4 Common Referral Marketing Mistakes That Ruin Your Campaigns

4 Common Referral Marketing Mistakes That Ruin Your Campaigns

Mistakes are a part of life. We stand and fall as children to learn how to walk. And as we go through life, there are mistakes we make here and there that we learn from. To err is human they say. 

But when it comes to business some mistakes can set your company back in thousands/millions of dollars and ultimately bring your brand to a halt. So you’d want to avoid errors that can cause major financial damage to your business because some of the effects are irreversible. 

And one marketing strategy that’s easily susceptible to errors is referral marketing. 

Don’t be mistaken, a referral marketing program is a powerful way to acquire new customers and skyrocket sales as customers are 4 times more likely to purchase a product or service that is recommended to them by family or friends than if they simply saw an AD. 

However, if you’re looking for the “4 times effect” then you need to have a look at the common mistakes that you’ll likely make if you’re not aware of them and how to avoid them. 

These referral marketing mistakes we’ll look at below will cost you time and money which if you’re seeking to build a powerful brand you have neither to spare. 

1# Choosing Poor Incentives 

To build a profitable referral program, you have to make the rewards appealing enough for customers to take their time to sign up for the program, and then promote it to refer leads to your business. 

But can this be done without spending adequately to ensure that your referral marketing program offers a quality incentive? 

A big no. One of the most common mistakes in referral marketing from companies whether big brands or struggling e-commerce platforms is the attempt to save a few dollars as they try to tempt customers with poor, unrelatable incentives. 

Think about it. Would you spend hours of your time trying to gain leads for a company that’s going to reward you with a free branded pen or a promotional mug? 

The excitement that referral marketing programs with such lackluster incentives can generate is next to nothing. 

What Do You Do? Give your customers what they’re looking for. Ensure your rewards are relatable to your brand and worth the time customers invest in promoting your products or services. 

Take, for example, the e-commerce luxury item brand Amuze referral program that offers customers and their friends $25 off their next flash sale buy. 

Amuze referral program

Image Source: No Attribution Required

The great thing about the program is that it drives the prices of the brand’s item down and this pulls in more customers in return. 

Plus the incentive is exactly what an online shopper would be interested in, who wouldn’t want a discount on luxury items? Here is an article that offers more tips on how to market products and services in Singapore. 

2# Complicating Your Referral Program 

Data reveals that the average web page visit is just under a minute and people spend 15 to 20 seconds reading each email. This implies that you only have a few seconds to pass the details of your referral program across to your customers. 

 If you take longer to explain what your program is all about, you can almost be certain of a “bounce” back from visitors. The bounce happens because web users do not have the patience for lengthy explanations and a large block of text turns readers off. 

Also, if your referral program seems too complex for the customers’ mind to comprehend, you’ll raise the scam alert as it will seem that you have some hidden clause in the aspect of rewards. 

Large blocks of text leave your customers wondering if they’re being swindled and once your customers get suspicious about your intentions you’re most likely not going to have them referring your product to their friends. 

What Do You Do? Keep it plain and as simple as possible. Your program should be clear at first glance and shouldn’t have to be read over and over again before readers can grasp what their gain is in referring people to your offers. 

A perfect example of a plain program is Fotofly’s loyalty program

Fotofly referral program

Image Source: No Attribution Required

The photography brand offers customers a free photograph session after every five sessions. While this is for a loyalty program, the emphasis is on clarity.

Customers know exactly what to expect and when to expect it without breaking a sweat trying to understand it. 

3# Attempting to Set & Forget 

Your brand’s referral marketing technique is not something that you can put on autopilot. If you want a successful referral program that remains relevant with your customers as trends evolve and change then you’ll need to revamp, review and revisit it on a consistent basis. 

Failing to update your referral program is a major mistake that companies make quite frequently and this usually results in financial issues because you’re literally throwing cash out the window by consistently funding a program that isn’t succeeding in pulling in sales. 

What Do You Do? Right before you get started on your referral program, ensure you have various follow-up strategies for testing and accessing the effectiveness of the program. 

