Viral Referral Programs: The Difference Between Trust and Trickery

Long before today’s marketing practices, entrepreneurs and marketers travelled to towns from miles away to reach potential customers, handing out pamphlets and brochures and searching for billboard spaces to make a sale or two. However, marketers have finally cracked the code to make marketing more effective through incentivization and word-of-mouth.

It’s no surprise that so many marketing tactics don’t work. Why? We think a simple “Hey, my product is good. Buy it now!” with a thousand (or probably a hundred thousand more) dollar budget will get you the ROI you deserve. Surprise, it doesn’t. These tactics feel more like shouting into the void, lacking the personal touch and social proof that makes people believe your product is worth their money.

Today, many industries are already utilizing digital marketing methods to reach a broader market, such as the event tickets industry, which has thrived with PPC and affiliate marketing. 

In this article, we will discuss how the ticket industry has thrived with digital marketing, including referral programs, and how businesses can create viral and ethical referral programs to drive business success.

How the Event Ticketing Industry Cracked the Code on Digital Growth

According to Introspective Market Research, the global online event ticketing industry is valued at USD 58.73 billion in 2023 and is projected to grow to USD 99.31 billion by 2032, a CAGR of 6.01%. The online ticketing events industry, like Event Tickets Center, has become an indispensable part of the modern event industry, giving the public easy access to the entire ticketing process and allowing event organizers and ticket sellers to sell and manage the inventory of their tickets through a single platform.

The success of the event ticket industry stems from its ability to provide event organizers with tools and access to real-time event analytics, sales tracking, purchaser preferences, and consumer behavior. With these significant benefits, event organizers, ticket sellers, and purchasers benefit from the analytics and convenience that event ticket platforms offer.

Ticket centers thrive in the entertainment industry by utilizing digital platforms and marketing methods, like PPC and affiliate marketing. PPC, or pay-per-click marketing, allows event ticket centers to reach audiences specifically looking for event tickets, pushing their platform to the top of the SERP using specific keywords. On the other hand, affiliate marketing allows event ticket centers to partner with affiliates who, in turn, earn a commission for every ticket sale.

At this point, we understand that digital marketing methods, including affiliate and referral programs, significantly drive business growth. However, many entrepreneurs still miserably fail because they fail to focus on what matters most for real growth: value over quantity.

Referral Programs That Sell Out Events

One unique feature of referral programs is their ability to leverage the power of word-of-mouth marketing. As traditional as it may be, word-of-mouth marketing has been one of the most effective ways to acquire high-value customers. After all, it is human nature to trust a convincing recommendation from a friend, family member, or close loved one more than random advertisements.

In the events industry, referral programs and marketing tactics aren’t new. Event organizers and ticket centers utilize referral strategies to invite new attendees through word-of-mouth marketing from existing attendees through the following:

1. Offering group discounts: Existing attendees can receive discounts if they gather a certain number of friends to purchase a group ticket through a link.

2. Special access or promotion for group attendees: Event organisers can offer special gifts, priority access, or VIP lounge access to existing attendees who can gather a large group for an event.

3. Ticket-based referral rewards: Event organizers and ticket centers can also offer existing attendees discounted ticket benefits, cash back, or a free upgrade for every successful referral.

The Psychology Behind Viral (and Ethical) Referral Programs

Make the Value Mutual

Referral programs operate on the premise that all parties benefit from a referral. At best,  successful referral programs become viral and ethical when they offer fair benefits to all parties involved. However, providing an ‘almost nothing’ value for a referral’s contact can significantly damage your referral program metrics and potentially harm your business.

For example, if an event ticket center offers a $50 coupon or discount to the referrer while the referred contact only gets a $1 benefit, it creates an unequal value distribution across parties, exploiting marketing tactics to benefit only one party rather than giving fair and equal value.

Social Proof: Your Secret Weapon (or Weak Spot)

Social proof is an excellent way to leverage referral programs to grow your business ethically. Your existing customer base acts as the ‘social proof’ that markets your products and services to their contacts, in exchange for your incentive. 

For this reason, services offering support in navigating challenging situations, such as debt relief programs that require a certain level of personal financial information, often benefit more from social proof, testimonials, and genuine success stories than purely transactional referral incentives.

However, this social proof can become a desperate attempt to acquire new customers through social manipulation, such as using overly aggressive or misleading information to increase the customer base.

Be Crystal Clear, or Risk Losing Trust

Transparency is crucial in launching referral programs, as referral conditions, perks, and incentives must be clearly outlined to ensure they are both ethical and successful. Here’s an example of a transparent referral program by Levi’s, and how both the referrer and the referred can benefit from the program.

On the other hand, a lack of transparency in a referral may state that the recipient can “earn $20 for every referral” without clarifying that the recipient must spend a certain amount to receive this referral perk. 

Referral programs also lack transparency when business owners use vague reward descriptions, misleading promotional messaging, or fail to clearly outline the terms and conditions of the earned referral rewards, rendering them useless.

What Motivates People to Share (Hint: It’s Not Just Rewards)

Referral programs become viral when business owners understand what motivates their target market to make a referral and what motivates non-customers to join the referral program.

