What if I told you the best referral incentive isn't money, it's a cognitive bias.
A couple of years ago, I came up with the best simple referral program. It costs nothing, has no special software, and works like crazy. But first…
Does a referral program even make sense for you?
Referrals might be a waste of time, so check a few things first:
Do you have a lot of customers? Referral program response rates average around 2%. So if you don't have many customers, it's probably not worth your time.
Are your customers thrilled? Sounds obvious, but... as Rob Fitzpatrick says "nobody recommends the second best solution." If your customers aren't delighted... probably best to focus elsewhere.
Would your customers know who to recommend you to? Referrers won't think too hard. So if your product is useful for most people, like a fitness app, that's great. But if your app serves a niche, you’re less likely to get qualified referrals.
Is it impolite? People would rather not talk about certain topics. If you’re in one of those areas, look elsewhere.
If you don't pass those 4 tests, cross referrals off your list. (Crossing things off of lists is great, by the way!)
If referrals do make sense for your business...
The Commitment Consistency Bias Referral Mechanic
This program relies on the commitment consistency bias, which states that people are very likely to act in a way that's consistent with their prior stated beliefs.
Here’s how it works:
Estimate your moment of highest delight. At what point in the customer journey are they hitting the "aha moment" and loving your product or service? Normally, it’s after they complete an important task. (Don't overthink this, just estimate).
Send a one-question survey. At that moment, send them an automatic email survey and ask if they are "likely to recommend" your product. Keep it as easy as possible with simple green & red “yes” and “no” links or buttons or thumbs up/down.
If they click “no” take them to a Google Doc survey that says "we're sorry to hear that, please let us know what we could do better?" (With space for them to submit feedback, & contact details).
If they click "yes," then take them to a page that says "We're glad you'd be willing to recommend us. Can you think of anyone now? Enter their email address below, and if they join, we'll give you each [10 credits]." (You don't need to offer a reward, but it's nice to offer something small. If you do, be sure to offer the same reward to both parties so it doesn't feel like they’re selling out their friend).
One more thing… For those who respond with a "yes," also send them an automated email they can forward with their personal referral link, just to make it super easy.
That's it. I hope it helps!
P.S. Speaking of referrals… Can you think of anyone else who might appreciate my emails? You can refer them to subscribe here.