Check out how Airbnb did it. They put in place 6 metrics that helped them track the ongoing success of their program. With this approach, Airbnb was able to keep every stakeholder aware of happenings involving the program and ensured that the program was working as expected. 

4# Ignoring the Time Factor 

You did your research and everything seems to be in place, yet your referral program isn’t bringing in the millions you hoped for so you decide to throw in the towel. 

That’s a wrong approach to referral marketing. The fact is that seeing the results you dreamed about and worked towards, takes time. 

Regardless of what marketing technique you’re using, whether you’re working with email marketing or you’ve just started a basic campaign to boost your click-through rates, every marketing program needs ample time to solidify. 

Remain consistent in your approach, review, and revamp your program and simply refuse to give up. 

What Do You Do? Do not expect referral programs to be a magic fix that will patch up all leaks in your business immediately. Rather view it as an ongoing strategy that’ll offer your brand a steady inflow of new customers. 

Tips On How To Set Up Referral Marketing

In case you’re wondering, referral marketing means getting paid for referring customers to a particular business. When someone recommends your product or service through a personal or business connection, you’ll typically earn a commission when that person makes a purchase. Some referrers may also provide additional content that encourages others to check out your product or service.

To become a successful referrer, you’ll need to develop a strategy and adopt some basic practices. Here are some tips on how to set up your own referral marketing program.

Make Money With Multiple Streams

To put it simply, you can make money online doing many things, but the key is to find a way to make money with multiple streams. For example, you can become a social media influencer and post regularly to Instagram, Twitter, and other platforms. You’ll likely earn money from ads on these websites and you can use that income to fund your product review blog. Or, if you’re a skilled marketer, you can create a blog, build a following, and then take advantage of affiliate marketing. When someone clicks a product or service link and makes a purchase, you’ll earn a commission.

Start With A List Of People You Know

To get started, you’ll need to develop a short list of people you know who might be interested in your product or service. You can use your personal contacts, Facebook, or LinkedIn to develop a list of potential customers. Create a spreadsheet or a list of email templates and send out a batch of personalized emails. A few weeks or months later, you’ll have a good idea of which products or services are generating the most interest and you can begin to narrow your focus.

Find A Niche

Depending on your experience, you may not know what to expect when you first get started with affiliate marketing. When I first got started, I wondered if I’d even make any money at all. You see, I’d never done any kind of marketing before and I didn’t really know what to expect. Once I landed on a few niches that I knew were profitable, however, I quickly saw that my efforts were paying off. Even if you’re just starting out, it may be a good idea to look for a niche that you’re confident you can convert into profitable sales.

Diversify Your Niche

As I mentioned above, you’ll likely need to learn a lot about affiliate marketing before you can succeed at it. In case you’re wondering, affiliate marketing is kind of like a combo of marketing and sales. When you sell a product or service online that you promote on social media, you’re acting as a marketer. When someone clicks a product or service link and makes a purchase, you’re acting as a sales person. A lot of people think that affiliate marketing is simply about getting paid for selling a product or service. While that may be true, it’s a lot more complicated than that. You’ll need to learn to promote a range of products and services and you’ll need to continually adjust your approach based on which products or services are currently performing the best.

To put it simply, affiliate marketing is a form of marketing in which you earn a commission when someone clicks a product or service link and a purchase is made. It doesn’t necessarily mean that you have to sell the product or service to which the link leads directly. You can promote products or services from many different companies and earn commissions from many different sources.

Build Your Brand

When you build your brand, you’re ensuring that your potential customers know exactly what to expect from you. When someone searches for your product or service on Google, they’re going to see your website’s name or product’s name in the search results. Essentially, if someone isn’t sure what they’re getting into by purchasing your product or service, you aren’t giving them enough reason to try it. In case you’re wondering, a brand is a “representation of a company or an organization, both online and off”, according to HubSpot.

Determine Your Best Converting Techniques

Determining your best converting techniques is a crucial step in setting up a successful affiliate marketing program. Without knowing which methods work best for your target audience, you’ll be operating in the dark. Ideally, you want to determine which methods are most effective based on specific metrics, like the number of sales that resulted from a specific technique or the percent of visitors that converted into paying customers. From there, you can determine if this is a method worth investing in.