A positive and ethical referral program motivation should include reciprocity and mutual benefits for the referrer and the referred contact, highlighting trust-based motivation and genuine appreciation. However, this can quickly backfire if the motivation shifts from genuine reciprocity to a sense of obligation.

An example of unhealthy and manipulative motivation for a referral includes:

1. Using manipulative language and tone like ‘Don’t let your friend down’ or ‘Return the favor to your friend’.
2. Utilizing social pressure on the referred contact to participate in the referral program.
3. Using psychological triggers like social comparison.

Don’t Bribe Everyone, Reward the Right People

The last thing you want when creating a referral program is for it to sound more like a sales pitch than a genuine recommendation. This happens when you become too focused on offering many incentives rather than the value they give to your business and referrers.

Analyzing marketing metrics, such as the cost per acquisition through referrals versus other channels, and understanding the average CPM for email ads used in promotional efforts, can provide valuable insights into the quality, efficiency, and sustainability of different approaches. 

You see, marketing need not be expensive to be effective, and many budget-friendly ecommerce promotion ideas generate good results while not being excessively costly, like referral programs. Focusing on delivering value and quality to both the referrer and the referred, rather than solely incentivizing a huge number of sign-ups, often leads to more positive and viral growth.

Talk Like a Human (Not a Marketing Robot)

Using simple words helps referrers and referred contacts know what they are getting into. Not only are they easy to read and digest, but using simple words also lets your customers know you value their time by not beating around the bush.

Examples of using simple words in referral programs (versus what you need to avoid):

1. Invite three friends, get 30% off vs. Invite friends and get premium benefits!
2. Sign up and you and your friend each receive a gift from us vs. Sign up and get mutually beneficial perks and surprises from us!

You get the point. Avoid overly complicated and vague terms and words, which often create unrealistic expectations. By using simple words, you get across the message that you aren’t hiding anything behind flowery words. See this example of Tapfiliate’s referral program that clearly indicates a 30% commission for every successful referral:

When Referral Messaging Crosses the Line

Aside from using simple words, choosing the right words in your referral program determines the line between referral marketing messaging, ranging from encouragement and persuasion to manipulation and guilt-tripping. 

Manipulation in referral programs begins when you use emotional pressure to persuade your customers to take action, rather than genuinely wanting to, because they have found the value in what you offer. 

An example of guilt-based messaging: “Your friend could’ve saved $10 — but you didn’t invite them!”

In this example, the business capitalizes on the guilt or shame that a referrer will feel about their friend not being able to save $10—all because you failed to enroll them in the referral program. This tactic shifts the blame onto the referrer, playing into their emotions through guilt-based messaging, to encourage them to reach as many referred contacts as possible. 

Another example of bad referral program messaging: “Prove you’re not a bad friend, refer a friend and help them save!”

In this example, they are simply (and straightforwardly) shaming the referrer into not becoming a bad friend by acquiring more contacts.

Use Exclusivity the Right Way, or Don’t Use It at All

The psychology behind exclusivity and why it becomes a crucial part of marketing is simple: everyone wants what they can’t easily have. 

In referral programs, business owners can capitalize on exclusivity tactics by offering invite-only access, exclusive perks, or limited-time referral windows to encourage referrers to secure as many referred contacts as possible within the program. When used appropriately, leveraging exclusivity should feel like an opportunity for referrers while offering valuable benefits for referred contacts. Here’s an example of a limited-time referral from Anytime Fitness:

On the other hand, exclusivity can be abused and turned into manipulation when businesses intentionally use misleading information on time, status, and access to encourage referrers to take action.

Some examples of how exclusivity is abused in referral programs:

1. Only 20 invites left for the free $50 gift! And it’s 20 invites every single day.
2. Get exclusive access to a concert! And it’s when you spend a certain amount.
3. You have 24 hours to get your discount coupon for every referral! And you’ve been sent three 24-hour email deadlines. 

Make Sharing Optional

Referral programs thrive when your customers become genuine referrers—that is, when they find real value, a connection, and a sense of free will to share your products and services in return for something of value.

Making sharing optional drives stronger trust and engagement. It demonstrates that you trust their autonomy in spreading the word about your business, thereby improving trust and generating higher-quality leads. 

However, this is where sharing becomes tricky when you start locking features, access, and perks behind a condition to force them to obtain the value behind a referral.

Here’s an example of how sharing options can be abused in referral programs: Invite two friends to claim your reward!

Although this reward has already been earned through previous referrals, referrers are still obliged to obtain two more contacts to claim it, which holds the users’ rewards hostage. 

Instead, make sharing an option to unlock premium or bonus features, or offering points or rewards for completing a task or sharing content, rather than making core referral program rewards difficult to access.

Final Thoughts: Incentivize Honestly, Grow Sustainably

Effective marketing programs that focus on ethical and genuine efforts yield better results than those that rely on deception and manipulation that damage brand reputation and generate ineffective leads that don’t improve marketing ROI metrics in the long run.

At their core, businesses that utilize marketing tactics such as referral programs should capitalize on word-of-mouth marketing from their existing customer base to expand their market to their peers and contacts. By offering genuine and valuable rewards, perks, and incentives instead of manipulative ones, their existing customer base becomes their most effective marketing tool for their products and services.