Why is refer-a-friend not yet on all sites?
Refer-a-friend schemes have been around since the mid-2000s yet they are still not a “must have” for online businesses. When we surveyed 150 online business in the UK – a mix of retailers, subscription businesses and marketplaces – we found that less than 50% offered refer-a-friend schemes. Of those that did, less than 15% considered the refer-a-friend schemes to be a runaway success. The reasons for the lack of companies offering refer-a-friend, and the lack of success in those that are live, are exactly the same reasons it is worth outsourcing refer-a-friend in the first place.
The reasons for outsourcing refer-a-friend are compelling:
Finding internal resource to build a referral program is difficult
Outsourcing refer-a-friend means that you can launch the channel with little or no development work, while building it in-house usually requires several months and is always at the cost of another new product being delivered.
Chosing a configurable software-as-a-service platform means the flexibility and control is entirely in the hands of the Marketing Team.
Without AB testing, a refer-a-friend programme is frozen in time
After launching an in-house refer-a-friend programme there is no scope for the marketing team to test or improve it. The first offers that go live are usually based on the marketing team’s initial hypothesis of what might best incentivise sharing behaviour and there is no way to test those once it is live.
The marketing team need to be able to AB test everything about the refer-a-friend scheme – the creative, messaging, the offer types and the offer amounts – in order to figure out what works best. It rarely makes sense for an in-house team to build this level of sophistication whilst it does make sense for an outsourced refer-a-friend provider to build it for multiple clients.
Mention Me has a full AB testing platform so that the marketing team can make any changes they want without any development involvement. We enable different offers to be served to different customers (either for testing, segmentation or personalisation) and for those offers to continue to be displayed to those customers and their friends at all touch points in the user journey, even if the marketing team have moved on to testing new offers.
Without the ability to AB test and optimise it's likely a referral programme will never drive more than 3-5% of new customer acquisition. With AB testing that figure is 10-30%. AB Testing your referral marketing drives on average a 6x improvement in performance over the first 6 months.
Download our Guide to AB Testing your Referral Marketing Programme
The benefits of an expert are huge
Refer-a-friend requires optimising a long and convoluted funnel that has a social interaction right in the middle of it.
Making the most of refer-a-friend requires learning and improving the experience at each step along the funnel. Doing this with a testing platform that is designed for purpose means you'll be able to see which parts of your funnel are working well and which would benefit from some experimentation. Having a specialised partner who works on refer-a-friend across multiple companies and sectors means that you benefit from the learnings of others directly and rapidly.
You have a far greater chance of refer-a-friend becoming a meaningful marketing channel where you’re taking advantage of this expertise and learning.
Outsourcing refer-a-friend removes the risk
Incentivised referral can be a major channel for customer acquisition and so most online marketing teams want to add it to their marketing mix. However, there are significant costs to consider when building internally. Securing the up front investment required to make refer-a-friend work without any data to show that it does work is difficult. Outsourcing refer-a-friend to a partner who is willing to take on some of the risk and be paid on their success in bringing in new customers gets around this.
Mention Me charges a small set up fee (significantly less than an internal build) and then a percentage of revenue from new customers’ first orders. This means our incentives are always aligned with our clients and there is much less risk for a marketing team to test refer-a-friend
In our experience a successful refer-a-friend scheme should deliver a 10-30% boost to customer acquisition (with some as big as 60%). There are several case studies you can download to see how Mention Me have gotten referral working on some of our clients:
- Farfetch; 15% of new customers from referral
- Glasses Direct; 30% of online acquisition from referral
- Emma Bridgewater; 11% of new customers from referral after just 6 months
- See all our referral case studies
If you’re considering implementing refer-a-friend or upgrading your existing scheme we’d be very happy to have a conversation with you to see if we could help. Please feel free to get in touch at email@example.com.