What are the Best Referral Marketing Program Incentives?

Referral marketing programs leverage the trust of current customers to drive positive word of mouth, and attract new customers - a lot of which hangs in the balance based on the type of reward you offer.

Abdul Wahab

Abdul Wahab

· 18 min read
What are the Best Referral Marketing Program Incentives?

Either through reciprocity or altruism, people are innately driven to share their positive experiences with friends and family. But from a business perspective, you cannot depend on basic human psychology to turn in new customers and drive growth.

You may have some loyal customers who will refer you to others without expecting anything in return. Despite their affinity towards your brand, the masses will still side with businesses that propose equally valuable trade - rewards in exchange for referring new leads.

Referral marketing programs leverage the trust of current customers to drive positive word of mouth, and attract new customers - a lot of which hangs in the balance based on the type of reward you offer.

For most prospects, dollar rewards serve as the perfect motivator and are just as easy for brands to propose, but they are no one-size-fits-all. To spark an interest in your audience, you need to identify what engages them most and aligns with your brand proposition all the same.

Finding the ideal referral incentive can be labor-intensive, perhaps an inspiration from the best referral marketing programs and effective tips would keep you on track.

What is a Referral Marketing Program?

Let’s roll back to the basics. Referral marketing is a strategic approach that harnesses people’s social influence to spread awareness about a product or service within their networks to bring new customers to its customer base. It relies on word-of-mouth and personal connections of existing customers to encourage prospects to refer their friends and family to the business.

Recommendations from a credible source - friends and family - carry more weight and influence than any sponsored ad you view on TV or on the social media feed. The continuous exposure to brand ads has cost low attention spans and response rates, making it ever-harder for businesses to earn prospects’ trust.

To overcome that bridge, referral programs motivate people through special incentives. Rewards serve as a win-win deal for both parties, where loyal customers are rewarded for their advocacy, and potential customers are compelled to try a brand based on a friendly referral.

Why are Referral Rewards Important?

Most of the referrals are driven by consumer enthusiasm, either for the company or the rewards it’s offering. While some might still share their experiences with others, without an incentive leading them you’re bound to attract a low response rate, let alone conversions.

People are more likely to do you a favor when they see a benefit for themselves, whether it’s participating in the program or compelling others to do so. Rewards such as cashbacks, discounts, or freebies, are a way of thanking your brand ambassadors for putting the positive image out and prospects for taking the leap of faith.

Here are some reasons why referral marketing incentives are important:

  • Boost Motivation: Offering rewards develops motivation in customers to actively promote your brand. Monetary rewards, discounts, or exclusive offers make the effort of referring others feel worthwhile and appreciated.
  • Leverage Reciprocity: Upon receiving a reward, many customers feel indebted to the brand and reciprocate by making additional purchases or continuing their advocacy.
  • Attract New Customers: For referees, referral rewards provide an extra incentive to become customers. The reward serves as a bonus on top of the natural appeal of trying out your product.
  • Strengthen Customer Loyalty: By rewarding their advocacy with attractive incentives, businesses can foster loyalty in their customers. They are likely to develop a strong emotional connection with your brand that lasts long-term.
  • Creating win-win Scenarios: The referrer gains incentives for promoting a brand they believe in, while the referred party receives a valuable offer or benefit, enhancing the customer experience with the brand.

Types of Referral Rewards and Incentives

Before you pin down ways to set up referral program incentives, assess your options. Regardless of the type of referral program you’ve implemented, referral rewards comprise the following categories:

Monetary Incentives

Nothing quite entices a customer better than a cash bonus or discount on their purchase. Monetary incentives trigger an individual’s desire for financial gain. If they see a real, tangible benefit linked with each referral lead, customers are bound to participate.

Often times, monetary referral rewards do not come with strings attached. Recipients are free to use the reward as they deem fit, whether for spending, saving, or investing. More importantly, businesses can easily track each monetary reward, the number of referrals made, and the return on investment ROI. Monetary incentives are usually presented as:

  • Cash Rewards: With the monetary value intact, cash rewards are straightforward and instantly appealing. Referrers receive a specific amount of money for each successful referral they make.
  • Discount Vouchers: Instead of offering cash, businesses can provide referrers with discounts or vouchers that they can apply to future purchases to encourage repeat business.
  • Cashback on Purchases: Referrers can earn a percentage of cash back based on the referred party's purchase amount, making it favorable for e-commerce and subscription-based startups.

