Yevhen Kasyanenko: A comprehensive guide to referral marketing systems for business

Learn about the proven practices used by Yevhen Kasyanenko, an expert and manager at BlooMLM. Thanks to his recommendations, you will be able to build a referral system that will increase sales, strengthen customer trust, and work for a long time. 

What is the referral marketing system and why is it important?

The referral marketing system is a strategy for attracting customers based on recommendations. Satisfied users who participate in the business want to share their personal experiences and attract new customers. In return, they are offered discounts, bonuses, or cash rewards. Research by the Wharton School of Business has shown that a customer who comes through a referral has, on average, a 16% higher lifetime value (LTV) than a customer acquired through other channels.

It is not enough to simply implement a system for it to actually work and deliver results. It needs to be carefully thought out, adapted to your company, and implemented. The system must work without fail. With the help of strategy, accrual logic, and transparent conditions, you can turn a referral program into real motivation for partners. BlooMLM specialists are ready to offer working solutions.

Our team of professionals develops effective referral systems that deliver results every day. Here’s how our specialists can help:

• building a clear and fair reward system;
• setting up automatic bonus and payment accrual;
• creating transparent reports;
• integration with personal accounts, etc.

You can see the growth of the structure and how much each active participant is contributing in real time. Your partners will have a convenient tool that motivates them to share the product. They will be able to build their network with confidence. Each of their steps will be evaluated fairly.

Start by identifying your business goals and the type of audience you want to attract through referrals. Develop a clear, motivating rewards structure that encourages users to share your product or service. Ensure the process of joining and participating in the program is simple and user-friendly. Track performance with analytics and make adjustments to keep the system effective and engaging over time.

How does the referral system work?

According to Nielsen, 84% of people make purchasing decisions based on recommendations from friends and family. There are three key participants in the referral system:

• Business – providing a product or service and developing motivational techniques.
• Referrer – recommends the business to other users. This person receives bonuses for each customer they refer. 
• Referral – someone who comes on recommendation and often receives a welcome bonus.

Why is referral marketing more effective than traditional advertising?

People trust referral recommendations much more than advertisements. Others are more likely to listen to people they know than to click on banners on the internet. Therefore, the effectiveness of referral marketing is growing and it is very profitable. This is because the cost of attracting a customer is minimized, while trust is increased.

Key participants in the referral system

The basis of every referral system should be mutual benefit. Each participant receives a specific bonus for bringing new customers to the company.

Referrers – who are they and what benefits do they receive?

Referrers are people who directly recommend a service or product. What they receive in return depends on the reward system. This can be:

• cash bonuses;
• discounts on future purchases (for example, 10–20%);
• exclusive offers;
• gifts or free products.

Referrals – who is attracted to the business and what bonuses do they receive?

Referrals are new customers who come on recommendation. To motivate them to place their first order, the company may offer them:

• discounts on their first purchase;
• bonus points;
• a free trial period.

Types of referrers in a referral system

The type of referrer depends on how involved they are with the brand. They can be:

• Regular customers (brand ambassadors) – those who simply like the product and want to share it without any particular benefit. According to various surveys, up to 25–30% of all recommendations are made spontaneously, based on positive user experience.
• Brand advocates – loyal customers who actively talk about the company on social media, forums, and among their friends. In return, they receive exclusive bonuses for referrals. About 15–20% of the audience is willing to become brand advocates if the terms of the referral program are transparent and sufficiently beneficial.
• Opinion leaders and bloggers are individuals who have a lot of influence and a wide audience. Their opinion is considered expert, so their referral links are especially valuable. Their referral links bring businesses an average of 30–50% more conversions than regular recommendations (data from HypeAuditor).

Referral marketing has become a unique growth tool based on human trust. If a company can build a referral system correctly, it will be able to attract many good customers. And these customers will be more loyal and engaged in the process.

Want your company to maximize its referral potential? How can this be done, you may ask. It is important to understand that competition in the MLM industry is currently quite high. For this reason, it is necessary to use marketing tools wisely. Then all the resources you invest will bring results. A well-designed referral system can be turned into a powerful channel that will attract loyal customers and promising partners. They will promote your business. 

We recommend using the help of BlooMLM experts for this. Each client receives an informative consultation with the team’s specialists. During this consultation, the current business model is analyzed and growth points are identified. The team will also advise you on the most effective way to build and improve your referral program. The specialists will share examples of successful cases with you and offer clear steps that will allow you to start making changes right now. 

Take advantage of the opportunity to build a system that works automatically and delivers results every day. Leave a request to take your business to the next level.

