How to Build the Best Customer Referral Program in 2022?

How to Build the Best Customer Referral Program in 2024?

Oftentimes when people need to buy a product or service, they ask for recommendations from friends and family members. Studies report that the majority of consumers trust referrals from their circle more than any other information source regarding a brand. 

The word-of-mouth promotion of a brand by its happy and loyal customers can be a big help to any business. Irrespective of your niche, running a referral program can keep bringing you new customers. 

The best referral programs are those run by brands that offer outstanding products or services, have a base of loyal customers, give a good reason for consumers to refer to them, are active on social media, and have established social proof, running a referral program will be profitable for you. 

What are the benefits of the best customer referral programs?

A referral program is a system that a brand employs to incentivize its customers to advocate on its behalf and bring in new customers. The best customer referral program is one that has the right products, rewards, messaging, and technology. 

Coming up with the best customer referral program will give your brand or business the following advantages-

  • Facilitates meeting leads where they are.
  • Raises brand awareness.
  • Boosts brand affinity with both existing and newly gained customers.
  • Attracts high-quality, warm leads through trust.
  • Widens your customer base at a low customer acquisition cost (CAC).
  • Generates customers with higher lifetime values (LTV).
  • Generates positive returns on investment (ROI) as it is a pay-per-performance channel.
  • Builds social proof. 
  • Hits your target market. 
  • Brings the merits of an owned, earned, and paid channel. 
  • Promotes viral growth. 
  • Enables you to identify your most loyal customers.

You certainly can’t afford to miss these benefits. And that’s exactly why you need to know what goes into building the best customer referral program. So, continue reading into the next section. 

How to create the best customer referral program?

A referral program’s success depends on a solid referral system- one that’s founded on outstanding products, robust customer relationships, and an explicit marketing objective. These should be the basis of designing and building your referral program. So, let’s dive into how to come up with the best customer referral program.

1. Offer outstanding products and/or services

Offer outstanding products and/or services

Happy customers are the backbone of any effective referral program. So, the foremost step in creating the best referral program is providing outstanding products and/or services to your customers. Only if your offering is impactful, people will be pleased and refer you to their circle. 

So, get to know your customers and the market. Stay abreast of current trends and preferences among your consumers. And go beyond customer expectations. This will help you serve them better, and thus, make them glad. And this in turn will lay the foundation for the success of your referral program.

2. Focus on your customer support

 Focus on your customer support

The customer support you offer matters as much as your offerings. People will recommend a brand that offers excellent customer service. Awesome customer service can bring in more marketing and sales opportunities. For, it represents a company’s culture and makes people want to be a part of it. 

On the other hand, if your customer service is awful, your dissatisfied customers will go about telling others about their negative experiences. And this in turn can drive away future customers. So, dedicate some serious attention to your customer service department. Provide the team with adequate training and carefully monitor their dealings with customers. There is a great tool called Kanban Board in teams that can help you with task management and increase productivity.

3. Set objectives and KPIs for your referral program

Now that you’re ready to set up your referral program, ask yourself what you want to gain from the referral program. The following are some examples of the objectives you want to realize-

  • Reaching a specific number of leads.
  • Gaining a certain number of newsletter signups or new social media followers.  
  • Rising conversion rate by a specific percentage.
  • Increasing revenue generation by a certain percentage.

Come up with concrete goals and metrics before launching your referral program. This will help you evaluate whether or not you’re approaching your targets. 

4. Decide upon your referral program rewards

Incentives play a vital role in motivating people to participate in your referral program. So, choose an incentive that they’d value. You may survey your customers to understand their preferences in this regard. However, ensure that you always remain within your budget. 

Here’s a list of referral incentives you can choose from- 

  • Cash
  • Discounts
  • Free products
  • Feature upgrades
  • Free subscriptions
  • Store credits
  • Eternal gift cards (like Amazon, Flipkart, etc.)
  • Branded swag items
  • Donations to charity

Another affordable and profitable way to incentivize referrers is to offer those surplus items in your inventory as rewards. 

5. Determine who’ll get the referral rewards

The next step in the process of building your customer referral program is deciding who’ll receive the referral reward. Whether the referred, the referred one, or both will get it. There are both merits and demerits to each of these. 

