant purchase doesn’t mean there isn’t value.  Let the build-up seen around the Powerball inspire you to simply get people talking, then find a way to slip in rewards to bolster sales.

Avoiding the Rewards Backlash

With the exception of two very lucky winners, millions faced the disappointment of coming up empty-handed. The massive level of letdown when Powerball players realize they don’t hold the winning numbers is just as palpable as the excitement leading up.

News publications and satirical websites do their best to ease the pain of I-didn’t-win-a-titis:

How to Cope With Powerball Loss

Americans Lacking Basic Understanding of Probability Disappointed by Powerball Results

But little can soothe the crushed high-hopes of mansions and sports cars. And according to Linda Pophal of Strategic Communications, business owners have to be careful to avoid the same upset in their rewards programs.

“Offering perks is commonly used by 
businesses, large and small, to attract customers. Unfortunately, this 
isn’t always the best approach. There are a couple of big drawbacks of
 offering perks and discounts. One is that they come to be expected
 and people are reluctant to purchase anything or interact with the company
 without a perk involved,” says Pophal.

Pophal goes on to say that this doesn’t mean perks aren’t beneficial and effective, but the onus is on the business to determine the best recipe for their company and customers.

Not every customer will be prepared to fully commit to the requirements that will gain them a perk, but instead of setting them up for disappointment by dangling an empty coupon code box or unattainable discount in front of them, businesses can offer something of a consolation.

The Powerball does this by giving players with a few matching numbers smaller prizes to reward them.  Even a single right number can potentially double the money a participant spent on a ticket.

In the ecommerce world, Amazon shows how this balance of benefits can be accomplished.  The company’s Amazon Prime program gives members the chance to earn free two-day shipping on their purchases.

This offering is the ultimate perk that can be earned on Amazon, but it requires that customers pay an annual fee of $79 to participate.  For some, that barrier of entry is beyond what they are willing to commit to in order to gain the advantage of fast, free shipping.  But that doesn’t mean non-members are entirely excluded from the advantages of shopping on Amazon.

An alternative option exists for those unwilling or unprepared to pay the yearly cost that serves as a benefit to both the company and the consumer.

Instead of either forcing a customer to get involved or denying them any access to perks, Amazon strikes a balance by offering free shipping on select purchases over $25.  In this win-win scenario, Amazon encourages more avid buying and the shopper isn’t left empty-handed.

Perks don’t have to be “all or nothing” and they don’t require that business owners sacrifice more than they can afford to for little return.  It’s all about balance, not everyone can hit the jackpot, but that doesn’t mean that playing the lottery can’t still have its benefits.

Candy Tips: 2 Simple Steps to Get More Referrals for Your Refer-a-Friend Program

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Here at ReferralCandy, we’re often asked about how online retailers can improve their referral programs to get more sales. In response to these questions, we’re starting a series of “Candy Tips” to help you make better use of word of mouth marketing. To start with, here are 2 Candy Tips to get more participants making referrals from your refer-a-friend program.

Tip No 1: Include a link on your homepage to your referral program.

One of the simple things that we have found often works in getting more referrals is to include a link to your referral program from your homepage, where customers and other visitors to your website can easily spread the word about your product through emails, Facebook and Twitter and get rewarded. For example, 525 Boutique, a contemporary fashion store and ReferralCandy retailer, places a prominent link on their homepage to their referral program. If you’re a ReferralCandy retailer, find out more about how you can help your customers access their personal Referral Corner from your homepage.
Continue reading →

10 Ways to Get More Customers for Your Online Store

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Hi I’m yongfook and I’m going to be guest blogging at the ReferralCandy blog about how you can get more customers and more sales for your online store. Previously I was CTO of Glamour Sales – one of Japan’s biggest e-commerce destinations for luxury goods. In 1.5 years we grew from zero customers to half a million, and sales reached double-digit millions annually (USD). We did this through growth hacking, at the ReferralCandy blog I’m going to share even more practical tips you can use to grow your business.

