6 Referral Marketing Mistakes Your Company Should Avoid

Referral marketing is a powerful tool when use correctly, but these referral marketing mistakes could destroy your brand so avoid making them.

6 Referral Marketing Mistakes

Photo by Varvara Grabova on Unsplash

Today, referral programs come in many shapes and sizes. As a result, there are several ways your referral program can go wrong. Referrals are a valuable way to promote your business, but you must structure your program to ensure you don’t waste money, make customers enraged, and accidentally destroy brand loyalty.

Executing a flourishing referral marketing program is not always a straightforward process. It can be simple to make mistakes that hinder your efforts, failing to drive customers to refer and eventually missing the mark on driving new customers. 


Here are some common mistakes businesses make while leveraging referral marketing campaigns – and how to prevent yourself from making them. 


6 Referral Marketing Mistakes to Avoid


1. Picking the wrong incentive

It’s crucial to pick a reward or incentive that suits your brand, and also fulfills your customer needs. According to an expert, one of the most common mistakes in referral marketing that businesses make is that they make an effort to save a few dollars while tempting customers with poor, unrelatable incentives.


Therefore, while selecting what incentive or reward to apply, find something that goes well with brand identity. For example, if you have a software company, giving away theater tickets will not strengthen your value proposition. Thus, it is recommended to dig deeper into your customer data to know who your most loyal customers are and what they care about.


If your loyal customers purchase from you frequently for instance weekly or monthly – then incentivize them with points credits or discounts for future purchases. But, if you are working with a customer base that doesn’t purchase frequently, think of offering a gift card or exclusive access to a new product. This will help you make your customers turn into advocates for your company.


2. Making it too difficult

Several companies overcomplicate their customer referral program. Keep your referral program intuitive and simple to follow. Present a clear link to the referral email or website. Give your consumers simple options for networking through email and social media and a way to track their progress and obtain rewards.


Likewise, think about what it is you’re incentivizing. Most referral programs give incentives to members doing promotion or if they refer a friend who then makes a purchase. If you ask too much of a customer, they won’t make any effort. Reward customers for accomplishing smaller things, like receiving an email address or the phone number for a potential customer.


3. Loss of attention due to lackluster promotions

Do you know what drives your customers to make a referral?

Knowing what inspires them to act is key to converting them into brand advocates. Unfortunately, standard offers aren’t always sufficient to pique a customer’s interest. Using specific incentives for promotions or offers adds urgency to the experience and drives your audience to make a referral. Customers are more likely to react to exclusive offers than an ordinary promotion needing inclusion and intrinsic value.


4. Lack of awareness about referral program

One of the biggest reasons behind referral programs failure is that your customers are not aware of it. Obviously, your conversions are bound to be low if your customers are not aware of the program or can’t locate where it lives. Therefore, it’s necessary to designate prominent fields on your website (across various pages), social profiles, email signatures, and apps. In addition, if the CTA is embedded on your site or simply existing in an email footer, there is less possibility for a customer to interact or be face-to-face with the program.


5. Targeting the wrong customers

Most marketers understand that not all consumers are created equal. Referral marketing serves best when you activate people who are already big supporters of your brand. So, look at your sales data and social media channels to recognize marketing personas who are active and early adopters. You can further consider doing customer segmentation who would benefit from a monetary incentive, such as a $50 credit on their next purchase or a percentage of the sale.


Brands that fail to connect with customers will find it difficult to run a referral program. Referral marketing isn’t a replacement for real customer service: these programs are not “set and forget” solutions for developing brand loyalty. However, referral marketing software can assist you in determining your best participants and test various incentives and channels to encourage results.


6. Lacking in reaching an audience to make an immediate impact 

Reaching out to a wider audience can usually be the most important factor determining a referral program’s success. The more people understand the program, the more referral customers you will get and the more sales you will drive. While customers usually act as brand advocates and word-of-mouth can build your audience, it’s necessary to expand your reach through all means of communication. Try to tap into your SMS, email, mobile app, and social channels in a consistent flow to drive campaign awareness and consideration. Also, make sure there is a clear call-to-action in each mode of communication that directs the audience to the proper destination. 


 Wrap Up

After reading this post you may get an idea about the common referral marketing mistakes every business makes. Hopefully, reading this post carefully and noting down these factors will help you avoid referral marketing mistakes that could tank your marketing efforts.