Your referral program is only as strong as the rewards you offer. A well-chosen incentive can turn casual customers into enthusiastic advocates who are excited to spread the word about your brand. But finding the perfect referral reward can feel tricky, especially if you’re unsure what resonates best with your audience.
Spoiler alert: There’s no one-size-fits-all approach to referral rewards. The key is to understand what motivates your customers and to adjust your rewards accordingly.
Here’s a quick and effective guide to help you decide which referral rewards will make your program truly shine.
1. Discounts for repeat buyers
Are your Advocates likely to make multiple purchases from you? If so, offering discount coupons is a smart move. When repeat purchases are in the mix, a discount on a future order holds more value, motivating your Advocates to refer more friends and maximize their savings. Learn more about the coupon reward.
2. Use the Rule of 100
Not sure whether to offer a percentage or a dollar discount? Use the Rule of 100:
If your product costs less than $100, a percentage discount tends to look more appealing and valuable to customers.
If your product costs more than $100, opt for a flat-dollar discount for a stronger impact with lower financial risks on your part.
Customers perceive the savings differently based on the item’s price point. This simple strategy can make your offer feel much more attractive. Learn more about the Rule of 100.
3. Cash for one-time purchases
What if your product is a one-time purchase or something customers buy infrequently, such as furniture, appliances, electronics, or luxury goods? In these cases, cash rewards are your best bet. Offering a discount on a future purchase doesn’t hold much value if customers aren’t coming back soon.
Instead, give Advocates a cash incentive for every successful referral. This approach feels immediate and rewarding, making them more likely to spread the word. Learn more about the cash reward.
4. How much should you offer?
There’s no magic formula here, but there are a few best practices to keep in mind:
Retailers that offer at least a 20% discount or a comparable cash reward see higher referral rates
The value of your referral reward should feel like a worthwhile trade-off for the effort your Advocates put in
Remember: Your reward doesn’t have to break the bank, but it should feel meaningful to your audience.
5. Be creative with a custom reward
Don’t feel restricted to just cash or coupon rewards. If you want to offer something unique like merchandise, loyalty points, or gift card, use the custom reward.
Keep in mind that custom rewards may require more effort on your part, as you’ll need to fulfill them manually. But if you’re aiming to create a personalized experience, the extra effort can go a long way. Learn more about the custom reward.
Pro Tip: Choose rewards that reflect your brand’s personality and values to leave a lasting impression.
Still unsure about the right referral reward for your store? Read our How to Choose the Right Referral Incentives For Your Referral Program blog and check out the different rewards you can give to your Advocates with ReferralCandy.
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