The subscription economy is booming, with the average US consumer spending around $430 per year on recurrent purchases. From eCommerce subscriptions and streaming services to SaaS (software as a service) packages, an increasing number of consumers and businesses rely on subscription-based businesses to solve problems or improve their quality of life.
However, as more people sign up for these services, competition for subscribers is growing. Players within the video streaming space, for example, are constantly vying for viewers’ attention and generating new tactics to reduce churn rates. So, how can you grow and retain a loyal customer base within crowded industries? One of the best ways to attract new customers is to harness the power of word-of-mouth promotion through a subscription referral program. Here’s how to create a successful referral program for your subscription business.
What are subscription referral programs?
A subscription referral program is a streamlined digital marketing program that rewards existing customers for recommending your subscription-based business to their friends and colleagues. It’s a win-win marketing strategy designed to enhance customer retention and acquisition, helping your business sustain long-term growth.
If that weren’t enough, subscription referral programs require minimal effort for maximum gains. Unlike social media marketing, for example, you can automate a referral program using referral software such as Referral Rock. Such software can track referrals your customers make and ensure the referral process is quick and easy. Referral programs work for all kinds of subscription businesses, including content platforms, eCommerce subscription boxes, SaaS programs, and online classes.
Why start a subscription referral program?
Subscription services need a robust customer base to survive. Failure to maintain a steady revenue stream from loyal customers could jeopardize your company’s sustainability. Fortunately, referral programs represent a simple way to encourage new customers to sign up for your service, while securing longer subscription renewals.
So, how does a customer referral program make such a significant difference? Well, did you know that people are four times more likely to spend money on something their friends recommend? Signing up for a subscription service can feel like a commitment, so people are often more inclined to pay for recurrent services their friends recommend. What’s more, referred customers are more likely to renew their subscriptions if their friends do the same.
Subscription referral program benefits
A subscription referral campaign could benefit your business in the following ways:
- Enhancing brand awareness: One of the best elements of word-of-mouth marketing is that it boosts awareness of your brand without the need for expensive advertising campaigns. Remember – existing customers represent your best advertisers, as they know how great your services are.
- Adding authenticity to your marketing campaigns: A family and friend program will provide a touch of authenticity and believability to your marketing efforts. In the long term, this will boost the lifetime value of new subscribers, encouraging them to subscribe for as long as possible.
- Ensuring your marketing efforts are cost-effective: Establishing your own referral program is much less costly than marketing strategies such as pay-per-click (PPC) advertising and influencer campaigns.
- Lowering the risk associated with customer acquisition costs: You’ll only need to reward existing customers when they secure a new referral. As such, paying for referral rewards does not carry significant risk.
- Tracking the advocacy of your subscribers: A successful referral program requires consistent adjustment to ensure your referral marketing methods work well. Fortunately, referral software can help you track your customer acquisition rates and identify your best advocates, helping you build an effective referral marketing strategy.
Are you ready for a subscription referral program?
A referral program works well for any subscription service – whether it’s a box, content subscription, or software – that people subscribe to via a website or app. But you need that digital presence to run a successful referral program.
You also need an engaged base of happy subscribers, some of whom have renewed your subscription already. Finally, you must have a stellar subscription experience worth recommending, both from the product and customer service standpoints. All of these factors are necessary for a subscription referral program to create growth.
Subscription referral program best practices
Successful referral marketing requires careful planning to ensure you keep every new referral and existing customer happy. Here are a few handy tips to ensure your rewards program drives engagement and results:
Decide on your rewards structure
Rewards represent the bedrock of your referral program, incentivizing your customers to recommend your subscription service to family and friends. However, you’ll also need to ensure your rewards are financially viable. The following referral rewards structures are relatively common and effective across a range of industries:
- Double-sided rewards: This structure rewards both the referring subscriber and the new subscriber, incentivizing the advocate to make more high-quality referrals and encouraging the new subscriber to stick with your brand. It is worth noting, however, that this model only works for paid subscriptions.
- Single-sided rewards: If you’re offering a free content subscription service that generates revenue via ads (and not through new subscriptions), it makes sense to reward only the referring subscriber.
- Tiered rewards: A tiered program offers different referral rewards depending on how many referrals an advocate makes.
- The more people they successfully refer, the higher their compensation.
- If you’re running a content-based or newsletter referral program, it’s worth implementing tiers with branded swag rewards, as these are cost-effective.
- Referral contests: Turning your referral program into a contest will encourage your existing customers to refer as many new people as possible within a given timeframe, providing a handy boost to your business.
