Successful referral programs are like a winning lottery ticket. When you have one, its guaranteed money for life. Except there is one main difference:

Winning the lottery is luck. A successful referral program is the result of a lot of careful planning and strategy.

Every company talks about how to get more referrals, but very few are able to develop and launch a referral program that scales their business. Here’s why.

  • They only see things from the company’s perspective. By ignoring the customer or user experience, not enough thought goes into how useful the program is.
  • They set it and forget it. Companies rush to put a referral program in place and simply assume that because they have one, people will use it. They ignore the need to measure the program’s effectiveness and optimize it over time.

To develop a sure-fire referral program, companies need to do three things well.

1) Build the referral process into the experience itself

Too often, the refer-a-friend option takes people out of the normal flow of the customer experience. But the most successful referral programs are designed within the day-to-day experience of your user base.

Ecommerce and subscription models make this even easier, by providing ready access to the referral process in the checkout or deliver process. Dropbox allows you to share files with friends who might not already have an account. Spotify allows you to invite friends to a shared playlist or to share an album who might not already have an account.

When the referral options feel like part of everyday use of the product or service, they are more likely to get used.

2) Give your customers a reason to refer people

Incentives work wonders for any referral program. Customers want to know, “what’s in it for me?”

Some of the most successful referral programs have a monetary incentive. One of the earliest programs to go viral was a deposit program from ING Direct. The bank’s customers would receive deposits of $25 or $50 for everyone they referred who opened an account.

By offering special discounts or other perks, you are giving your customers a reason to refer people beyond the simple joy of telling your friends about a great product. You are tying your own success to their interests.

3) Automate the referral program for scale

Let’s face it, in order for your referral program to really drive growth today, it needs to be automated. A process that relies on manual oversight or execution is fine, but it is not going to efficiently scale your business.

When you automate the process, relying on software and other tools to manage who is referred, the delivery of the referral, the tracking and delivery of the reward or incentive, you create a system that works without human intervention. When this is done right, you truly can set it and forget it. It will work for one person, or ten, or a hundred.