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How to Create Mobile-based Referral Program?

In order to develop a referral program and keep it working, your marketing and sales teams should work really hard. Things get even more complicated as 18% of referrals are now initiated on mobile – and the number continues to grow. How to create a referral program and should you build it into your mobile app? Read on to find out!

5 tips to develop a successful referral strategy

Before we dive into the challenging and exiting process of building a mobile-based referral system, here’s something for your consideration:

  • Referral customers cost less and have a 16% higher life-time value than users acquired via other channels;
  • The average customer is four times more likely to buy a product/address a company when referred by a friend;
  • 92% of customers trust referrals from people they know (including friends on social media);
  • 83% of customers are eager to share positive experiences and recommend a business to their friends/SM followers – but only 29% of those actually do so.

It turns out referrals have the potential to drive more revenue than other customer acquisition strategies; however, entrepreneurs lose customers halfway and never reap the benefits of referral marketing! How come?

There are several reasons for this. Some companies do not offer rewards (which increase the likelihood of getting a referral). Many businesses do provide cash and non-cash incentives, but the perks aren’t enough to attract and retain customers. 

In most cases, however, brands design terribly inconvenient and time-consuming referral programs that rely on email/social networks only and require filling in long forms/enter data manually.

How to Create Mobile-based Referral Program?

How to develop a referral program that really works?

  • Evaluate your contacts and define possible referral opportunities. You should analyze your CRM data and reach out to your past and present customers, as well as hot leads;
  • Create a list of “inner circle” contacts. Here the “inner circle” term refers to all the customers who have had a pleasant experience with your brand and can therefore recommend you to friends/colleagues/social media followers without any incentive;
  • Choose between an incentive/non-incentive program. Some customers – especially those who make your inner circle – will be happy to join your program and spread the word without any reward, while others will expect cash incentives. Although non-cash incentives are 24% more effective at boosting a referral program’s performance in the long run, targeting both segments is considered the middle ground for most companies;
  • Outline the basic principles of your referral program. Here are a few examples of successful referral programs for your inspiration. Although Amazon offers only $ 5 to both new customers and Prime members they received the invitation from, there are multiple non-monetary benefits of being an Amazon member like unlimited streaming of movies and the option to borrow Kindle books that sweeten the pot. Gilt Groupe, a US lifestyle and shopping website that was launched as an “invite-only” service, gives customers $ 25 “towards future purchases” after the person they’d referred the service to places and picks up his first order. Slang, a platform targeted at buyers and sellers of authentic streetwear, offers $ 10 to both parties (that is, a customer who sends an invitation and a friend who accepts it). Finally, there’s Hotel Tonight, the last-minute hotel booking service that shortens the referral process to just two (!) taps and makes use of a dual-sided $ 25 incentive. All the brands we’ve mentioned have built referral program elements into their business websites and mobile apps – and that’s exactly what you can do!
  • Do not ignore marketing. A brand like Amazon (which has the most visited e-commerce website and the #1 app US Millennials and Centennials can’t live without) can surely afford to burry its referral program somewhere deep in the app interface. If you’re not making $ 136 billion a year, however, you’d better craft emails for each type of customers on your list telling about your new referral program, promote it on your website and app home pages and prepare a referral kit – that is, promo content which includes case studies, e-books, explainer videos, blog and social media posts advertising your project. As long as you find a way to provide real value to your customers, they’ll make it up to you!

Creating a mobile-based referral program: Addzer case

As a prominent mobile vendor, the r-stylelab.com team has worked on multiple customer referral applications. However, it is Addzer, a complex customer referral/loyalty system developed for an Asian start-up, that stands out from our portfolio.

Addzer (which is available on both Google Play and the App Store) is a SaaS solution targeted at small- and medium-sized Horeca businesses that are new to referral marketing or cannot afford to develop custom mobile software. It features a web-based admin console which allows business owners to add catering facilities to the program and manage content (including promo campaigns and menu items), a PHP-based server which processes payment transactions and generates sharable links, stylish iOS/Android apps for customers and mobile applications for cashiers (also iOS and Android).

