In today’s digital era, many businesses harness the power of gift card programs to incentivize and reward customer loyalty. By offering a range of enjoyable gifts and experiences, digital gift cards effectively reward your customers for doing business with your company and encourage them to come back for more.

Digital gift cards for referrals are an excellent alternative to cash rewards and work particularly well when:

• You’re not expecting any further imminent purchases from your customers 
• You like to give your customers choice when it comes to choosing their customer rewards 
• You’d like the reward customers that help with “word of mouth” marketing efforts when they “tell a friend” about your product and it results in a sale 

In this post, we will delve into the many benefits of gift card referral programs, but before we do, let’s take a quick look at some of the basics of referral marketing.

What exactly is referral marketing?  

Put simply, referral marketing is a system that incentivizes your customers to recommend your business, products, and services to their friends, family, and broader networks.

The overall purpose of referral marketing is to reach a large pool of potential customers by asking your existing and previous customers to become promoters of your brand and give them a great reward for doing so — such as a digital gift card.

Referral marketing is an extremely effective tactic through all sales funnel stages. This is because customers referred to your business naturally have pre-established trust in your brand.

The power of incentivized referrals   

Although it is common practice for businesses to ask existing customers to refer their goods and services to their own networks, it goes without saying that offering an attractive incentive to do so will garner a higher success rate than offering no reward at all. Incentivizing your customers to “refer-a-friend” often proves to be one of the most dependable forms of advertising — for small and large businesses alike.

Why use gift cards for referral rewards?  

Third-party gift cards, such as Starbucks gift cards or Amazon gift cards, are becoming increasingly popular for businesses looking to establish successful referral programs.

So, why are gift cards such a popular choice for businesses wanting to reward customer referrals? There are many reasons, including:

• Security — When compared to cash, digital gift cards are highly secure. Emailing the cards to your recipients negates the need to collect and retain personal information such as mailing addresses and bank account information, which would be needed for depositing cash.
• Ease of management — Integrating with a reliable gift card API provider, such as Runa, removes the risk of your customer rewards impeding your internal billing systems and the hassle of adjusting invoices and discounting orders. 
• Less fraud risk — Unlike coupon codes, discount codes, or links, gift cards can’t be shared or broadcast across networks, which poses a much lower fraud risk.
• Customer satisfaction — Gift cards provide immediate gratification for your customers, almost giving the appearance of free money! This is quite unlike discount offers, wherein the customer still needs to hand over some cash from their pocket. Also, if the referring customer is not likely to purchase from you again in the near term, a gift card from their favorite brand is a reward they can redeem immediately on referring a friend.
• Variety of Choices – Why give “a” single gift card when you can give a variety of gift card options and the recipient can choose a particular gift card that best suits them? This is a very powerful benefit and with the right provider the variety of gift cards can grow and change over time.

 When is it ideal to use gift cards for customer referrals?  

Using digital gift cards to reward customer referrals is a smart choice for any business looking to increase its customer base and ultimately drive growth. However, they can be an extremely smart choice for industries and online businesses with high loyalty and retention, such as:

• Telecommunication providers
• Insurance and mortgage brokers
• Mattress retailers
• Travel booking providers
• Online banking
• B2B Softwares

The reason that referral gift cards work particularly well with these industry and business types is that the products or services they provide are bought less frequently by the same customer.

A person purchasing a mattress won’t be likely to repeat that purchase imminently. Therefore, offering a discount coupon for a future purchase won’t impact the customer’s buying decision that much because they’ll either need to wait months or years to use it, or they’ll simply forget that they even have it.

Gift cards for providing immediate customer satisfaction and influencing buying decisions 

Let’s look into the above scenario via another vertical industry and buying decision. Put yourself in the shoes of a customer who has just made a large purchase that they aren’t likely to repeat for some time — such as a once-in-a-lifetime holiday abroad. On your purchase, you’re offered a discount coupon as an incentive to refer a friend. Your friend also books a holiday with the same business, and you’re given your coupon.

As you’re not planning on booking another holiday anytime soon, the discount is not of much use to you — and you’re not overly inspired to continue making referrals to the business. Yet, if you were given a gift card to one of your favorite brands as a reward for your referral, you would automatically be inspired to continue making referrals. A winning combination for the business and customer alike!

Gift card rewards in the B2B environment   

Gift card rewards are also beneficial for B2B companies that want to incentivize specific employees or stakeholders within the business you’re providing for.

For instance, if your business sells software solutions that a specific group uses internally, the employees using the software will naturally be more inspired to refer your company if there’s a personal incentive for them to do so. A discount on the software subscription won’t excite them, as they are not personally paying for it! On the other hand, a digital gift card may provide the perfect incentive for them to tell others about your business.

Of course, the use of gift cards in referral programs isn’t limited by the type of business or industry — they are an excellent choice for any business wanting to use digital incentives to build powerful referral campaigns. Choosing the ideal reward for your program ultimately involves knowing what works best for your customer’s buying cycle.

Offering a selection of gift cards for customer referrals   

Although many businesses use gift cards in their referral programs, not all companies offer a selection of gift cards. This is likely due to a lack of time and resources when implementing their reward program.

Yet, taking the next step by offering a variety of gifts and experiences for customers will speak well for the business at hand and, most importantly, encourage ongoing referrals.

There’s little doubt that today's consumers want to be recognized and rewarded for their loyalty and referrals. And they not only want unbeatable discounts and rewards, but they also want everything to be individually customized and immediately available.

By purchasing digital gift cards for any brand that are instantly deliverable, companies can optimize customer and business experiences. At Runa, we make this process easy!

Choose Runa to power your gift card referral program  

At Runa, we understand the power of utilizing digital incentives to drive business growth. Our easily integrable gift card API allows your business to incentivize customers and employees with bulk gift cards from a range of leading brands, including Amazon, Starbucks, DoorDash, and Uber. 

Moreover, our API customization options allow you to easily personalize your recipients’ gift card experience by choosing the gift card brand, order description, denomination, delivery format, and email template.  

Ready to learn more about how you can leverage the power of our feature-rich platform for your referral program? Arrange a free demo today!