Recall PayPal’s $10 double-sided incentive program for generating referrals.

PayPal referral program rewards banner.
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Non-monetary Incentives

Unlike cash rewards, non-monetary incentives might require a more creative and impactful approach to devise but ensure better engagement and long-term participation in the program. They are 24% more likely to shape people’s perception in your favor than hard cash.

These incentives appeal to customers’ emotions beyond the financial gain, fostering a deeper connection between them and the brand. Some non-monetary incentives include:

Exclusive Access: For every positive lead generated through referrals, users get a free pass to access exclusive features or packages that were otherwise restricted for non-paying customers.

Premium Content: In exchange for each conversion, referrers get access to valuable resources such as ebooks, guides, tutorials, or industry insights which enhances their engagement with the brand.

Recognition and Status: Referrers are highlighted as brand ambassadors, earning recognition, badges, or titles that showcase their advocacy within a community.

Dropbox’s referral program landing page.
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Hybrid Incentives

As the name suggests, hybrid incentives combine elements of both monetary and non-monetary rewards to create an enticing incentive structure for referral programs. Offering a mix of financial benefits and value-added experiences, hybrid incentives cater to a broader audience irrespective of their prime motivations. HelloRewards presents a suitable example

HelloRewards refer-a-friend incentives.
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Sometimes referred customers receive a cash reward for signing up along with an additional discount on their first purchase. Some brands provide recognition and status to their ambassadors for promoting the program. The immediate financial gain along with an added reward fare better in terms of long-term savings.

How to Set the Perfect Referral Incentive?

Referral marketing can be a powerful growth strategy for any business, but without proper rewards supporting it, the campaign may lose its potential. A study suggests that more than 80% of people wish to tell their friends about a purchase, but only 29% actually do. By devising attractive rewards you can increase participation by 30%.

As enticing as they may appear, cash rewards shouldn’t be your first choice for rounding up customers, especially as a service-based startup. A simple $10 credit won’t suffice if your audience is looking for something more valuable. Consider the following steps before finalizing your referral rewards:

Assess the Audience's Motivations

Understanding the motivations of your target audience is the first step toward proposing incentives that spark their interest. Incentives that resonate with your customers’ preferences help a long way in developing business-customer relations, maximizing engagement, and boosting the conversion rate.

For instance, if you’re finding it hard to convert your visitors into customers a special discount recommendation might nudge them to become your clients. Or if you’re facing a higher churn rate, enabling access to your premium features will help retain customers long-term.

While marketers often conduct market-wide customer research to learn audience motivations, you may need to dig deeper to discover their desires and preferences. Engage in one-on-one interviews with a sample of your customers. Deep conversations can reveal nuances in motivation that quantitative methods might miss.

Align Your Brand Values

Offering lucrative incentives is a must, but people who are only in for the bounty will switch over to your competitors unless you have a plan to retain them. Instead of proposing a cash credit up front, introduce a loyalty system or tiered incentives that keep your customer hooked for long.

Some brands also offer temporary access to their premium features to give their customers a taste of what the company has to offer. Many of them purchase the premium package by the end of the trial period and recommend their friends to do the same.

As long as your rewards mirror your brand values and proposition, you will gather customers who are more interested in your product or service than the reward which bring them.

Review the Budget

As a marketer, it’s your job to strike a balance between offering incentives that motivate your customers to refer their friends and ensuring the strategy doesn’t eat away at your marketing budget.

Startups usually spring off with limited budgets. So offering untamed bonuses and discounts right from the beginning will leave you nothing to support other customer acquisition channels. Consider your total marketing budget spending per month to the leads you convert in the same period, to assess the true value for your referral reward.

But the best thing about referral marketing, it takes no significant budget to start. Companies like Robinhood and Harry’s took off with referral marketing programs without rolling out excessive rewards. All they did was phenomenal promotion across major platforms and enabled early access to those who refer new leads without promising any cash incentive.

Leverage Exclusivity

In the race between high-dollar cash credits and exclusive incentives, exclusivity wins. People are always ready to jump on offers that are exclusive and rare. Exclusivity triggers FOMO - fear of missing out - in individuals, compelling them to get aboard when others in their group are doing the same.

Referrers are motivated to earn rewards that not everyone has access to, while referred parties are enticed to become part of a niche community. Exclusive offers are often followed by a sense of urgency, with people leaping to take action (either sign up or make the purchase) before it’s no longer accessible.

