Groupify is an amplifying tool - we multiply the amount of customers in your shop by incentivising them to bring you more customers. The success of Groupify’s multiplication effect is determined by one important parameter: the attractiveness of the incentive.
The good news is: It’s entirely up to you to present an enticing offer to your customers that motivates them to bring you additional customers. In this section we want to help you with a few pointers to configure your rewards correctly.
The ideal discount
We’ve partnered with one of Germany’s renowned universities with a focus on eCommerce, to scientifically analyse Groupify’s referral effect in action. Together with FHWS Würzburg, we analysed the minimum discount values necessary to trigger online shoppers to make referrals. Obviously, results vary based on industry, but our general findings are:
<10% off – Too low to trigger a referral
10-20% off – Referral only with existing purchase intent
>20% off – Referral even without purchase intent
How can this behaviour be explained? Our qualitative analysis showed that discounts below 10% are simply not attractive enough for people to reach out to their network. “I’d rather not pester my friends for a 10% discount, especially since most online shops offer that for a newsletter registration anyway.”
Discounts between 10% and 20% incentivised shoppers to make a referral primarily when they have decided beforehand that they want to buy a product. “I want to buy X and if I get a few of my friends to visit the shop I get it cheaper.” While a shopper’s desire to score a good deal is a strong motivator to take action, our analysis shows that it only works if the intent to purchase was already there. People being referred to the shop (without the plan to purchase something) do not interpret savings below 20% as “once in a lifetime bargains” and therefore do not feel compelled to buy anything. Even though you now new visitors, chances of immediately turning them into actual customers are low.
Precisely because of this reason, it makes most sense to offer bold, high rewards. Our analysis shows that discounts greater than 20% trigger a “bargain alarm” in shoppers. Especially if the time or the amount for this offer is limited, shoppers experience an urgent need to take action immediately in order not to be missing out. From a psychological perspective, this fear of missing out on a great opportunity is a very strong emotional driver. Additionally, the motivation behind the referral changes from “pestering my friends for my gain” to “enabling my friends for their gain”, which increases the likelihood of a referral happening tremendously.
>20% off? No can do baby doll
Now, you might say that in your industry 20% discounts are unheard of and simply impossible. We understand. But hear us out. Ultimately, your goal should be to make your customers an offer they simply can’t refuse. And often this offer might lie outside of your comfort zone. In some industries that’s 20% off, in others it’s 50% off, maybe in your industry it’s 10% off. No matter what amount is right for you, try to make it as compelling as possible. Because that’s exactly when your customers take action and bring you more customers. And guess what? Those referred customers won’t be able to resist your offer either. If you do it right, referrals lead to so much additional business that giving discounts does not actually hurt your bottom line, but helps you win.
As we learned in setting up rewards, the Groupify multiplier effect works best when you educate your customers to utilise all the exciting rewards Groupify has to offer. Educating your customers is as simple as sending out an email newsletter, sharing an Instagram story or creating a landing page encouraging them to make use of your store’s new capabilities. Feel free to use these materials as inspiration!