- You may wish to enter all advocates into a prize draw, with each referral representing a single entry. Content subscription brand Morning Brew has used this model for its MacBook Pro giveaways, to smashing success.
- Alternatively, you could award an extra prize to the subscriber who makes the most referrals in a given period.
- Just remember to advertise the competition through various marketing channels, and post updates on social media to maintain excitement about the campaign.
Select motivating but cost-effective rewards
While you must keep tabs on your budget, you should also choose incentives current and new subscribers will appreciate. Before you start advertising your program and creating a landing page, ascertain how much you are willing to pay for each new subscriber.
Once you’ve established a general pricing structure, you can start considering rewards. Generally speaking, rewards that relate to your brand will work best, ensuring cost-efficacy and maintaining loyalty. Examples could include:
- Discounts on one subscription payment
- Credits toward a subscription
- A free month’s subscription
- A free upgrade to a new subscription level
- Perks related to the subscription, such as access to bonus features or free products
- Branded swag, or other gift items that match your brand’s values
If you want to bump up your selection of referral incentives, you may wish to consider offering cash rewards or gift cards. However, it’s a good idea to save these for your best advocates who help drive a high conversion rate.
Ask your most loyal subscribers first
It’s a good idea to personally invite your most dedicated subscribers to get involved with your referral campaign. Such subscribers could include:
- Those who’ve been signed up for the longest period.
- Those who’ve talked about their customer experience in person, on social media platforms, and in positive reviews. The more frequently they extol the virtues of your business, the better.
- Those who recently posted positive online reviews or provided in-person feedback about your business.
- Those who gave you the highest scores on a customer satisfaction survey.
Targeting these subscribers first will ensure the referral program starts well and draws many new customers, some of whom will become advocates themselves. You can reach out to these subscribers with a personalized note, subsequently rolling the program out to all subscribers.
Promote your program
Even the most attractive and engaging referral program won’t work if no one knows about it. Try to promote the program through a variety of channels to boost engagement, including:
- Your website – add it to your homepage and create a dedicated landing page
- Dedicated email blasts
- Email newsletters
- Renewal emails
- Other regular subscription update emails
- Your email signature
- Social media posts
- Your online subscription portal (if applicable)
- During direct conversations with subscribers – don’t be afraid to spark up a conversation and ask for referrals!
Make it easy for subscribers to make referrals
Subscribers are more likely to make referrals if finding and sharing the referral program is as easy as making a few clicks or keystrokes. You should also create an eye-catching headline to add to your marketing materials about the program, ensuring customers are enticed by the potential rewards on offer.
Additionally, you need to ensure the program’s functionality and explain the steps involved very clearly. A step-by-step guide tends to work best and will maximize the customer experience. Once you’ve written a guide, ask yourself (or a friend) whether the steps make sense.
You should also ensure the rewards structure is clear and won’t mislead customers into believing they’ve won bigger rewards than they’re entitled to. For example, you should explicitly state whether the advocate wins a prize when the new subscriber enters their contact details, makes a payment, or stays with your service for a certain period.
On your webpage, remember to include a separate FAQ page to clear up any confusion about the referral program rules. Finally, you should give your subscribers as many options for sharing as possible, including social media, SMS, online referral links, email, and more.
Use referral software
Whether you’re running an eCommerce or a SaaS referral program, you need referral software to streamline the creation of your referral program and ensure your tracking and management processes are as simple as possible. Other referral program benefits include:
- Create customized referral experiences for your brand
- Track where each referral comes from to ensure you target the best advocates
- Instantly issue rewards for successful rewards and minimize your administrative burden
- Collect program data to measure success and make improvements on past mistakes
Create and establish your referral program in a matter of days with Referral Rock. We offer automatic program promotion for scalable, cost-effective growth – without the need for complicated coding.
Here at Referral Rock, we’re experts in creating tiered programs.
Track and measure your success
Tracking certain metrics allows you to follow the success of your program and ascertain whether you need to make any adjustments to your strategy. Key metrics to follow could include how long referred subscribers retain their subscriptions on average (compared to your wider subscriber base), the percentage of subscribers who make referrals, and how many referrals lead to conversions.
Triumph in the subscription market with a new referral program
Making a name for yourself in the subscription is no easy feat. However, a referral program could provide the boost you need to secure long-term growth and give your subscribers the customer experience they deserve. By following the guide above, you can ensure your referral program is clear, effective, and won’t break the bank.
Ready to harness the power of referrals with the right software? Contact us to learn more about how Referral Rock can scale your business.