Here’s how it works:

  • A customer comes to a café that has enrolled in the Addzer program;
  • He then checks in by scanning a QR code printed on a flyer and makes an order;
  • The Addzer app (which is installed on his smartphone) generates a unique QR code;
  • The customer (who is now ready to pay the bill) shows his QR code to the cashier (who also scans the picture using the cashier app);
  • The server verifies the user, processes the transaction and assigns several bonus points to the customer;
  • The customer is happy with the food/drinks/service. He wants to earn more bonus points and invites friends to join the program using social networks;
  • His friends join in and visit the very same café (or other catering facilities that participate in the program);
  • The lucky customer gets bonus points off the purchases made by his friends (and the people they’ve recommended the app to);
  • The bonus points can be spent on drinks and snacks at all Addzer-friendly cafés and restaurants.

How to Create Mobile-based Referral Program?

The solution (which makes use of multiple technologies including AWS, NFC, mobile payments) was developed by a team of four mobile and web developers, one QA engineer, one designer and a project manager over the course of 60 weeks.

If our customer had outsourced mobile app development to a US-based company ($ 150 per hour), Addzer would’ve cost them about $ 1 million! The median Eastern European developer hourly rates, however, range from $ 30 to $ 35, so they managed to reduce software development costs by 450%.

Right, we know what you’re going to say: $ 195-230 thousand is still a lot.

It really is – but you most likely won’t have to pay that much! Addzer is a SaaS solution that incorporates the elements of both customer loyalty and referral programs, implements the QR recognition technology, makes use of virtual currency and does some heavy processing on the server side. 

It is a business on its own, while YOU need a business tool which can be incorporated into your brand app –or a simple app with referral mechanisms!

According to Pavel Vaskou, Head of iOS Development Unit at R-Style Lab, adding referral program elements to an existing app – for instance, a food ordering application like Breakfast Delivered – is a no-brainer (at least on the mobile side).

There’s no magic to it:

Your customer wants to get 20% off his next purchase and decides to invite a friend. After he pushes the button (share via email, SMS, social networks or messengers), the application server generates a shareable link or a promo code. Once the person who has received the invitation clicks the link to initiate the app download process (or downloads the app directly from the App Store/Google Play and enters the promo code), the server registers the request and assigns bonus points to the parties involved. Bonus points can also be assigned after the invitee makes his first payment transaction (which is also processed on the server side).

Technology-wise, your vendor will implement the REST API to enable communication between the app and the server, multiple social network SDKs (Facebook, Twitter, messaging apps) to let users invite friends/share app content in 2 to 3 clicks and the Firebase Dynamic Link technology which directs the user who hasn’t yet installed your application to Google Play or the App Store.

However, it is the web-based server that handles the referral program logic. Also, it features an admin panel which allows business owners to manage content (including promo code campaigns) according to their needs. Such servers are typically built with PHP frameworks (for instance, Laravel 5.5+) and make use of the MySQL database.

Creating a referral program: cost estimate

Based on his vast mobile app development experience, Pavel says the mobile part will take only 2 weeks. That’s $ 15 thousand if you address a US vendor – or $3-3.5 thousand if you outsource mobile app development to an iOS/Android development company based in Eastern Europe.

Zakhar Bessarab, Senior Web Developer at R-Style Lab, reckons the server part will take another 4 weeks (or $ 30 thousand in the USA and $ 6-7 thousand in Eastern Europe).

Assuming you work with an Eastern European vendor, is $ 10 thousand a fair price for long-lasting customer relationships? What’s more important, will the referral program bring you ROI?

Let’s go back to Hotel Tonight, whose founder considers referrals a crucial element of the company’s overall marketing strategy. According to the study conducted by Extole, the company earns $ 17.5 on each referred customer without spending anything! Thanks to low-cost referrals, Hotel Tonight can spend more money on customer support – and that’s where happy clients come from.

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