It probably doesn’t come as a shock that “word-of-mouth” marketing is one of the strongest drivers of new retail business, globally. Fully 74% of shoppers say that they will invest in a brand or product, because a friend, family, or other trusted source recommended that they do so.
This sort of brand evangelism is the “holy grail” for almost all business owners, managers, and marketers and entire sections of your local book store’s “entrepreneurship” section are probably dedicated to different ways in which to accomplish it.
While you may provide an amazing service beloved by all of your customers, that’s often not enough. How do you prompt them to sing your praises? The ability to inspire this kind of referral based business is one of the primary tenants of loyalty marketing.
It makes sense then, that the same software that drives almost all loyalty-based marketing programs, can be leveraged to incentivize those people who take the time to recommend your business to their friends, family, and customers. Fortunately, the same tools that make it easy for your to reward consumers are also incredibly useful for rewarding people who might be in a position to recommend you.
Ambassador programs, sometimes called “affiliate”, “referral”, or “lead” programs, help you put in place the mechanisms that allow you to automatically reward the people that are driving your growth. In these cases, you’re trying to incent a seller who, may or may not be an end user themselves. Here are a couple of examples:
Ambassador Program Use Cases
- As a restaurant owner in a tourist area, you might be interested in prompting a local hotel’s lead concierge to recommend your establishment when hotel guests ask “where to go for dinner”.
- As a florist, you know that much of your business is referral driven and encouraging your active customers to recommend your services for weddings, parties, and more can be a vital source of new business.
- As a credit card processing company, you may want to increase your value to a particular client by incenting your customers to shop at that client’s business. This is a reverse ambassadorship where in you are acting as the referrer in order to gain a secondary reward. Many of the same principals apply, however.
No matter what business you’re in, the common thread is that in all of these scenarios, you’re rewarding someone for recommending your business, vs. shopping at it. Loyalty platforms, like bLoyal, can help you administer, manage, and analyze these ambassador programs more effectively.
How to get started
Assuming you’ve already got a loyalty platform in place, the first thing you’ll need to do is create a way to recognize the customers that are being referred to you and where they’re coming from. This can look a bit different, depending upon the type of business you have but the most common method of tracking your ambassadors is through assigned gift cards.
In this scenario, you might give a concierge 50, “$5.00 Off” cards and say, I will give you $1 for any item of your choice, for every card I get back. These gift cards would come back to you by way of referred customers redeeming the cards at your business.
You can accomplish the same objective through trackable coupons, landing pages, and any number of other tools… depending on the specific features that your loyalty program offers. The important factor is being able to track your discounts through your retail CRM.
How much should I offer?
There’s no right or wrong answer here. When first starting your program, it will likely take you a little bit to find your sweet spot. Here are a couple of factors to keep in mind, however:
- Know Your Customer – In the case of a referral program, the ambassador is your customer, not the end user. Give your ambassador some incentives to play with, but make sure that the brunt of your allocated resources are focused on the person bringing in new business. They are already playing the role of trusted advisor to your end user and they shouldn’t need a whole lot more than that in order to send new customers your way.
- The value of a new customer – It’s difficult to quantify the exact cost of acquiring a new customer, but we know that it isn’t cheap. Whatever marketing expenses you may incur while building your referral programs, if nurtured, tend to pay off in spades as each successive customer then recommends several new ones and so on. Don’t be afraid to invest.
88% of Americans say that they would like some sort of incentive (money, product or service, loyalty points, early access, swag) for sharing product via social media or email.
Ambassador Program Tips
We know that ambassador programs work. But what separates the flubs from the success stories? In short, the key to building a great program lies in providing value to your referrer. As we mentioned, earning new customers can be notoriously expensive It’s a good idea to make referrals, among one of your top loyalty program KPI’s, even over direct purchases. Here are some proven strategies for successful loyalty based ambassador programs.
Building a cumulative point system is a great start. Try awarding successively larger amounts of value to an ambassador’s account, the more people they refer. Adding point multipliers during high traffic periods, like holidays, against certain high-margin purchases, and return customers, can also create a big uptick in revenue, right when you need it.
Create a Goal
Setting goals for your ambassador program members can be a powerful motivator and is one of the fundamental premises behind gamification. Try using “ghost points” that only vest when the ambassador has referred a value threshold, as measured by revenue, customers, number of items purchased, or anything else.
