Referral program rewards are an important consideration for companies focused on reducing customer or talent acquisition costs. Nielsen’s Global Trust in Advertising study found that 83% of respondents trust recommendations from people they know and there is ample evidence of successful referral programs from PayPal and Dropbox famously gobbling up market share in their early years to 58% of jobs at Salesforce being filled by referrals. The results of these programs are undeniable and in today’s tough labor market, companies like Southwest are taking advantage of the inherent benefits in referral programs that lead to objectively better customers and candidates.
Customer Referral Programs Improve Profitability and Loyalty
The American Marketing Association reviewed research on the effectiveness of referral program characteristics to help explain why referral programs result in customers that are 25% more profitable and 15% less likely to churn. They found that matching and social enrichment help make customer referral programs a boon for businesses that have a difficult time getting insight into the needs and preferences of prospective customers and those that depend on customer trust and attachment.
Matching for Profitability
A customer willing to refer others to your business clearly has a fit to your products and services. Because our friends share many of our needs, preferences, and values, it also makes sense that the referred will be a good “match” to your business as well. A lower acquisition cost for referred customers improves profitability, which continues to increase the longer the referred customer remains loyal.
Social Enrichment for Brand Loyalty
The bond between a referrer and the referred is an important part of why the referred remains loyal to your business – especially while the referrer remains a customer. It is much more challenging to be disloyal to a brand than it is to be perceived as disloyal to our friends.
Employee Referral Programs Reduce Cost and Turnover
By the same logic, it is no surprise that Indeed’s survey of 663 employers found that 74% said candidates sourced from employee referrals were extremely qualified for the role. Harvard Business Review found that employee referrals are valuable because they bring privileged and hard to observe information to the hiring process for both prospect and employer. Clearly the same dynamics are at play for both customer and employee referral programs.
Considering Referral Program Rewards
According to the Society for Human Resource Management 74% of employers offer referral incentives, with 92% of them offering cash rewards. However, “employees often don’t feel appreciated for submitting referrals, whether they get a bonus or not.” Public recognition, contests and “Items branded with the company’s logo and other noncash rewards” are recommended incentives to ensure a more successful employee referral program. We know from our look at incentivizing employees with personalized gifts that non-cash rewards provide better motivation, help to create positive memories, and are most effective when the program participant gets to choose their reward from a variety of options.
Branded Referral Program Rewards with an Online Company Store
A BrandHub Online Company Store is our branded merchandise management portal that can be customized to support a referral program rewards strategy that features:
- A broad selection of customizable branded promotional products to draw from in offering a range of trendy swag and exclusive rewards your referrers will be eager to choose from.
- Stackable coupon codes and a points-based pricing option that allows variable rewards for different activities or to be delivered over time as the referred-customer or employee passes preset milestones.
- Variable data products that enable individual personalization of rewards to include the recipient’s name or other personal details.
- Hassle-free setup and hands-off distribution of rewards to facilitate a rewards program without processing orders or managing inventory.
Get Started on Your Referral Program Today
Customer and employee referrals improve profits and reduce costs, making it essential for businesses to implement referral programs. Contact us or fill out the form below to begin a referral program with rewards that will ensure motivated participation.