Why Do Companies Use Referral Rewards?

Referral rewards are a marketing strategy that allows companies to leverage their existing customer base to attract new customers. By offering discounts or other incentives to current customers who refer new customers to the company, businesses can create a powerful word-of-mouth marketing campaign that brings in new business at little to no cost.



Why should my company be using referral rewards?

There are several reasons why companies use referral rewards as a marketing tool. One of the most important is that they allow businesses to reach new customers who may not have heard of them otherwise. When a satisfied customer recommends a product or service to a friend or family member, they are more likely to trust that recommendation than they would a random online review or advertisement.

Another key advantage of referral rewards is that they can be a cost-effective way to acquire new customers. Since the primary expense associated with referral rewards is the discount itself, companies can often save money compared to other types of marketing campaigns that require significant investment in advertising or PR.

How Beem worked referral rewards to their advantage

An example of a company that used referral rewards to drive growth is Beem. Previously known as Beem It, Beem is a mobile app that provides users with a digital wallet, making the process of sending and receiving money easy. They also provide cashback when shopping with certain brands. Beem’s referral program offered both the referrer and referred customer a $5 bonus after the new user signs up and makes their first purchase using the app. This created a powerful incentive for existing users to spread the word about Beem, which helped the company grow exponentially.

In addition to driving growth, referral rewards can also be a valuable tool for building brand loyalty. When customers feel like they are part of a community or have a personal connection to a brand, they are more likely to stick by it long-term. By offering referral bonuses or other incentives, companies can encourage their customers to become ambassadors for their brand, further strengthening that loyalty.



Is there a downside to a business offering referral rewards?

Of course, there are some potential downsides to using referral rewards as a marketing tool. For one thing, it can be challenging to track and manage referral programs effectively, especially as the number of participants grows. There is also the risk that customers will take advantage of the program or refer friends who are not a good fit for the company, which can lead to wasted resources and lost opportunities.

Despite these challenges, referral rewards remain a popular and effective marketing strategy for many businesses. By leveraging the power of word-of-mouth marketing and creating strong incentives for customers to share their positive experiences with others, companies can grow quickly and build a loyal customer base that will continue to support them over the long-term.



To conclude...

Referral rewards are a powerful marketing tool that can help businesses reach new customers, build brand loyalty, and drive growth without breaking the bank. By offering incentives to their existing customers to refer new customers, companies like Beem have been able to tap into the power of word-of-mouth marketing and create a strong and engaged customer base. If you are looking for an effective way to market your business, referral rewards are definitely worth considering.