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5 Mistakes in Referral Marketing and How You Can Avoid Them

Referral marketing is a great tool to increase exposure, collect more customers, and grow your bottom line. However, you can run into some common referral marketing pitfalls that may prevent you from getting the results you want. In this article, we’ll cover 5 mistakes seen in referral marketing and give you actionable ways on how you can avoid them.

5 Mistakes in Referral Marketing (And Ways to Overcome Them)

Did you know that people are 4x more likely to buy from your business when they were referred by a friend? This is huge in the digital marketing space!

So, if you are looking to build your business using referral marketing tactics, you need to be aware of some common mistakes because these mistakes can cost you time and money. (It is also important to be aware of them and to avoid them to ensure that you don’t fall into certain pitfalls that may not be as obvious.) With a little bit of planning and forethought, you should be able to avoid the most common mistakes and save yourself some trouble. Let’s dive in :

  1. Asking for Too Much at Once

Have you ever started to fill out a form on a referral marketing sign-up page just to ditch it altogether? Did you feel as though the questions on the form were just a little bit too invasive (or personal) for what you were trying to sign up for? We know we have!

The Fix?: Depending on your unique program, you will want to only ask questions on your form that are absolutely necessary to know. This may include asking for their first name, last name, email, and anything else that is only essential to know. (All in all, you want to encourage your customers to sign up for your program, not scare them away.)

2. Offer Exclusive Incentives

It’s no secret that referral marketing is a great way to grow your business. But, you need to be careful to only recruit the right customers to join your referral program.

Why is recruiting the right customers imperative for a successful referral marketing program? The last thing you want is to have a bunch of inactive referral accounts, and being “choosey” from the get-go will give your referral program a competitive edge.

The Fix?: Be sure to only ask your most loyal customers to join! Look at your system to identify which customers interact with your brand the most or are repeat buyers. If you are smart about asking for referrals, you will be able to watch your business thrive even in an oversaturated market.

Fun Fact: Word-of-mouth has been shown to improve marketing effectiveness by up to 54%.

3. Not Providing Enough Information About the Program

Your customers won’t sign up for a vague referral program that’s lacking in detail. In today’s digital world, more and more people are becoming apprehensive to sign up for a program that they don’t fully understand — especially when companies are asking for certain pieces of contact information on a sign-up page. (We can thank spam callers and hackers for that.)

The Fix?: On your sign-up page, be sure to include all of the necessary information your customer needs to know before signing up. This includes laying out the different incentives they could receive, a “how it works” section, and testimonials from other members of the referral program. By providing this information, they will get a more holistic view of what your program is about.

4. Giving Out Incentives Your Customers Don’t Want

Rewards and incentives are one of the main drivers to crafting a great referral program. The rewards you offer in your program are the catalyst to whether your customers will click the “sign up me up!” button or not. (So, yes. Rewards and incentives are a very important piece to your referral marketing strategy!)

If you offer rewards your customers don’t care about, you are missing out on the opportunity to collect more digital leads and sales. Instead of having a thriving referral program, you will be left with a program that is easy to forget about and unexciting for your customers. Reference successful case studies as you evaluate the incentive program you plan to implement in your marketing strategy.

The Fix?: Ask your current customers what rewards and incentives they would like to see in the referral program! This can include discounts, free gifts, or something else entirely. It’s easy to take a shot in the dark and select rewards based on assumptions. But it isn’t until you take the time to ask your customer what rewards they want to see in the future where you will be able to strategically select rewards that matter the most to your customers.

5. Neglecting to Look at the Data

If you are a marketing consultant or business owner who doesn’t look at the metrics, you are doing marketing flat out wrong — especially in the referral marketing space. Without looking at the data, you are basically turning a blind eye to certain factors that may project your business forward.

The Fix?: Don’t neglect looking at the data. You should keep track of your number of sign-ups, your email open rate, click rates, and more! This valuable data can help you fill in any gaps in your program and get you more referrals to your business and more individuals who are excited to do business with you.

Create a Referral Program that Works

It goes without saying that referral marketing is one of the strongest channels for growing an online business — at least when done correctly. Our hope is that you will walk away from this article knowing something new about referral marketing and some of the different common mistakes in the referral marketing realm.

Your referral marketing program won’t explode overnight, but with some time and effort, you can see a positive return on your referral marketing program with the right strategy in place.

By Ryan Gould

Vice President of Strategy and Marketing Services Elevation Marketing