  • Rewarding only the referrer will encourage your customers to share more. However, the referred one may not be motivated to buy immediately. This way, neither the referrer nor your business will benefit from it.
  • Rewarding only the referred friend will not bring you many referrals. However, the chances of it leading to a sale are good.
  • Rewarding both the referrer and the referred one often witnesses the highest engagement. The referrer will be encouraged to refer you more and the referred will be eager to make his/her first purchase from you. 

6. Determine a reward structure

Now it’s time you establish a reward structure. This involves deciding when and how the reward will be given away. Here are some of the common options in this regard. 

  • Standard reward structure: You incentivize each successful referral with the same reward and the reward is sent to the customer immediately after the referred one buys from you. The disadvantage of this structure is the risk of customers losing their motivation over time. 
  • Tiered reward structure: This involves rewarding referrers based on the number of referrals they bring in. For instance, a referrer will get $10 for the first two referrals and then $20 per referral for the following referrals.  Alternatively, you could offer higher-value products or branded swags after they reach certain referral goals. 

  • Multi-step reward structure: This splits the entire referral process into steps and incentivizes referrers for each step they achieve. For instance, $5 when a referral gets in touch with you, another $5 when the referral checks your website, and the final $10 when he makes a purchase. 

7. Design your customer referral program and landing page

A prospective customer might hear about your business for the first time when a friend shares with you through the referral program. It’s crucial to make the best out of this opportunity and deliver a great impression. That’s why the best referral programs have an attractive referral landing page that acts as a self-sufficient explainer. 

Below given are certain things you need to take care of while designing your referral program-

  • Use a short, crisp, and catchy headline that bears your program’s value in a single sentence. 
  • Ensure that the tone and design look and feels appealing and authentic.
  • Let the message convey everything it needs to in bullets.
  • Give customers multiple channel choices to spread the word. 
  • Provide prospective referrers with pre-written, editable message templates.

8. Choose the right referral program software

Choose the right referral program software

After designing your referral program, choose a referral tool that helps you easily manage your program. The ideal referral program software will have the following features-

  • Mobile-responsiveness
  • A seamless user experience
  • Editable templates
  • Complete customization
  • Multiple-campaign management
  • Multi-structured rewarding
  • Security/fraud prevention
  • Complete automation
  • Safe and secure payment checkouts
  • Social sharing
  • In-depth analytics
  • A free-trial

9. Promote your referral program

Promote your referral program

Some of the best referral programs are those marketed efficiently. After launching your referral program, you need to promote it through multiple channels. This will let people know of its existence. Some popular marketing mediums are your website, email, social media platforms, and blog posts. 

Here are some tips in this regard-

  • Make your referral program visible on your site’s home page.
  • Make a short reference about the program in your email signature and include a link to it. 
  • Include a short message like “Join our referral program”, “We have a referral program”, “Refer a friend”, or “share us and get a reward of $10” on your social profile. Also, have a link to the referral program there. 
  • Include social sharing buttons in your referral program to simplify the work for your referrers.
  • Post a blog announcing the newly launched referral program. 

10. Track, analyze, and improve

Track, analyze, and improve

Your referral software will provide you with statistics about your customer referral program. You should analyze them to understand what kind of messaging or incentivizing works, the common characteristics of those with higher brand affinity, the channels that generate the most referrals, and more.

By analyzing these metrics over time, you’ll gain a lot of valuable insights into what works and what doesn’t. Put them to the best use by applying them in modifying your referral program accordingly. This would continually improve your program. 

Wrapping up

Now that we’ve explained how to build the best referral program, do get into action immediately. We encourage you to try our referral program software- InviteReferrals for free. It has all the features required for setting up and managing your referral campaigns effectively!


Q1: What is a referral program?

Ans: A referral program is a system that a brand employs to incentivize its customers to advocate on its behalf and bring in new customers.

Q2: Why do businesses need a referral program?

Ans: A referral program acts as a formal system to tap into the power of referrals. Referrals work in attracting new customers to a business because people trust ther people’s recommendations more than advertisements from brands themselves. 

Q3: Why use referral program software?

Ans: Using referral program software helps you to easily launch and manage your referral campaigns. It will also give you valuable referral statistics and analytics using which you can continually improve your referral program. 


Shivani is a content writer at InviteReferrals. She writes SEO articles, blogs, and guest posts for businesses to improve website ranking on SERP. She follows a balanced approach for the quality of content and its marketing. She loves to do creativity, although she had an English major in her graduation.