Advocate

Who is an advocate in referral marketing?

How to reward advocates

Why are advocates important for brands?

How to maximize advocate rewards

Who is an advocate in referral marketing?

In referral marketing, an advocate is the existing customer of a business who refers a new customer in exchange for a reward.

Businesses are increasingly relying on their brand advocates to grow their customer base. Referral programs are executed in different ways. However, most of them try to reward the advocate for their behavior with a compelling incentive.

How to reward advocates?

For most companies, advocates receive their reward after the new customer referred by them enters a referral code. Generally, referral programs have three stages:

  • Advocates receive a referral code to pass on to their friends.

  • New customers enter their friend’s referral code for a discount on their order, or some other kind of reward.

  • The advocate earns a reward of their own when their referral code is used.

The number of friends that an advocate can refer to a brand varies from business to business. Some brands prefer not to limit the number of referred customers from an advocate. Others, however, build up their strategy around a maximum number of referrals from an advocate in a certain period of time. 

Why are advocates important for brands?

Advocates are an integral part of a referral program, bringing customers that are more valuable than average in terms of retention rate and customer lifetime value (CLV):

Referral marketing

Moreover, examining the activity of customers with a high referral rate will give you an idea of where your program is really excelling and what features are creating the most buzz.

Advocates can have a significant impact on reducing customer acquisition cost (CAC) for a business. Compared to other methods of attracting new customers (for example, paid acquisition), this approach is considerably less expensive. 

How to maximize advocate rewards?

It's essential that your referral program gives advocates a worthwhile incentive. Since you expect your advocates to bring you valuable referred customers, you should create value for them too. Use reactive discounts and loyalty programs to maximize advocate rewards:

  • Reactive discounts: To differentiate your referral program, you can rely on reactive discounts, meaning a discount or cashback equal to a percentage of the new customer’s spend. Why are reactive discounts effective?

    referral program

  • Loyalty programs: If you enable loyalty on your referral marketing campaign, you can reward the advocate with loyalty points. Syncing your referral and loyalty programs can encourage your existing customers to use their referral awards to go to higher loyalty tiers and find more exclusive offers there.

Check out our ebook, “Setting up your referral program with Talon.One” to learn how to power your own business with a cutting edge referral scheme.

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