Make it an Inside Job
As the phrase goes, “I got a guy”. Your ambassadors want to feel like they have something exclusive to offer and the end user wants to feel like they are getting an inside deal. Empowering your ambassadors with personalized gift cards, landing pages, and exclusive discounts can help them feel like they are part of the club, and the end user, like they are getting something truly special.
We can’t say this enough: Make it easy for people to recommend your business! The best way to do this is to make sure that your ambassadors have a resource center to go to for questions and feedback. This may be as simple making sure that you regularly update your ambassadors with new menus, the most recent group rates, etc., through email. More advanced user sometimes build partner portals through their websites.
If you have tiered programs, make sure that the ambassador’s role for selling higher value products, is clear and open.
Anytime someone is a referrer for your business, you should think of them as an extension of your staff. Prompting them to drive business is not enough. Genuinely acknowledging them when they do send a new customer your way, with a “Thank You” is vital to building referral relationships. Long term points programs work well for this, but try to think outside of the box. Instant rewards are a great way to let your ambassadors know when their referrals are working.
Marketing Your Ambassadorship Program
Just like you would market to your end-users in a loyalty program, you want to make sure that you stay in regular touch with your ambassadors. They are a key part of your strategy. Channel marketing (or marketing to the people that are in a position to recommend your products), is essential when launching a successful loyalty based referral program.
Remarketing & Retargeting
Just because you’ve told someone about your program, doesn’t mean they’ll start using it without a little nudge. Segment your ambassadors off into a group on the back end of your loyalty platform and email them exclusive referrer discounts. Once you download their emails from your software, it’s not difficult to generate a social media based paid remarketing campaign which only your ambassadors will see. The overall point is, keep reminding them that you’re there. As with most marketing efforts, your goal is to be top-of-mind at the “zero moment of truth”, when they’ve been asked for a recommendation.
If you have the resources, contests can be an incredible way to drive participation in ambassador based referral programs. Offering some kind of large scale prize for contests ranging all the way up to six months in length, can pay itself off very quickly. This strategy works especially well for enterprise level customers where economies of scale shrink the cost of one-time loyalty program incentives compared to the overall net gain in business. To gain traction in this area, you’ll probably need to “go big”.
Most importantly: Remember that your ambassadors reflect on you and you on them. No ambassador wants to send you business and then hear that their referral didn’t enjoy the experience. Pay special attention to these new customers. Make sure to keep your referrers in the loop on what’s going on at your businesses, so that they can best inform the customer.
Measuring the Effectiveness of Your Ambassador Programs
What’s your loyalty-based ambassador program worth at the end of the day, anyhow?
A simple way to figure this out is to segment all of the tickets where an ambassador program discount has been applied. Remove the value of the discount you applied to your end user (in our starting example, a $5 off coupon) and then remove the value of the reward you applied to your ambassador’s account on the same ticket.
Depending on your industry and vertical, standard marketing and advertising expenses tend to run about 5% to 10% of gross revenues, in any given month.
Simply divide the dollar value of the discounts you gave by the total revenue earned from referral based revenues and you should end up with a percentage cost on your program.
Troubleshooting Your Ambassador Program
If your program is running a little cold and you’re not sure what to change, the first place to turn is always the analytics / business intelligence dashboards that your loyalty platform provides. This data should tell a story about who your most valuable referrers are, the type of customers they’re sending you, and where to focus your attention.
Here’s a couple more quick tips to make sure that you’re investing wisely.
- It may make sense for you to require a minimum dollar value spend in order for ambassadors to accrue points. That is, the cutomer must spend at least ‘x” amount before you award points. This will help ensure that you’re not giving out lots of benefits on small ticket items.
- Similarly, you may want to tack the number of points an ambassador accrues to the final spend of the end user or create accrual tiers in which your ambassador earns blocks of points based on a minimum spend.
- You may want to consider adjusting the value of your offers to the end user. Remember that they shouldn’t need a lot of extra incentive beyond their trusted source referring you.
- Marketing! Marketing! Marketing! Remind ambassadors of why they should be recommending your business and what’s in it for them.
If you’re looking to invest in a loyalty-based ambassador or referral program and need some help choosing a platform, bLoyal builds seamlessly integrated loyalty solutions for organizations at all stages of business growth. Contact us or request a demo, below.