Tob.in

Introduction
 
Coupons are a great technique for driving customer acquisition by giving your potential new customer an incentive to purchase your product. Additionally coupons can also be used as part of loyalty program that increases retention and repeat purchases from existing customers.
 
However when it comes to referrals you often see coupons (or discounts) as an after thought. What if you added the incentive during the purchase process to reward the person for referring new leads? With the state of social networking and social media, we can now implement savvy techniques to make new customer acquisition through referrals more powerful than standard techniques used by most sites.
 
One technique I’m eager to see put to use is Social Referral Discounts/Coupons. It’s the idea of incentivizing sharing via a social network during the checkout process. That is, giving the customer a discount in exchange for letting the merchant post a message to the customers social network.

I’d even argue that the following technique for offering discounts is more valuable than any coupons or promotions you offer because it not only incentivizes a purchase, but it also promotes an action that leads to referrals. Traditional coupons become worthless to the issuer once they have been applied to the customers cart.
 
How does it work?

In this fictitious example the customer comes to Foodzie.com to purchase a 6 month Tasting Box. When the customer gets to the checkout cart, they are presented with an option to save 10% off their purchase by sharing their purchase with their friends. While this option can be used in addition to traditional promo/coupon codes, our example simply replaces the promo/coupon codes with the Social Referral Discount.



When the customer chooses to apply the discount to their cart they are presented information about how it works and instructions on how to apply the discount. Here the customer is presented with the option to share the details of their purchase their Twitter stream or Facebook wall. Choosing either of these options will lead the customer to the respective services authentication/permission page.

After connecting with the respective social network the customer is brought back to the cart. Here they are notified that the discount has been applied and the total price has been adjusted. The customer then proceeds to checkout and pay for their order.  Upon payment the shop will share the customers purchase with the social network that was chosen.



Measurement

I’m a firm believer in MEASURE EVERYTHING and the beauty of this technique is that it’s highly measurable.  You see how many people your message was presented to and you know when someone from that audience has clicked through on the link and whether or not a transaction was completed based on this referral channel.  The one downside is that you don’t have a good idea of how many impressions your message received.

Additionally if you find a particular set of customers that performs well in terms of referrals, you can then focus on how to bring those customers back by offering them larger incentives.