Motivate Sharing: A Look at Non-Financial Referral Program Reward Structures

Motivate Sharing: A Look at Non-Financial Referral Program Reward Structures

More and more companies are generating real revenue from referral marketing and affiliate marketing channels. To maximize their effectiveness, though, it's important to understand how the two are different, and create specific plans for each. To create an effective strategy for a word-of-mouth campaign, it's helpful to understand the motivations of both affiliates and ambassadors.

Read next: "The Primary Use Cases for Referral Marketing Software"

Referral marketing is done by your brand ambassadors. Brand ambassadors are people who will shout from the rooftops, praise your product because there is something about it they love. Perhaps it's the product, the company, both, are any number of other reasons. Some ambassadors just want to be the "first" to let their friends know about your product. Whatever the reason, their motivation isn't entirely financial.

Affiliates are more likely to be incentivized by a financial gain. They probably have less of an attachment to your brand. Typically ambassadors know the person they are referring the product to, affiliates do not.

One of the easiest ways to inspire referral behavior is to leverage the motivation for sharing. An easy way to do this is by adjusting the reward structure of your referral program. Here are three alternatives to a financial reward structure that you can use to incentivize ambassador behavior.

Reward Structure: Dual-Incentive

Works best for: Any

Communicates: "I love this product. You're going to love this product. Trust me. Here's 20% off to give it a try."

Why do we share so much on social media? It's obvious, because we want to be liked. To many, being liked is more important than financial reward. What's the easiest way to be liked? Give gifts of course! You can create gifts that your ambassadors can give away by structuring your commissions using a dual-incentive reward structure.

A dual-incentive structure rewards both the referrer and the new customer. An example would be when an ambassador shares a one-time 20% discount to the referral for signing up (SaaS), or $10 off the referral's next purchase (ecommerce).

Reward Structure: Swag

Works best for: Ecommerce

Communicates: "I love this product so much I want to wear it!"

Branded swag is a great way to build trust between ambassadors and referred customers. If the referred customer discovers that the ambassador is earning branded swag as a commission, the discovery will reenforce trust in the recommendation.

Branded swag has the added bonus of being a great conversation starter.

Reward Structure: Product

Works best for: SaaS

Communicates: "You need this product for your business. It's easy to use, the support is terrific and we significantly increased revenue because of it."

One of the best ways to incentivize user behavior is to determine your currency. What value are you providing your users?

Dropbox asked themselves this question and determined that it was extra storage space. Once they understood what their currency was they were able to offer the extra space as a referral commission. As a result, the number of referrals dramatically increased.

Summary

Affiliate programs and referral programs are similar, but different. To maximize the effectiveness of your campaigns, consider the motivation of your users, and try and reenforce those motivations through your incentive structure.

Do you want to learn how to turn more of your customers, partners, affiliates, and fans into revenue generators?Request a custom demo from one of our referral marketing software experts today!