Even if you’re offering something intangible, gamifying the process will build up hype around your product. The bigger the buzz, the higher the reach, and the better the participation rate for your referral program.

Steps to Choose the Right Referral Reward

With new startups popping up and existing enterprises extending their product lineup, you may start wondering if your incentive is good enough for your audience to prefer you over others.

Will a percentage discount or flat cash payout attract them to your platform? Or Would you need to introduce structured or tiered rewards to build up engagement and reap the long-term fruit? In case you’re still unsure of how to choose the right referral reward, the following steps might help.

What’s the Reward?

In a referral marketing program, the quality of rewards is what drives an audience to participate. If your rewards are attractive, and in line with the prospects’ desires, and your brand values, you have a high chance of motivating your customers. Here are 3 popular reward types for any marketing program:


One of the most commonly used rewards in modern-day marketing is discount coupons. More than 50% of global customers have rated discounts as the most-valued reward any business can offer.

Mostly, discount coupons feature a percentage off of a purchase but some retail companies selling high-valued products describe discounts as a dollar amount off the original value. For instance, a brand may offer $15 off a purchase if the amount exceeds $100. In terms of a referral program, Children’s Place serves as the ideal example.

The Children’s Place refer-a-friend referral rewards layout.
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In-Store Credits

In-store credits involve providing referrers and/or referred parties with a virtual wallet of funds that can be used for future purchases on your website or physical store. These credits are often awarded once a successful referral results in a new customer making a qualifying purchase.

When participants redeem their in-store credits, they're likely to make additional purchases, driving repeat transactions and increasing your sales. Trade - a coffee subscription service - offers $15 in-store credits when a new purchase is made through a referral link.

Trade’s referral program landing page.
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Cash Rewards

Unlike store credits, cash rewards do not tie into the company but rather are distributed as a thank-you voucher for participating in the referral program. It’s a tangible way to motivate individuals to take the defined action, either referring others to a platform or obliging them to purchase.

Cash incentives are shared as direct payments, digital transfers, or checks, allowing recipients to use the cash as they see fit. Here’s how ibotta offers its referral reward:

ibotta refer-a-friend website landing page.
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Branded Swag

Branded swag, short for "swag" which stands for "stuff we all get," refers to promotional items that carry a company's logo, messaging, or branding. In referral marketing, offering branded swag as rewards can be a creative and memorable way to incentivize referrers and referred parties.

The swag normally includes apparel, accessories, tech gadgets, and bags bearing the name of the company. Get it right and recipients become walking advertisements for your brand as they use or wear the swag in different settings. Jam features compelling branded swag rewards for each referral.

Jam homepage showcasing swag gifts for each referral.
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Who Gets the Reward?

Like any other marketing strategy, you need to point out your end target when devising your referral program. Who do you want to motivate? Who will benefit your project more in terms of immediate purchase and long-term loyalty? Based on your answer, you can send out rewards to the parties involved.

Most referral programs are either structured as one-sided or two-sided depending on who receives the reward.

Single-Sided Referral Incentives

In a one-sided referral rewards system, the referrer is the main beneficiary. When the referred user signs up or becomes a customer, the referrer receives a reward, often in the form of cash, discounts, or gift cards.

The referred party may still benefit from the product or service they purchase, but their motivation to engage is not tied to a direct incentive. Scribe Media - a publishing and media services company - extends just the right referral structure.

Scribe Media referral rewards for the loyalty program.
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Double-Sided Referral Incentives

Double-sided referral rewards tend to motivate both sides involved in a referral marketing program. In a double-sided referral rewards system, both the referrer and the referred-in customers receive rewards when the terms and conditions are met.

When a new customer is referred and makes a purchase, the referrer is rewarded for their advocacy, and the referred party also receives a benefit for becoming a customer.

Lulu’s “share the love” double-sided referral program banner.
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How do they Get the Reward?

With the referral reward outlined and recipients finalized, it’s time we look at other finer details like:

When’s the Right Time?

Delayed rewards are not well-received. Sending the reward promptly after the referral action - referral conversion or after the initial purchase acknowledges the referrer’s efforts, letting them know their contribution is valued. Making your customers feel respected goes a long way in building trust and fostering healthy relationships with customers.

Will you Give the Reward in one go?

Whether a business should give the referral reward in one go or stagger depends on the type of reward, the customer journey, and the impact of the referral program.