In this post we’re going to look at some tactics. Everyone running an online store should form a long-term strategy for growth and it’s important to recognize the difference between strategy and tactics. You should define objectives, strategy and tactics in that order – for example, say I run a store for pet clothes:

  • Objective: Reach 1000 pet owners in the database
  • Strategy: Doggy Got Style!
  • Tactics: Summer Doggy Swimsuit Sale, Stylish Dogs of Instagram series of blog posts, World’s Most Stylish Dogs weekly newsletter, nominate-your-dog Stylish Dog Award (with prize), Dress-Your-Dog mobile app.

Tactics are actions you take to execute a strategy. But what are some common tactics you can use as part of a “big picture” strategy? Here’s 10 tactics on getting more customers for your online store.

Hold a Sale
Discounting is not a long-term strategy but it can be highly effective in driving new customers to your store. Figure out your customer acquisition cost and from that, how much of a discount (on a limited amount of quantity/product) you can afford to offer in order to acquire new customers – then announce to the world via Twitter and your blog! Just be careful of attracting deal-hunters, since these customers may not be of long-term value to your business.

Run a Competition
Competitions can be a fun way to spread the word about your store but remember to keep the competition purposeful to your brand. Don’t run a “cute pets” competition if you’re selling womens lingerie! You can extract maximum exposure from competitions by building in a voting mechanic – in order to win or be shortlisted, participants have to get their friends to vote.

Give Free Samples
The more you can do to lower the barrier for a customer to experience your products, the better. This might not make economic sense depending on your product, but it’s worth trying if the cost to offer a free sample is low.

Partner Up
Partnering with a non-competitive but audience-complementary partner can be a highly effective way of acquiring new customers. This can be something as simple as a traffic exchange – partnering with a highly-trafficked site in your customer’s domain, putting up a banner to drive traffic to your shop, and paying the partner either a cut of the cart revenue or a flat fee for every customer acquired via the partner banner.

Write Targeted Blog Content
It’s no quick-fix, but writing authoritative, interesting content in your online shop’s contextual domain will pay huge dividends over the long term. Targeted content will help boost your site’s SEO bringing in new customers organically, and will also encourage your existing visitors to share your content more. Every online shop should have blog content as part of its marketing strategy!

Offer a New Product / Service
It sounds obvious, but a super effective way to capture a whole new customer segment is to offer a whole new product or service! This doesn’t even need to be complicated, it could simply be a repositioning, repackaging or even repricing of an existing product. On that last point, here’s one of my favourite examples of casual price discrimination…

Advertise
It’s one of the most basic forms of driving people to a product or service, but don’t forget about it! Experiment with Google Ads since you can fine-tune your targeting and choose how much you want to spend.

Participate in Social Media
In the age of social media, effective marketing is not just about getting people to come to you – it’s about participating in the channels that your customers are participating in whether that’s Facebook, Twitter, Instagram or any of the other dozens of popular services. Pick the channels that are right for your business and participate authentically – remember that social media is not there to simply drive people to your store, it’s also there to help you create stories about your business that people can share with others.

Incentivise First Purchase
Sweeten the deal for first-time purchasers and you’ll increase the amount of conversion from visitor to customer. Some online stores offer a small discount for first time purchases, the key is to make it tangible and obvious what the customer will get if they purchase right now.

Referrals
The best and arguably most valuable method of customer acquisition is when existing customers refer a friend. When this method works really well, all the marketing is done by your existing customers meaning you can focus on running your online store instead of spending time bringing people to it. Referrals can happen organically via Word of Mouth marketing (focus on great products, great prices and excellent customer service – these alone will get you very far) but you can also implement a referral marketing program.

The simplest way to do this if you’re already running an online store is with referral marketing software – this will help to automate the process by which existing customers are encouraged and rewarded to tell their friends about your online store. ReferralCandy is a fully-automated, plug and play solution for referral marketing and at the time of writing works seamlessly with over 16 different e-commerce platforms including Amazon, Bigcommerce, Etsy, Magento, Shopify and Volusion.

Try ReferralCandy Now if you’d like to automate your customer referrals!

The Top 10 Most Popular Online Retailers on Facebook

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Have you ever been to a rival online retailer’s website and and wondered how they got so many likes on Facebook? Have you ever wondered which online store owns the most popular Facebook page? Have you ever wondered why your high school crush never liked your Facebook cover photo back?

