referral reward idea

5 Best Referral Reward Ideas To Attract and Entice More Customers

A continuous flow of new customers is a key element for business growth, but what makes it challenging is that customers are usually hesitant to try out new brands. This is where referral marketing comes in. 

When someone gets recommendations from others they trust, they are 4x more likely to purchase. You can make it a success with the right referral reward ideas; you can convert your existing customer base into your most influential advocates and increase your sales.

Most marketers believe that customer referral programs have a lower customer acquisition cost as compared to any other channel. The reason behind its low cost is that you don’t need to pay a single penny until you make a sale. Moreover, a referral program allows you to re-engage loyal customers with rewards built to satisfy them. In this blog, we will learn how to create a successful referral rewards program.

5 Best Referral Reward Ideas 

1. Referral incentives

Referral incentives are one simple referral marketing strategy. This incentive-based program rewards referrals for bringing successful referrals. Whenever the referred friend makes a purchase, you can make your customers happy by offering them:

  • A gift card
  • Store credit
  • Cash reward
  • Free products
  • Company swag
  • A free month subscription

Remember, the more expensive your product is, the more useful your referral incentive should be. Keep in mind those convincing friends or family members to purchase high-end products is challenging, so your reward should encourage clients to put in the effort. 

Earlier, businesses were hesitant to launch referral programs because they considered that reward payout would be difficult and overwhelming. But with Xoxoday’s assistance, it has become much simpler. Now, businesses do not need to worry about the payout of the referral rewards and can sit back and relax as Xoxoday makes reward disbursement smooth and simple.  Xoxoday and InviteReferrals integration make it easy for you to automate your referral program..

2. Referral contest

Referral contests are all about giving away one large reward—for instance, a $100 gift card or plane tickets to Hawaii to attract existing clients to recommend your business further. These contests can trigger your customer base without asking them to purchase anything. 

You might have seen referral contests on social media, with brands giving one raffle entry for every friend their followers tag. Once the entry deadline is over, the brand randomly declares a winner.

Conducting monthly referral contests is a fantastic way to create brand awareness while allowing you to maintain a positive brand reputation since potential customers will know about you from people they rely on. Further, you can track your to maximize your brand’s reach:

  • Participation rate:  It signifies the percentage of clients who take part in your contest after noticing it on one of your marketing media, such as social media. A low participation rate means that you need to enhance or increase your marketing for the referral campaign or offer a better reward.
  • Daily website, landing page, or profile visits:  While conducting a contest, you should notice a spike in visits to the channel where you’re directing referred customers. If there isn’t an upsurge in visits, there likely isn’t more brand awareness.

  • An average number of referrals per contest: Finding trends in this metric can let you identify the most enticing prizes for current clients.

3. Social gifting

Social gifting has taken the customer referrals rewards model to another level. In social gifting programs, referrers still get rewards whenever a friend finishes their first purchase, and both the referrer and referee will get the perks. For instance, whenever a new user signs up for UberEats with a current customer‘s code, they earn a discount on their first purchase (such as $10 off). After the completion of the first purchase, the referrer gets a discount too.

Social gifting leads to a win-win situation for everyone. Here referrers don’t need to make much effort to persuade their friends to try your brand. It is one of the best referral reward ideas that is perfect when your goal is to boost customer acquisitions. Further, track these metrics to maximize the results of social gifting,

  • Repeat purchase rate: It indicates the percentage of clients who purchase more than once within a set time frame. This should boost or stay steady. Otherwise, new and existing clients may be falling off after they claim their reward, which signifies that your active customer base isn’t expanding.
  • Conversion rate: The conversion rate indicates the percentage of referred leads who make a purchase. You can consider modifying your offers if you’re not acquiring as many customers as you’d like.

4. Tiered rewards

Tiered rewards are one of the best referral programs as they help your startup and small business to create a domino effect for word-of-mouth marketing. When you consider tiered rewards, referrers are keeping on referring, and the people they refer may also join in on your program.

A tiered rewards program can be launched in two ways: 

  • First, you can give enticing prizes for every successful referral your customers provide. For instance, customers can earn a $10 worth branded reward voucher for their first referral, then a $15 worth branded voucher on their next. 
  • Second, you can present one-time prizes or ongoing perks (like exclusive customer support) whenever customers reach a certain amount of referrals per year. Furthermore, if you run a service-based small business that focuses on tiered rewards, you may present a $10 gift card for the first referral. Then, after five referrals, you can give any service for free.

When it comes to tiered programs, coupons work the best. And the reasons for it are valid. Psychologically, humans are naturally attracted to a good deal, be it small or large. By incorporating discounts and coupons into your marketing strategy, you are appealing to the minds of your customers more easily as well as effortlessly.

So start delivering recipient memories through custom gift coupons and create a brand impression that lasts forever. Interestingly, distributing popular third-party brand vouchers that are personalized and meaningful across different geographies doesn’t have to be as complicated or time-consuming as it sounds.

This type of referral program has the power to convert your best customers into long-term brand advocates. It also uniquely delivers the perk of keeping existing clients engaged with your brand, suggesting you maintain satisfied customers while gaining new ones. 

5. Experience and Reputation-based referrals

Referrals come from 2 different processes. I.e, Experience-based and reputation-based referrals.

  • Experience-based referrals– These referrals happen because of direct experience working with your company. It primarily includes your past and existing customers and partners, employees, and vendors. The strategy here is to get as many people as possible to ask about your brand. These referrals happen when people who haven’t worked with you directly know about your brand and its reputation or expertise.

  • Reputation-based referrals- They may know someone who has worked with you or bought something from you in the past and had a wonderful experience. Moreover, the chances are that they are familiar with your products and may have a recommendation in the past. On the other hand, they might appreciate your expertise in certain industries or specific services but do not have actual knowledge of your reputation.

So these are some of the best referral reward ideas that you can implement to attract more customers.

Metrics to track to measure your program’s success 

Here are the two most important metrics that you should measure

a) Customer lifetime value (CLV)

It denotes the total profit you expect to earn from the average customer throughout their entire relationship with your brand. A persuasive tiered rewards program should improve your CLV.

b) Customer growth rate

 It shows how fast your customer base increases within a set period of time. A positive growth rate suggests you keep existing clients and add new ones. A negative or static growth rate means your churn rate is too high, indicating your program isn’t driving customer loyalty.


In this post, we have learned about the 5 best referral reward ideas that can help you out. Also, remember, a referral program can assist small business owners in generating more leads, reaching more customers, and increasing long-term client retention, so pick an idea that suits your business The best way to make it successful is to offer them rewards as it will encourage them to do word of mouth and strengthen brand reputation. 


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.