5 Referral Program Mistakes You Must Avoid
Updated: Feb 24, 2023
Anything that is first in our lives holds such a special memory in our minds, right? Such a good yet scary feeling it stirs upon, don’t you think?
With all the hard work and optimism, we look forward to its success, and what an odd mark it leaves when it turns into a failure, ugh!
I faced something similar in 2020 when my first webinar failed to such an extent that we couldn’t even go live while our participants waited.
It was the early lockdown days and while platforms like Zoom and Google Meet were yet to gain popularity, we decided to go live on YouTube and host a webinar.
We conducted multiple dry runs with our speaker, tested YouTube live settings, and were all set but sadly, we failed.
How My First Webinar Failed
On the webinar morning, I had my eyes glued to my laptop screen, eagerly waiting for the YouTube live stream thumbnail to change into our speaker’s face only to see a notification.
“I can’t go live!”, the speaker messaged me and I went like —
Call it our ill fate or a technical glitch, we couldn’t go live. As learnings follow failure, our team sat down to list down all the possible ways this could have been avoided.
Do you know which tactic came out victorious? Over preparation. We had prepared just right for the webinar with all the tests and practices.
But we didn’t know what we were going to do in case things go south because we never saw the failure coming.
One major learning we took was having a Google Meet or Zoom link as a backup and sharing it with registered participants. While it may affect the turnout rate, it was still something.
But hey, why am I telling you this? Because as a Shopify business that’s building or planning to build a referral program, you may not get it right the first time and that’s okay.
There are many businesses we can learn from to ensure that your Shopify referral program is a success. Here are 4 refer and earn program mistakes you can avoid.
1. Weak Referral Incentives
Non-substantial referral rewards are that one Sonpapdi sweet box that no one wants during the Diwali festival. Let me divide the reason behind poor referral incentives into 2 categories:
a). Reward itself
If you’ve read my article on why I haven’t referred anyone to the Rapido referral program (India’s bike taxi and auto app), you may know that the biggest turnout was their rewards.
As someone who spends close to ₹200 every day, a one-time reward of ₹50 isn’t exciting. Also, I’d not want to refer a friend saying that you only get ₹25 rewards.
I faced a similar hesitation when I came across Pipette referral rewards, a brand that sells skincare and bath essentials for moms and babies.
Now their best-selling products approximately range from 5 to 14$ which means that as a new customer, I’d have to add 2 to 3 products to the cart.
So the necessity for me to shop for $45 to be able to get $10 off isn’t very convenient. Instead, they could offer 20% off on cart value when advocates choose to Subscribe and Save option and free shipping to referred friends.
b. Two-way rewards
I always recommend that any business that runs a referral program must reward both the referrer and the referee. It’s non-negotiable. I mean, just imagine.
I ask my friend to trust my words and try a product and that friend doesn’t get anything?
In this case, wouldn’t I as a customer think twice before referring? Why even create that friction, right?
What’s even worse is not rewarding advocates for all the social capital they put into referring a friend and that’s what Wild Deodorant has done.
As a brand that sells reusable deodorants that are made from natural ingredients and come with cute cases, they offer 50% off on the first orders to referred friends but nothing to the advocate.
One thing I loved about Wild Deodrant’s referral program is that they’ve added a story highlight on their Instagram handles with a link to their referral program.
But my happiness soon turned into disappointment when the story ended with a message for advocates saying that they can enjoy their popularity after giving 50% to their friends.
Reading this, most existing customers would be like this —
2. Hidden Referral Program
Many e-commerce brands have a referral program that’s no less than a gem but has it buried under the menu, most of the time.
While I’m not saying that it must be pushed at most points of the customer journey, it’s just that it should be easy to find when the customer is at the peak of a good shopping experience.
This means that it’s important that you find that ‘Aha moment’ for customers and show a refer and earn message smartly.
Some examples of doing this would be showing refer and earn messages in
Post-purchase page
Order confirmation email
Order delivered email
Post Positive review
It’s as simple as saying, “Enjoyed using our product? Tell your friends about it. Click here.” The Whole Truth (a health and wellness brand that sells s100% clean snacks), does this beautifully in its referral program.
It shows a refer and earn launcher on the website as well as in the banner in their order confirmation email.
3. No Personalisation
Personalization is the key to customer satisfaction and the same plays a crucial role when it comes to referral programs. For instance, don’t we always like personalized emails? Why is it that email subject lines that have our names in them have better open rates? The answer is simple. Personalization improves customer experience. 80% of customers are more likely to buy from a business that offers a personalized experience.
Personalization also improves customer retention. So it’s important that your referral program communications are personalized to increase referral participation. Take a look at these two brands to understand how much of a difference a personalized referral message makes over a non-personalized one.
The second referral email is from Rentomojo (rental furniture and appliances brand) referral program. The email doesn’t even mention that she actually got the ₹25 rewards when I referred her.
The first referral email is what my friend received when I referred her to Crave by Leena (a vegan bakery) referral program. It shows the name of the advocate.
4. Complex Referral Process
If your referral program isn’t easy to use, the customer would probably get lost in the process and end up not referring. In fact, making it easy for an advocate to refer is as important as making it easy for a referred friend to claim rewards. A referral program becomes complex based on 2 factors:
a. Difficult to refer
Groupon, a popular online deals platform, launched a referral program in 2010 that allowed users to earn $10 credit for each referral.
However, the Groupon referral program faced criticism for being overly complicated and difficult to use, and they ultimately discontinued it in 2014. But what went wrong?
Referrer had to add a credit card within the site to claim the reward which Groupon would add in Groupon Bucks within 7 days of referred friend’s purchase.
Referred friends must subscribe to Groupon, and make a first purchase of $10 or more within 72 hours. Quite the pressure, right?
b. Lack of referral tracking
Leaving your referrers wondering what’s happening with their referrals indicates poor referral tracking. A referrer must be able to track their referrals and rewards using a referral tracking dashboard.
This also enables reminding their referrals to complete referrals, which increases the referral conversion rate.
Having said that, I can’t help but share Rentomojo’s referral tracking dashboard with you because it’s so comprehensive!
It shows
How many friends I have referred and how many more I can refer
Total rewards I’ve earned as a referrer
Rewards my friends have earned and for which activity
At which stage my friends are
The biggest benefit of referral status is that I can remind my friends to place an order so that we both can earn ₹200 for a minimum monthly rent for ₹500.
Now that’s cool, right?
5. Poor Reward Fulfilment
The whole point of referral marketing or referral program is that participating customers are incentivised. But this went for a toss for Airbnb when they launched Airbnb host referral proram.
In 2015, Airbnb launched a referral program that incentivized users for inviting their friends to list properties on Airbnb.
To attract new hosts, Airbnb awarded
Referrers with $100 cash reward for each new friend that hosted a first trip on Airbnb
Referred hosts with $50 reward if they received a first booking (over $100) within 150 days from the day they got invited
But things went south when Airbnb host referral program customers started giving negative feedback.
The started expressing their disappointment over
Referral reward not being credit on time
The $100 minimum first booking value for a referred host to qualify as unrealistic with average rental rate being as low as $15 in some areas.
Such inability of brands to fulfil referral rewards is one of main reasons why a referral program would fail.
Learning from Referral Program Mistakes
The whole reason I listed the above reasons behind a referral program not working is because I don’t want you to repeat them. Your referral program may not be perfect but you also shouldn’t launch it for name sake, without taking care of the basic parameters.
That’s why referral program software like ours exist because we understand what works, components that are crucial and then make it easy to make referral revenues by the click of a few buttons.
Sounds fascinating? You can always explore more here because we’re all anyway learning, right?