Well, the geeks here at ReferralCandy actually went to some lengths to find out, and then got me to write about it. First, we collated all the websites on Alexa that were online retailers (we took out those companies that had physical stores, so Victoria’s Secret sadly doesn’t count). Then, we crawled their webpages to find out where their Facebook pages were, and how many likes were on each Facebook page. Finally, we picked out the top 10, and checked out their pages in detail to see how the heck they got a million likes or more (and we did all this while delivering a smoother refer-a-friend web-app for your online store).

It was a lot of work, but it was also a good excuse to procrastinate with some e-window shopping at work. So without further ado, here’s the Top 10 most popular e-retailers on Facebook, as voted in by the mouse-clicking masses.

10. InfiBeam (937k likes)

We kick off the list at number 10 with the popular Indian e-commerce site InfiBeam, which sells everything from computers to flowers. Their Facebook page is full of pithy and earnest sayings, like this one above from Charlie Chaplin. I think it’s sweet, and their customers like it too, apparently.

9. Flipkart.com (1.09m likes)

Flipkart.com founder Binny Bansal tells a great story about how he started the Indian online bookseller from a two-bedroom apartment with his brother in 2007. In a recent interview, he says that every day, one of them would go on a bike to buy books and make their own catalogue. ” We would sit down on the floor and make the packages to give to the courier agencies for shipment.” It’s since come a long way from it’s humble beginnings and now sells music, movies, games, cameras, etc. It’s been likened to India’s Amazon, but with cash-on-delivery and other innovations tailored for the Indian e-commerce market.

Their Facebook page goes by simple themes (this month’s theme is “technology” and last month’s was “rain”). We also really like their use of infographics that their customers can relate to, like this one on the A-Z of Indian cuisine.

8. Newegg.com (1.09m likes)

The guys at newegg.com sell a wide range of electronics, as well as some geeky-techy eenie-meenie stuff, like this TV Universal Remote Control Keychain, in case, you know, you needed to switch channels while on the go. They’ve got a great Facebook page which asks some quirky questions such as “Do you consider your computer a male, female or just an object?”. Well,  more than 1400 people responded to that. Some sample answers. “Don’t know, I respect it’s privacy” or “It’s female. Her name is Cortana.” and so on. Clever and conversational content that resonates with the right audience, that’s why Newegg.com comes in at Number 8 (beating out Flipkart by about 500 votes, this one was closer than close).

7. Fashionandyou.com (1.12m likes)

Fashionandyou.com is a leading Indian fashion site that specializes in 3 day deals for site members on clothing and accessories. While their Facebook page is not exactly groundbreaking stuff (nice pictures of nice ladies in nice clothes), their social refer-a-friend programme and deep discounting has helped to generate over 3.6 million members via social media channels. Hey, referrals rock!

6. Worldsoccershop.com (1.35m likes)

It’s no wonder that the beautiful game is in the top 10 list of most popular online stores on facebook. Started by a failed soccer player from Brixton, England in 2001, Worldsoccershop.com has turned into something of a behemoth in online sales of replica team jerseys, boots and all other kinds of soccer paraphernalia. According to their website, they ordered 200,000 balls for the FIFA 2010 World Cup alone (up from 20 for the 2002 World Cup). That’s a lot of balls, Mr Anderson!

Their Facebook page is pretty straightforward, with droolworthy pics of the latest boots and replica jerseys on sale. But when your clientele is made up of the world’s testosterone laden young men playing the world’s most popular sport, you’re bound to get a few likes!

5. Yepme.com (1.36m likes)

Having started just two short years ago, Yepme is an India based online retailer specializing in private-label mens’ and women’s clothing for the 2nd and 3rd tier cities in India, where designer labels fear to thread. An aggressive social media and viral tv campaign (see the funny youtube clip above) has seen Yepme reach more than 1.3million likes on Facebook. Who’s gonna be watching this up and coming brand closely? Yep me.

4. EastBay (1.46m likes)

Americans are fanatical about sports, and EastBay is one of the leading online retailers of sportswear from football to cheerleading. Like worldsoccershop.com, their Facebook page seems to follow a tried and tested formula by posting snazzy pictures of sportswear and sportsmen (be like Mike, anyone?), and asking their scores of customers to comment on which ones they like best. It’s kinda like sports porn. And 1.4m people are addicted to it.