Types and models of referral marketing

There are different types of referral programs. In some, only the referrer is motivated, while in others, everyone is motivated. Which option you choose will depend on the specifics of your business and your target audience.

One-sided and two-sided referral programs

• A one-sided referral program is when only the referrer receives bonuses. This is convenient for the company, but provides less motivation for referrals.
• In a two-sided model, both the referrer and the referral can receive rewards. This increases engagement and brings more customers to the company. Global practice shows that two-sided programs are 20–30% more effective, as they provide additional motivation for new customers to take advantage of the offer.

An example of a successful program is Revolut. Here, the referrer receives bonuses after the user they have attracted activates their card. Tinkoff is also popular. It has a whole system of discounts that can be obtained when recommending a card or investment products.

Word of mouth: can it be considered referral marketing?

In the case of word of mouth, recommendations are natural. They are not backed up by bonuses. This differs from a classic referral program, because the motivator is personal experience, not financial gain. According to Nielsen research, 54% of people share information about a brand simply because they want to help others make the right decision or tell them about something interesting.

Here are some cases when word of mouth is worth using:

• if the product inspires enthusiasm and a desire to share (for example, an unusual service or unique quality).
• if the customer feels that they are doing a good deed, not just earning money.

Monetary vs. non-financial rewards

There are several types of rewards in referral programs:

• Financial bonuses – specific payments or a percentage of the purchases made by the referred customer.
• Non-financial bonuses – discounts, points, gifts, free services.

Which option is better? The first is suitable for financial and IT services, and the second is for e-commerce, fitness, education, etc.

Examples of successful referral programs

There are now many successful companies that have decided to use referral schemes. This has allowed them to increase their customer base and reduce marketing costs.

Well-known global and Russian case studies

• Dropbox offers increased cloud storage to those who invite a friend. Thanks to this, users actively shared links. The user base grew by more than 60% thanks to this program.
• Airbnb – here, both the referrer and the new user receive bonuses. The program was particularly effective in the first years of the startup, increasing the user base by 25–30% through referral links.
• Skyeng – students who invited new customers could receive free lessons. This had a positive effect on customer loyalty.

Offline referrals: how recommendations work in real life

You can encounter referral programs both online and in traditional businesses. For example:

• Fitness clubs: bring a friend and get a month of training for free. According to internal calculations by a number of fitness chains, up to 30% of new customers come in this way.
• Banks: you can get bonuses if you recommend a new credit card. Some banks report that referral customers spend 15% more on average and use their services more actively than those who come in through traditional advertising.
• Retail: a discount on a purchase if you bring in friends. As a result, such promotions increase the average check by 10–15%.

When a referral system is well thought out, it can become a unique and powerful tool for company growth. The main thing here is to choose the model that is most beneficial for each participant and allows you to involve users in the process more naturally.

The BlooMLM team has been able to help many MLM companies. Our specialists understand that a referral system is not just a tool for attracting customers. It can be turned into a powerful growth mechanism. And this will become the foundation for scaling your business. However, this mechanism cannot work if you do not take the time to think through every detail. You need to start with the reward structure and finish with the technical implementation of the idea.

The professionals at BlooMLM are not only engaged in creating such systems, but also in building strategies that actually deliver results. They set up transparent accruals, automate all processes, implement analytics, and integrate the system into CRM and personal accounts of partners.

To see the team’s professionalism for yourself, take a look at their case studies. This will help you learn how our specialists have already helped various MLM companies launch effective referral systems. You will understand how an efficiently built system increases the flow of new customers and the engagement of each participant.

How to launch your referral program? Step-by-step guide

A referral program is not just about bonuses for invitations. It is a strategic tool for attracting customers. The program will only work effectively if all aspects are taken into account, from planning to analytics.

Preparing a strategy

Before launching a program, it is important to define its goals. Here are some examples:

• Increase your customer base – suitable for startups and new products.
• Increase the average check – works well in e-commerce and financial services.
• Increase customer loyalty – most relevant for educational platforms and subscription services.

Then choose a bonus model:

• Financial rewards – direct payments or cashback.
• Non-financial bonuses – discounts, bonus points, free services.
• Combined schemes – for example, a discount for a referral and a bonus for the referrer.

Technical implementation

It is important to make the program convenient for each customer and ensure that it can be integrated into the business. The following points should be taken into account:

• how data will be placed on the website — develop a separate section in the page menu or an entire landing page that describes the terms and conditions;
• simple registration of participants — it is convenient if you can log in using a social network or email;
• use of unique links, QR codes, promo codes — these will help you conveniently track referrals.

