Referral Marketing Key KPIs. It is very common for marketing teams to fixate on what incentives and sharing options to offer when they start to think about referral. Whilst these are important components of referral, they are not the most important factors for success. Social considerations play a huge part. Your customers will only share if they believe their friends will value what they’re being offered and there is minimal risk of the referrer being perceived negatively for sharing the offer. Everything from the way you present the programme, the brand, the incentives and the share options can have a big impact on how your customers perceive the social risk, and the social upside, and ultimately that will determine the success of the programme.
It’s one thing knowing that referral marketing should work, it’s another making it work. You need to start by understanding how good programmes work. Engage with the social interaction at the core of referral When people initially think about referral marketing they tend to focus on the incentives and ease of use as the key drivers of success. These are indeed both important components. It’s critical to make sure the incentive feels right to the customer and that customers can share easily, however they are not the most important components customers talk about when asked. It is the relationship with their friends that is by far and away the most important factor when deciding whether or not to share.
There are two parts to this. At Neoneyx, we define them as “social capital” and “social risk”. If the referral makes someone look good because they’re introducing a brand that their friends will love, or because they’re giving an offer that is too good to be true, then their friendship will benefit from the referral and their social capital increases. If the referral risks making them look like they’re acting in their own self interest then most customers won’t risk a friendship by sharing an offer with their friends. There is too much social risk. The key determinant of how people think about the social capital and the social risk components comes down to how the referral offer is positioned and how they view the brand. There is a lot you can do when setting up the referral programme to optimise these social considerations. The picture to the left is a graphic we use at Neoneyx to think through how to optimise referral programmes. The aim is to increase the number of referrals by growing the balloons and shrinking the weights. It’s a useful metaphor to make sure that teams don’t focus solely on the left hand side as they design their referral programme.