3. Peixe Urbano (1.59m likes)

Coming in at No. 3 is the only Brazilian online retailer on our list. Peixe Urbano (which means urban fish in Portuguese – yay Google Translate!) was founded in 2009 as a group buying site for local products and services, and is today present in major Brazilian cities as well Argentina, Mexico and Chile. With more than 16 million users and an expanding Latin American market in ecommerce, this is one site to watch.

2. ShoeDazzle (1.99m likes)

And the first runner-up of our inaugural online store facebook popularity contest? It’s none other than ShoeDazzle, a online Ladies’ shoe store with a personal stylist function thrown in based on customer preferences. We like their website for its sleek look set against a minimal white background, and their Facebook page is chock-full of item promotions and fun polls, interspersed with other social media like Twitter and Pinterest.

Infamous shoe fan and wife-of-a-dictator Imelda Marcos once said “I did not have three thousand pairs of shoes, I had one thousand and sixty”. Personally, I believe that you only ever need two pairs of shoes, one for work and one for playing soccer (see item 6 above). Unless you’re a soccer player of course. But hey,  it seems that 2m rabid ShoeDazzle fans on Facebook beg to differ.

1. Amazon.com (12m likes!)

And the one Facebook page to rule them all? You guessed it, it’s none other than Amazon.com, and they tower over the market with a whopping 12m likes. That’s 5m more than Mitt Romney! Amazon’s Facebook page keeps things interesting by asking viewers to comment on their favourite singers, movies, games, gadgets etc. It also touches on key product launches and the human stories behind them – its post on the re-launch of the Furby asked customers to relate the longest time they’ve waited in line for a hot toy (and got 1700 comments). But mostly their Facebook page got a lot of likes by being, well, Amazon.

How to get more likes on your Facebook page

So, after a few days of Facebooking, what have we learnt from the most popular online retailers on Facebook? While it’s clear that how big your Facebook following is necessarily a function of how many customers you have, there’s a lot of things we can learn from the top 10 nevertheless. Here are three tips we picked up from the best in the business.

  • Know who your customers are

The best Facebook pages for B2C businesses understand their target demographic. Newegg.com targeted their geeky clientele by asking them a whimsical question about what gender their computers were. Flipkart.com reached out to their Indian mass market with infographics that they could relate to, such as this one about cricket legend Sachin Tendulkar. The best content speaks to the heart of your loyal Facebook friends, who will spread the word in turn.

  • Let your audience do the talking

Many of the top 10 online retailers on our list use interactive activities to get the audience involved. For instance, ShoeDazzle is a master of this with online polls and contests such as this one on the winning look for the Emmy Awards, with the winning items getting a discount on their store. Getting your Facebook community involved in commenting, voting and posting gives them a sense of ownershop of the Facebook page, as well as your brand.

  • Post. Alot.

Most of the Top 10 on our list post on a daily basis, some multiple times a day. Keeping things fresh with a joke or the latest product update helps keep your Facebook following coming back for more, and adds a sense of vibrance and activity to your page.

Which Top 10 List do you want to see next?

So from India to Brazil to the US, from Football to Furbies, that’s our roundup of the most liked online retailers on Facebook from around the globe, as well as what makes them likeable. We hope this helps you understand better what works on Facebook for your online store.

Got a top 10 list you want to see on the ReferralCandy blog? Let us know below. Till next time.

Alvinl is the marketing guy at www.ReferralCandy.com, the refer-a-friend app that increases your sales through word of mouth. In his spare time he loves geeking out on technology, psychology and economics news.
Image credit: Sean MacEntee

Referral Programs: Who Should You Reward?

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In a previous post, we found out that referral programs bring you better customers and also brings in the dough. Now that we know a customer referral program is beneficial, the next order of business is to decide what kind of customer referral reward scheme to implement.

There’s been some recent research by the good people from the University of Pittsburgh and Korea University on this issue (pdf here). They examined how different referral reward schemes affected referral likelihood.

Some background to start with:

The study examined the effect of brand strength on two common types of reward schemes, a “Reward Me” scheme in which the recommender (the existing customer) receives the reward, and a “Reward Both” scheme in which both parties (the existing customer and the new customer) are rewarded.

