Top 3 considerations for a bullet-proof referral program

Successfully growing your brand community requires a community building loop where customers join, engage and share your community with others. By implementing Groupify or another referral system, your customers are encouraged to go through this community loop while earning rewards and bringing in new members into your brand community. 

Unfortunately, where there are referral and loyalty programs, there are a small minority who try to exploit the system. This is known as referral fraud, where there are attempts to abuse your brand’s referral program to gain rewards that haven’t been genuinely earned. Creating fake accounts or sharing referral codes on discount websites are just some of the ways that people attempt to cheat the system. Completely preventing referral fraud is impossible, and placing so many restrictions on your referral program will hinder the 99% of shoppers who use the system properly.  So how can we minimise referral fraud while keeping your community happy? 

Here’s some things to keep in mind to prevent referral fraud:

Offer discounts, not dollars

Instead of offering direct dollar discounts to referral advocates, why not offer them discounts that can be redeemed for brand-specific rewards? Discounts encourage customer acquisition while preventing fraud. Discounts in and of itself require a purchase to be made - it is not possible for fraudsters to game the system.

Minimum purchase amount

With Groupify’s reward configuration settings, you can modify the minimum purchase amount the discount is valid for. With minimum purchase amounts you can ensure you’re covering your bases so that your community is provided with value while keeping your bottom line in check. Minimum purchase amounts also force customers to add more products than the value of their voucher to their cart, thereby mitigating lost revenue so that a voucher cannot be applied to their whole order. With this prevention in place, customers will be discouraged from making empty referrals in an effort to get their order for free.

Monitor suspicious activity

If you don’t know what suspicious activity looks like - it can be as simple as looking for patterns. If a brand advocate suddenly makes a large number of referrals, or if you notice that the friends completing referrals have email addresses very similar to the advocate who sent it to them, that might be a red flag. Additionally, advocates who are consistently referring friends who make small purchases, or if referred friends pay only for shipping costs - these are all a couple of common examples of behaviour to keep an eye on.

In an ideal world, referral fraud doesn’t exist.  Since it is inevitable with any loyalty or referral program out there, the important thing is to design a program tailored to the needs of the people who want to use it properly. With the right program in place, your referral program becomes a pivotal part of your online brand community. Keep in mind that the community benefit from the majority is greater than the negative impact of the minuscule minority. And while people may try to game the system by receiving discounts inauthentically, at the end of the day that’s still additional revenue coming in.