Sending the full reward immediately leads to instant gratification, enticing referrers to continue supporting your business within their networks. However, the strategy has one tragic flaw. People who are motivated solely by the reward could lose interest in your proposition once they receive it.

Will you Introduce a Tiered Reward Structure?

Instead of offering it all at once, companies often stagger the reward in tiers which are awarded as participants refer more customers or achieve specific milestones.

As they refer more customers or achieve predetermined milestones, they move up through different reward tiers, each offering higher-value rewards or incentives. The rewards become increasingly enticing as participants progress, motivating them to refer more and reach higher tiers.

As participants strive to achieve higher tiers and spread it to more leads, the program's visibility can increase as more referrals are made. Morning Brew introduced an impeccable tiered reward structure, offering special benefits for achieving specific referral milestones.

Morning Brew referral rewards layout for referring friends.
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6 Best Referral Marketing Incentive Examples

When putting together a referral marketing campaign, it’s best to look up to companies that have aced the strategy, achieving phenomenal growth through the power of word-of-mouth marketing. Whether you need some inspiration to structure your program or gather ideas for referral incentives, reviewing success stories may trigger your creativity.

We’ve pooled together a batch of referral program examples that can offer unique insights into program design, promotion methods, and reward structure.


Booking.com is a globally recognized online travel platform that offers users a convenient and comprehensive way to book accommodations, flights, and rental cars.

Established in 1996, the company currently has a presence in over 190 countries, accommodating tourists worldwide. Much of the company’s global outreach is owed to its brilliant referral marketing strategy.

Type of Reward

Marketers at Booking.com leveraged plain old cash incentives to boost customers but with a big upgrade. Instead of accrediting the booking.com wallet, the $25 cash reward is deposited straight to the referrer’s credit card.

Booking.com refer-a-friend landing page.
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Who Gets the Reward?

Although the double-sided referral incentive awards $25 referred-in users as well it’s in-store credit. Meaning it can only be used for purchases via booking.com. The best part! Customers get the same dollar credit in their bank accounts no matter how many referrals they bring, making the prospects brighter for each participant.


Bandier is a premium activewear and fitness fashion retailer that has carved a niche in the intersection of fashion and fitness. Launched in 2014, Bandier has become a sought-after destination for stylish and high-performance activewear.

Besides upscaling several emerging apparel labels worldwide, Bandier sells mainstream activewear brands like Nike, Adidas, and Under Armor. Much of the brand’s popularity is owed to its referral strategy.

Type of Reward

The apparel brand offers $25 in-store credit to referrers for every friend they bring on board. The credit points are directed into the digital wallet linked with Bandier and can be redeemed for the next purchase.

Bandier refer a friend homepage.
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Who Gets the Reward?

The double-sided incentive system makes it so the referred-in customer receives a similar $25 credit upon signing and making the first purchase. But what makes it stand out is the unlimited reward program. Participants can keep winning rewards for every new lead that joins through their referral code.


Moo is a design-focused online printing company that specializes in creating high-quality, customizable printed products for individuals and businesses alike. While the company originated in 2006, it has gained quite a recognition in the printing landscape thanks to unique designs and premium finishes.

Moo has maintained a robust social media marketing strategy to fuel its growth, its referrals program stands as the winner. Unlike its competitors, Moo introduces a multi-faceted referral structure geared toward business and customer referral programs.

Type of Reward

The printing enterprise extends in-store gift cards worth between $20 and $150 depending on the type of lead you bring through. If you refer a friend to Moo, you will receive a $20 gift card but if you refer a business, you will be eligible for a $150 company gift card paving the way for repeated business.

Moo referral landing page featuring different referring options.
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Who Gets the Reward?

Any customer or registered business that joins through a referral link receives a 25% discount coupon on their first order. Referred customers can also access free company templates and bulk discounts if they indulge in repeat business over time.


Hostinger is a web hosting company that provides individuals, small businesses, and aspiring entrepreneurs with an accessible and affordable platform to build their websites. Besides hosting services, the tech company offers domain registration and website-building tools and templates for all niches.

Type of Reward

A little unconventional for service-based companies, Hostinger signs up its referrers as brand agents who are eligible for a 20% commission from the referral’s first purchase.

If a customer you refer buys a web hosting plan for at least 12 months, you will receive part of the profits made. So, the bigger the fish, the higher the referral commission. Not to mention, if you sign up as an affiliate, you can earn up to 60% profit from every sale.