Two levels of brand strength were pitted against each other; stronger brands versus weaker brands. Stronger brands are brands that are well-established and have high brand awareness. Consumers of stronger brands feel more brand commitment to the brand than consumers of weaker brands.

298 mobile phone subscribers using different mobile services in Korea were examined. There are three major mobile services in Korea, the leading brand having 53% market share and the two follower brands having 31.5% and 15.5% share. The leading brand was used as the stronger brand, while the two follower brands were used as weaker brands.

The subscribers were told that their mobile phone provider was embarking on a referral reward program. The reward was 60,000 Korean won in free calls (about $50 at the time of the study) in the Reward Me condition or 30,000 won in free calls each in the Reward Both condition.

They were then tested for whether they would refer their phone service for the different reward schemes.

What they found:

The results were condensed into a chart shown below.

The Effect of Reward Scheme and Brand Strength on Referral Likelihood

Off the bat, we see that there are some significant differences in referral likelihood between stronger brands and weaker brands for different schemes.

For weaker brands: Referral likelihood increased by large margins when rewards were introduced (for both Reward Both and Reward Me schemes). The Reward Me scheme fared slightly better than Reward Both.

Researchers explained that consumers of weaker brands care a lot about what they get out of the referral as they tend to be more price sensitive. This perception caused them to be more attracted to the reward scheme where they gained the most, which was the Reward Me scheme.

For stronger brands: The Reward Both scheme performed a lot better compared to the Reward Me scheme. Now this is surprising. The consumers of stronger brands did not seem to care about the higher reward they obtained for referrals in the Reward Me scheme! What is going on here?

Researchers think this counterintuitive result is due to existing customers having a high affinity for the brand and are already willing to make the referral. By offering a larger reward to referrer, it makes it seem like they are in it for the money.  Additionally, the study showed that consumers of a strong brand tend to be less price sensitive. So the bigger reward in the Reward Me scheme didn’t increase referral likelihood as it was seen as less important.

How does this apply to me?

This study only looks at referral likelihood, which represents just one dimension of customer referral programs. In reality, there are other dimensions to consider (such as how to ensure that referrals result in a purchase).

However, there are still some clear practical takeaways that we can obtain from this. First off, it’s clear from the study that rewarding customers for referrals improves referral likelihood over not rewarding them.

Secondly, the strength of a brand affects how customers react to a referral program.

So which type of reward scheme should you choose?

For newly launched brands: Choose either the Reward Me or Reward Both scheme. If you go with a Reward Both scheme, the study suggests that you should give bigger rewards to your existing customers. They tend to be more price sensitive and doing so might increase referral likelihood significantly.

For stronger, established brands: A Reward Both scheme is the clear choice. The study shows that your existing customers tend to be less price sensitive, so this means you should skew rewards to new customers and downplay the rewards to your existing customers.

Do Referral Programs Bring You Better Customers?

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Are referred customers more valuable than non-referred customers? This is the question that researchers from Goethe University Frankfurt and University of Pennsylvania set out to answer in their paper “Referral Programs and Customer Value” (pdf here).

Some background to start with:

The researchers tracked around 5,000 customers that a leading German bank acquired through its referral program. A 25 Euro reward was given to existing customers for each new customer brought in.

The profitability and loyalty of these new customers were tracked for 33 months and compared against a random sample of about 4,600 customers acquired through other methods in the same period.

What they found:

The study revealed several interesting differences between referred and non-referred customers. It turned out that profit margins, retention rates and lifetime customer value were significantly higher for referred customers. Here are some of the key insights:

1. Referred customers have higher profit margins
Referred customers started out with profit margins that were more than 25% higher than non-referred customers. After 29 months, the higher margins of referred customers became equal to those of their non-referred counterparts.

The researchers think that the initial higher profit margins were due to the referred customers being a better fit for the bank. This was because the referrer would likely select friends that he or she thought would be a good match for the firm.

Another possible reason for the higher margins was that friends of the referring customer would be more like them and have similar needs and values. And the bank could use these similarities to better serve the new customer and get higher margins.

However, these advantages gradually vanished as the bank accumulated the same amount of information about both referred and non-referred customers. Also, non-referred customers who weren’t a good match for the bank were more likely to leave as time went by.