Promoting the referral program

Even if the program is good, it will not produce results if it is not promoted. The following will help with this:

• Email newsletters and push notifications will keep your customers informed. According to HubSpot, a properly segmented mailing list can increase engagement in a referral program by 18–25%.
• Social media and content marketing – posts, stories, gamification.
• Paid channels – targeted advertising, Google Ads.
• Opinion leaders and bloggers – increase loyalty through recommendations.

Launch and monitoring

Once the program is up and running, it is important to monitor its effectiveness. This can be determined by the following metrics:

• How many customers have been attracted – specifically, how many new users have come to the company through the referral program.
• K-factor – how many new customers are brought in by one participant.
• Conversion of referrals into active customers – the percentage of those who not only registered but also performed the target action.

If you conduct regular analysis, you will be able to make changes to the conditions, improve the experience, and increase the effectiveness of the program itself.

Automating referral marketing: which services can help?

To effectively manage a referral program, both strategy and process automation are important. Special services can be used to track results. They also help with bonus accrual and prevent fraud.

Popular platforms

There are now a wide variety of tools available to automate referral programs. Here are some of the most popular solutions:

• Flocktory – a Russian service that allows you to easily integrate referral programs into online stores and CRM systems.
• BitRewards – a blockchain platform that offers cryptocurrency bonuses for attracting customers.
• GetViral is a tool that allows you to quickly launch referral marketing and has convenient analytics.
• Sailplay is a convenient platform for increasing trust, including referral programs and gamification.

How to choose a service for your business?

The platform you choose will depend on the specifics of your company. It is also important to consider the goals of your referral marketing. Here is a quick guide:

• E-commerce and online services – Flocktory and Sailplay are best suited.
• Tech companies and crypto projects – BitRewards with blockchain reward features.
• Startups and small businesses – GetViral with quick setup and a flexible reporting system.

At the same time, consider whether the service will be easy to integrate with the company’s website, as well as with all systems, including CRM. The functionality and price of the service are also taken into account.

Mistakes when launching a referral program and how to avoid them

Every company, even if it is successful, can encounter mistakes when implementing referral marketing. Therefore, we decided to share common problems and methods for solving them.

Insufficient promotion of the program

Mistake: users have no idea that the referral program exists and therefore do not use it. The solution is as follows:

• Post information about the program on the main page of the website and in the customer’s personal account.
• Use email newsletters and push notifications.
• Talk about the program on social media and launch advertising campaigns.

Complex participation conditions

Mistake: To participate in the program, users must complete many steps, which reduces motivation. Solution:

• Simplify the registration and reward calculation methods.
• Make the terms and conditions transparent: clearly explain how the program works.
• Offer clear and valuable bonuses.

Lack of fraud control (referral fraud)

Mistake: Users start using fake accounts or exploit loopholes in the rules. Solution:

• Implement a system to verify the uniqueness of referrals (e.g., by IP address or cookies).
• Set simple requirements for earning bonuses (e.g., the referral must make a purchase or pay for a subscription).
• Use analytics and suspicious activity detection tools.

If you avoid these mistakes, you will be able to create an effective and proven referral system. Thanks to it, you will have a constant stream of new users.

Conclusions: why every business needs a website referral marketing system

DSN research shows that companies using a website referral marketing system have an average customer base growth rate that is 20–30% higher than their competitors who rely solely on traditional advertising. At the same time, customer acquisition costs (CAC) are 25–40% lower.

Referral marketing helps attract new users and strengthen the trust of existing ones. Companies that use this method are always gaining new customers. At the same time, their advertising costs are minimized and brand loyalty is increased.

Key advantages of referral marketing

The main advantages of a referral system are:

• High efficiency – it works better than traditional advertising, because recommendations from friends and acquaintances are better received.
• Two-way model – if both the referrer and the new customer receive a bonus, the program will bring maximum results.
• Simple terms – when you participate in the program, your involvement grows.
• Automation – modern management tools allow you to minimize routine tasks and avoid mistakes.

How can BlooMLM help your business?

With the help of the BlooMLM team, you can develop and implement referral programs. The specifics of your business will be taken into account. We create strategies that really work and increase the number of customers. This also ensures sales growth.

Contact us today. You will receive professional advice and develop a referral system that is perfectly suited to your company. This will be the first step towards strengthening your business. During a personal consultation with the BlooMLM team, we will conduct a detailed analysis of your structure, goals, and marketing plan. You will learn how to build a referral system tailored to the specific needs of your company. The reward logic will be clear, the accrual will be automated, and the functionality will be convenient for partners.

With a properly configured referral program, you will be able to attract more customers and have a stable channel for growth. In addition, it helps strengthen team loyalty and provides competitive advantages for your company.

Submit your request now so we can offer you a strategy that really works. With it, your business will be stable and effective.