How Do “Refer a Friend” Bonuses Work

Whenever we discover new hobbies or catch the latest movie in theatres, we always want to share the experience with friends. Hopefully, they will love your new-founded activity as much as you do.

While a word of mouth is still effective, the emergence of technology allows us to communicate with each other and connect with our interests and hobbies.

From social media and chat boxes, tech permits us to find out new information and ways to spend our leisure time with friends.

Businesses and websites have taken advantage of this phenomenon by implementing an opportunity for users to refer a friend in exchange for a reward.

Not only do the companies gain another customer into their base, but also maintain loyalty and positive user experience with their already established customers.

Multiple product-based and service-based companies utilize this strategy. For example, tutoring organizations and online games, have been implementing referral programs by offering direct benefits to existing users.

While these features may entice you, the goal is to refer to websites and services to friends in order to help out the companies and yourself.

The casino industry is known for having plenty of bonuses to give to its users, including free slot games and referral programs. Therefore, casino regulators are using this feature to expand a greater customer base.

Since it sounds pretty simple, let’s break down on how a referral program works, as well as examine its effectiveness.

A referral program can be distributed in two ways, either through word-of-mouth marketing or refer-a-friend program.

Word-of-mouth marketing is the traditional form where customers build a network of conversations through the influence of their own network. In other words, the customers themselves become social proof.

“Friend recommendation” among friends, family, and even celebrities and influencers is the most effective and credible version of a referral program that can send the profits to a significant increase.

Yet the refer-a-friend program is also worth taking a look, as it has shown to be more purposeful than the former.

A refer-a-friend program essentially incentives current customers to refer their friends and family to a specific business.

Typically, a form of a reward is offered to the customer referring the company to another potential customer who signed up or made the purchase.

Several surveys and statistics illustrate the success of incorporating the refer-a-friend program into their business model and overall marketing strategy.

About 90% of consumers trust in companies and services recommended by friends, family, and people they generally know. In addition, friends influence approximately 81% of online consumers in the United States in making purchase decisions.

According to OCG, bonuses have played a huge part in acquiring new users in the online casino industry.

Taking our previous example, online casino games are on the rise partially due to the very popular application of the refer-a-friend bonus.

Nevada reported two consecutive summer months in 2019 that went past the one-billion-dollar mark in casino revenues.

Even the most untraditional locations that are including casino games are seriously profiting from this new addition.

A Chicago airport with a slots section, for example, is expecting to generate about $37 million per year.

While the benefit of ‘refer a friend’ bonuses for the already established customer is clear, the question that arises is if the new customer somehow gains anything from this transaction.

The “friend” in this situation is also entitled to some kind of reward similar to the original customer, as well as the welcome bonus meant for new users.

All in all, a referral program is a key tool for creating new leads, improving conversion, and enhancing customer loyalty.

The leads are ultimately based on social proof of the founded customer base, along with peer-to-peer recommendations.

Besides, if the potential customer has not yet responded to the referral, the program is still a strong addition to the marketing sector of the company, as it boosts the company’s reputation and builds your email list.

Usually, the original customer’s bonus is received once their friend creates an account or utilizes the reward referred; however, each website and service has different regulations that may vary and affect the time of the bonus’ arrival.

Multiple well-known companies have implemented the referral program in one way or another, such as Dropbox, Uber, and AmazonPrime.

With Dropbox offering the customer and their friend 500 MB of free storage, the company was able to grow to over 4 million permanent users in just 15 months.

The referral program was the only form of marketing Dropbox seriously needed, as this strategy increased the business’ signups by 60%.

AmazonPrime’s referral program was along the lines of putting the friend’s $5 purchase into your pocket, specifically into your next purchase with the company.

With a clear call to action and easy share-ability, AmazonPrime’s referral program was extremely successful, as they opened the doors to every possible customer, Prime or not Prime.

Due to the overwhelming evidence of the refer-a-friend strategy, there is nothing left to do but to learn how to create a successful marketing model.

Some basic tips include determining the targeted audience, setting achievable marketing goals, choosing an incentive, implementing tracking software, and most importantly, clarifying and promoting the program to users.

Choosing the incentive should be inventive, inviting, and interesting for all customers. Different choices are available, such as cash, loyalty points, free trials, and store credit.

Furthermore, there are fun incentives that could be implemented and advertised, including mystery referrals, where users unlock mystery gifts for every friend they refer the service to.

While the incentive should be new and fresh, it should be realistic to be effective with all customers, both established and potential. For example, users will be more likely to refer a service to a friend if the reward is quite large.

At the end of the day, referral programs are extremely effective for any kind of company, be it a small online casino website or a worldwide e-commerce platform, that will increase and maintain a solid customer base.

It is important to give back to your customers, and for new customers to know that they have a way of receiving perks for their involvement and contribution. A well-structured Refer-a-Friend bonus program can help a business acquire new users and retain existing users, which not only helps with growth but also gives the company a good valuation.