Set Up Goals And Metrics

Setting up goals and metrics is another crucial step in establishing a successful program. You’ll want to set specific, measurable goals that you can track to determine if you’ve reached or surpassed your overall objectives. For example, you may want to set a goal of increasing the quantity of email newsletters you send out or boosting the percentage of website visitors that turn into paying customers. Whatever your goal, you’ll need to track the results of your efforts to measure your success and adjust your strategy as needed.

Setting metrics is similar to setting goals but it’s a little more complicated. You’ll want to set specific metrics, like the number of sales or website visitors, that you can use to track your progress. Once you have these metrics, you can determine if you’ve reached or surpassed your overall objectives. For example, you may want to set a goal of increasing the number of sales you make by promoting a product or service that generates $100,000 annually in revenue. To track your progress, you could set a metric like “number of sales,” and then track that over time. If your goal is to generate $500,000 in annual revenue, you’ll want to set a new, higher goal. To set this new goal, you can either raise your conversion rate or try a different approach. Alternatively, you could set a goal of generating $400,000 in annual revenue and then reassess your strategy based on whether or not you reached that goal. If you did, great! If you didn’t, you may want to consider either lowering your goal or testing a new strategy.

Use Free Tools To Build Your Audience

One of the first things you’ll need to do is build your audience. To do this, you’ll want to use free tools like Google Analytics, Facebook Analytics, or HubSpot to track the type of content your audience consumes, where they consume it, and how they consume it. From there, you can develop a strategy and figure out which methods work best for reaching your target audience.

Use Digital Marketing To Grow Your Business

To put it simply, you can use digital marketing to grow your business. More and more companies are turning to digital marketing to gain exposure, find new customers, and grow their business. Typically, this entails using social media platforms, like Facebook or Instagram, to grow your audience and acquire new customers. You’ll want to develop a strategy for digital marketing and adopt some basic practices, like posting regularly and using specific hashtags. Essentially, if you want to grow your business, you’ll need to get yourself out there, digitally, and grow your audience. Just remember that it takes time to see results from digital marketing efforts. Just like any other form of marketing, you’ll need to be patient.

Make Money With Ads

If you’re looking for a quick and easy way to make money, you can always opt for ads. Ads are an inexpensive way to gain quick exposure and you’ll typically only need to invest a few dollars to gain thousands of dollars in ad revenue. To put it simply, you can make money online with ads by purchasing ad space on websites. You’ll want to make sure that you put in the right keywords so when someone searches for your products or services, your website comes up in the search results. To get started, you’ll need to create a Google account and then use that account to log in to your Google Adsense account. from there, you can begin to build your audience, set up goals and metrics, and then begin to make money with ads.

As you can see, setting up a successful referral marketing program is a bit more complicated than simply selling a product or service. To get started, you’ll need to define your goals, set up metrics, and then begin to develop a strategy. Remember to be consistent and patient. Once you get the hang of it, building a successful referral marketing program won’t be as hard as you think and it could provide you with a lucrative income stream.


Here’s a recap. To ensure that you build a successful referral program, you must avoid offering poor incentives, a complicated program, setting and forgetting and ignoring the time factor. 

As much as possible try to avoid the above mistakes and your referral program is sure to succeed. So go out there and put what you’ve just learned to work! 

Get in touch for more tips about referral marketing and digital marketing in Singapore. 

About the Author

Tom Koh

Tom is the CEO and Principal Consultant of MediaOne, a leading digital marketing agency. He has consulted for MNCs like Canon, Maybank, Capitaland, SingTel, ST Engineering, WWF, Cambridge University, as well as Government organisations like Enterprise Singapore, Ministry of Law, National Galleries, NTUC, e2i, SingHealth. His articles are published and referenced in CNA, Straits Times, MoneyFM, Financial Times, Yahoo! Finance, Hubspot, Zendesk, CIO Advisor.


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