Hostinger affiliate program landing page.
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Who Gets the Reward?

All Hostinger users are eligible to participate in the referral program and reap hefty commissions by spreading the word. Incoming customers can get a 20% discount on the checkout if they sign in using a referral link. Referrers are only liable for rewards if the lead they referred does not ask for a refund within the first 45 days of purchase.

New York Times

The famous American newspaper publication runs a "Sponsor a Student Subscription Program" that has enabled access to over 3 million public school students across the US. The enterprise adopts an unconventional referral strategy - a sort of community service that harnesses an individual’s desire to participate in the common good while expanding its user base.

Type of Reward

For an audience that isn’t obliged by monetary incentives or rewards, offering them a chance to donate for community service works perfectly. New York Times pledges to provide free access to five high school students for every purchase made through the subscriber’s referral link. The referred customers can access a discounted subscription sign-up of $1 per week for a year.

New York Times student subscription program webpage.
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Who Gets the Reward?

The New York Times referral program works both ways. On one side it allows subscribers to participate in community service for high school students. On the flip side, new customers can subscribe to their favorite newspaper publication at a discounted price of $1 per week.


SugarSync is a cloud-based file synchronization and sharing service that allows users to store, access, and share their files across multiple devices. It extends user-friendly solutions for individuals and businesses to back up and manage their digital files seamlessly. As a SaaS startup, SugarSync instates impressive referral rewards without draining its budget.

Type of Reward

One way to keep your customers engaged long-term and spread positive notes about your brand in their friendly circles is to make an in-house offering - SugarSync does this best. In exchange for referring friends, customers can win a bonus storage of 10 GB. By keeping referring new leads on board, you can reach up to 40 GB in cloud storage.

SugarSync referral program web page.
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Who Gets the Reward?

SugarSync’s referral incentives go both ways but for referred users, it works in tiers. While referrers get free storage space worth 10 GB, new users will receive 500 MB space for signing up through a referral link. Once they make qualified installation and payment following the trial period, they’ll receive the rest 9.5 GB storage capacity.

Tips to Design Effective Referral Program Incentives

Here are some additional tips to help you devise irresistible referral program rewards:\

  • Know your target audience's preferences and pain points. Are they motivated by discounts, exclusive experiences, or altruism? Understanding what drives them will help you tailor incentives that resonate and encourage them to participate.
  • Set referral goals that are realistic and attainable. If the referral target is too high, participants might feel discouraged and disengage from the program.
  • Choose rewards that participants genuinely find valuable. High-value rewards, like significant discounts or free products/services, tend to generate more excitement and motivate more referrals.
  • Offer a variety of incentive options to cater to varying preferences. While some participants might be excited by monetary rewards, others might prefer exclusive experiences or recognition within your community.
  • Transparency is crucial. Clearly communicate the referral process, how rewards are earned, and how participants can redeem them.

Closing Note

A referral marketing program can either skyrocket your customer inflows or let it down the drain, depending on the type of rewards you’re offering. For prospects who are yet to purchase your products or use your services, incentives can play a big role in luring them in as customers and compelling them to be your brand advocates.

While laying out your referral marketing strategy, decide who your target audience is and what are their motivations to devise incentives that motivate them best.

Remember, if your customers make high-value but infrequent purchases, it’s best to reward them with cashback, gift cards, or discounts. But if they make repeat purchases or have subscribed to your services, a free product, service upgrade, or access to premium service would keep their loyalty intact. Hire Prefinery.com to create and manage your referral program so you don’t have to worry about it getting flop.


What types of incentives work best for referral programs?

The best incentives vary based on your audience and business. However, popular options include discounts, cash rewards, exclusive products or services, gift cards, and access to premium features. The key is to offer rewards that align with your brand’s value proposition and audience preferences.

Should I offer the same incentive to both the referrer and the referred person?

Offering incentives to both parties is often effective. More than half of e-commerce and retail companies offer double-sided referral rewards to increase engagement. It creates a win-win situation, encouraging both referrers and their friends to participate.

Are monetary incentives better than non-monetary incentives?

Both options can work well, depending on your audience. Monetary incentives like discounts or cash rewards can attract a wide range of participants. Whereas, non-monetary incentives, such as exclusive experiences or personalized gifts, can tap into emotional connections and keep their interests high for an extended period.

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