Why Consumers Love To Join Referral Programs - What To Know

Mar 24 — 3 mins read

Everyone loves a good referral program. A method fueled by word of mouth, it's one of the most effective forms of advertising. But why is this the case? What makes a referral program tick? Why do consumers refer links to their friends and family? Why does seeing a trusted friend share something hold any weight? Why does it influence our purchasing decision? 

As it turns out, there's a valid psychological explanation as to why referral programs are effective, and we're here to break down the key principles:

 

Instant Gratification 

Humans are more inclined to perform a task if they receive something in return right away. Consumer behaviorists have observed that with shoppers, smaller but immediate rewards are preferable compared to delayed rewards. This is because we're all wired to place more value on instant gratification than waiting for a reward, regardless of how substantial it is. We want to chase happiness, and we want to get it fast. There are even studies that confirm that a person exhibits a higher level of cognitive activity when exposed to immediate rewards.

 

Collective Liking

 When your friends like something, you tend to like it, too. In his book focused on the psychology of persuasion, Dr. Robert Cialdini wrote, "We view a behavior as more correct in a given situation to the degree that we see others performing it." This phenomenon is often referred to as collective liking.

In commerce and marketing, people react better when they feel like their choice would be validated by their peers. Partaking in something approved by the people they trust and look up to is one of their key motivators. Referral marketing creates community approval, resulting in more people having a more positive sentiment to your brand.

 

Reciprocity

People are likely to give after they receive. We all tend to repay what another person has given us. Take birthdays, for example. If your friend gives you a present, you feel obligated to provide them with one on their birthday, too. Failing to return the favor would only make you feel indebted to that friend.

 This is fueled by reciprocity. Humans are naturally grateful. We respect gratitude and want to offer something in return for what has been given to us. For referral marketing, brands that show appreciation to customers tend to be more liked by the public. Even a simple thank you email for purchasing a product that also contains a link to your referral program can make a consumer want to participate in it.

  

Cognitive Dissonance

 Many are familiar with buyer's remorse. There are times that after you buy something, your brain immediately regrets the decision. And it's not even the brand's fault, per se. It's just human nature. 

In referral marketing, don't wait for your customers to feel buyer's remorse before you present them with your referral initiatives. Give them an opportunity to share after a purchase so you can participate in their excitement of having bought a new item. You get to dodge the buyer's remorse and create a positive feedback loop. It can gain you new customers, too. 

So long as you apply these psychological principles in your referral programs, then they have a higher chance of being successful. 

Chums Referral is a 50,000-strong community of friends who recommend products and services to each other. It focuses more on personal connections instead of discounts and coupons. Get in touch with us today to learn more.

 

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