Even though profit margins became equal over time, the study still found that the average lifetime customer value of referred customers was 16% higher than that of non-referred customers.

2. Referred customers were less likely to leave
The research showed that the probability of remaining a customer by the end of the study was 82% for referred customers and 79.2% for their non-referred counterparts. Analyzing this data, researchers found that customers acquired through the referral program were 18% less likely to defect than non-referred customers.

In a nutshell, referred customers were more profitable and less likely to leave than non-referred customers.

How does this apply to me?

So what does this all mean? We now know why referral programs work and why it’s worth paying for them – because they help you attract more loyal and profitable customers. Applying the study to your own business, we can see that referral programs don’t just bring you more customers, they bring you better customers.

If you’re hungry for more details, you should definitely check the full paper here.

Referral and Affiliate Marketing: What’s the Difference?

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“You guys do referral marketing? Isn’t that the one where affiliates do referrals for you?”

Not many people know the difference between referral and affiliate marketing. It is pretty easy to confuse one with the other. Affiliates do refer customers to your business… right? Technically, affiliate marketing could be considered a subset of referral marketing.

In practice, though, referral and affiliate marketing are rather different ways of finding new customers.

Similarities:
Both drive new customers to your business through a group of people selling your product who don’t work for you directly (the advocates). This similarity is the reason that referral and affiliate marketing are often mistaken for one another. But there’s something very different between the two that sets them apart.

The answer lies in the relationship between the advocate and the prospective customer.

In affiliate marketing, the advocate doesn’t know the prospect personally. It’s unlikely that they would go out for a beer after work or know the names of each other’s kids. And this changes the motivation for the endorsement being made. The advocate helping you make the sale in affiliate marketing is doing it for the financial reward involved.

“I’m going to refer this product to anybody I can so that I’ll get rewarded for it.”

In referral marketing, the advocate is recommending you to someone he or she knows quite well. This could be a college roommate or a co-worker.

So the big difference lies in the main relationship involved, you’d say. But this relationship makes all the difference in the world!

“I’ve found a great product or service that I want to tell my friends about because I believe that it will make their lives better.”

The reason for the referral is altruism and making referrals is a deeply satisfying way to connect with others.

Yes, there might be a discount or some other incentive thrown in to sweeten the deal. But this doesn’t change why it’s being done.

“I’m not going to wreck my reputation unless I think the recommendation will really help my friend.”

So there you have it. The core difference between referral and affiliate marketing is in the relationship between the two people talking about you.

The relationships in referral marketing are personal while the ones in affiliate marketing are financially driven.

This distinction leads to certain practical nuances that need to be considered when implementing the two forms of marketing. It also results in each having its own pros and cons. But we’ll save that for a future post. For now, we’re content that there’s a stake in the ground to start from.

Not a Smooth Landing (Page)

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A few days ago, we got an interesting email from one of the merchants we work with. She pointed us to a competitor whose referral marketing campaigns uses landing pages. So if someone wants to recommend the store, they’re directed to a webpage with a box that looks like this:

They would then type the email addresses of friends into the box or let the page access their email account to slurp in their contact list.

This turns out to be pretty different from the way we do it. Once ReferralCandy is hooked up and running, it simply sends an email off to each customer after they make their first purchase. The customer then forwards the email to anyone they think would be interested, from inside the email client itself.

She liked the landing page idea and asked if we had something like that to offer.

Actually, we did previously consider adding a landing page to our campaigns. However, we ultimately decided against it for a bunch of reasons that have been confirmed by other merchants we’ve worked with.

We designed our referral flow to make it as effortless as possible to pass the recommendation message along. With a landing page, it’s no longer as easy for customers since they need to dig their friends’ email addresses out and enter them into the web form. Although this is only a little more effort, it causes conversion rates to take a hit.

So what about giving the website direct access to your contact list for it to pull in email addresses? That’s gotta be pretty easy right? Well… people are getting more wary of this practice since it’s what a spammer would do and could give you a bad reputation. In general, giving any website full access to your address book is a no-no.

We might offer a landing page option in the future, but it would only be after we figure out how to make it as simple and as safe as possible for the merchant’s customer. Since ultimately that is what’s best for the merchant as well.