Pixel tracking in referral programs is risky business

Today’s customers demand a high level of engagement from brands. Customers who interact with brands, especially through social media, assume that someone is listening to them and they expect a response.

Recently, I sent a question via Twitter to a small technology brand and the prompt (within minutes) and personal follow-up left me a bigger advocate for the brand than I was before I sent the message.

So what happens to brand advocates when the follow-up fails? In the case of referral programs, failing to follow through with an advocate, one of your best customers, can end their relationship with your brand. Or worse, it can turn them into a vocal brand detractor. According to the White House Office of Consumer Affairs, “A dissatisfied customer will tell between 9-15 people about their experience.”

When failure is not an option

The threat of follow up failure is one of the main reasons using pixel tracking to track advocate success is risky.

Pixel tracking, or embedding a small image in an email or webpage for reporting purposes, is a very common technology. For analytics, like email open rates and page views, where pinpoint accuracy takes a back seat to a general performance overview, pixel tracking is a viable solution. For example, if your email open rate is reported as 30% but is really 33%, no harm is done.  However, if each failure is a referral that you fail to recognize, at best you have failed to keep a promise, and at worst you have converted a valuable advocate into an angry brand detractor.

When tracking advocate success in your referral programs, any failure rate is too high.  Cookies (required for pixel tracking) are blocked by an estimated 5% to 40% of web browsers.  This means that you risk angering 5% to 40% of your advocates.  Most sources cite third-party cookie blocking rates at 20% to 40% and first-party blocking rates at about 5%.  A  study by comScore  suggests even higher rates.

As concerns over privacy continue to grow, an increasing number of consumers are taking measures to block and delete cookies. This fact only furthers the risks of using pixel tracking to track advocate success in referral programs.

Though using pixel tracking to monitor advocate referral success is a risky venture at best, there can be benefits. The primary benefit of pixel tracking is the decrease in setup time. By reducing development time, pixel tracking allows brands to get referral programs up and running quickly. In some cases, referral pilot programs or test campaigns, pixel tracking could be a viable option. A best practice in these cases is to create a manual success tracking process to assure that all advocates that provide a successful referral are indeed rewarded. However, even in pilot programs the risk still exist and companies must decide if the risk of alienating loyal customers is worth the time saved.

So how will you know when pixel tracking fails? You probably won’t. You may find out when an angry advocate calls and asks why their promised reward has not arrived. Or when, by failing to keep your promises your referral program generates negative buzz. By then, unfortunately, it is too late, you have turned an advocate and best customer into an angry naysayer and a former customer.

 

Questions? Tweet at me @JSwenson1

 

The stormy challenges of an in-house referral program

Developing software in-house is always a risky business, and this is as true for referral programs as it is for other types of software systems. Marketing lead-gen teams must fight through stormy weather when having to design requirements from scratch while simultaneously navigating the turbulent waters of IT concerns and project priorities.

At Amplifinity, we’re proud to say that some of our most successful referral programs are for customers that had endured the storm of their home-grown systems before turning to us. These are both B2B and B2C brands that were unable to scale their programs sufficiently to meet their referral goals.

With their in-house programs, these brands had high operational costs and frustrated their advocates with poor communication. While these programs achieved some level of referral success, they did not achieve the level of solid lead generation and closed sales that was anticipated.

Here is a typical example from our most successful telecom customer::

This customer had a home-grown reward fulfillment process that took 30 to 45 days to issue a bill credit to their customers. In addition, their referral program did not generate any status communications to the advocates, so advocates had no clue whether or not their referrals were even processed. This resulted in large volumes of calls to the call centers to inquire about the status of referrals and referral credits. And, because there were no automated status updates to inform advocates about referral progress, the advocates lost interest and made few additional referrals. With these program weaknesses, this customer was more than ready to graduate to an automated referral platform when we reached out to them.

In this post, I’ll focus on three challenges of in-house programs: scale, advocate experience, and operational costs. Implicit in the text is the understanding that a solid SaaS referral platform addresses the challenges with the right mix of enterprise hardening and rich feature sets. In future posts, I’ll focus more on the best referral practices and program features that make for the most successful referral experience.

Scale

By “scale”, I mean the ability to support millions of referral events without depending upon IT to keep the software running, without requiring manual intervention to complete any of the referral processes, and with sufficient tooling to support program changes without involving IT.

We’ve seen in-house referral systems that successfully empower advocates to make referrals, but then require manual intervention to complete the referral process. They don’t effectively close the referral loop so that advocates get rewarded in a timely manner, they may calculate rewards with a spreadsheet, or they may require manual steps to fulfill the rewards.These manual steps are manageable at the outset of the program, but when referral volume climbs to hundreds or thousands of successful referrals per month, manual processes cannot keep up. Operational costs go up and advocate experience goes down, as in the telecom example above.

Advocate Experience

The number one factor driving successful referral programs is a fully-engaged advocate base. Once a customer, employee, or partner accepts your invite to become an advocate, your referral program has to do everything in its power to deliver a positive advocate experience.  Happy advocates make more referrals. Unhappy advocates abandon the program.

In-house programs often struggle to keep their advocates happy. We hear stories like:

“My friend told me he bought your product, but I never got rewarded.”

This happens when the referral loop doesn’t close, either because of inadequate system design or because of dependence upon a manual process. That hurts!  It drives calls to your call center and discourages the advocate from making more referrals.

With in-house referral programs that successfully close the loop, which is great news, there remains a missed opportunity to stimulate the advocate to make more referrals, which is an active, and automated, nurturing program. Every time a prospect takes action, whether responding to an advocate’s email or completing a purchase, the brand has an opportunity to reach out to the advocate, thank her for her referral activity, and ask for more referrals. In-house programs generally don’t have this capability and lose out on a key method for amplifying the success of the program.

A closed-loop assures a positive advocate experience. An effective nurturing program turns that experience, and the referral results, to great!

Operational Costs

Above, I mentioned how manual processes and an unclosed referral loop increase operational costs. Interestingly, these are not IT costs, but the cost of extra work on the business side to keep things moving.

On the IT side, the largest operational cost for in-house systems comes from the management of the referral program content. This includes the web pages that advocates and prospects use, the referral tools, and the emails that go to prospects and advocates. What we’ve seen in home-grown systems is that it is expensive to maintain this content, and that maintenance generally depends upon IT involvement.

Successful referral programs are built on platforms that remove IT dependency from the equation once the initial integration to the back-end systems are completed. This require tools that allow marketing teams to manage their own content and to configure their reward rules. We have found this self-management capability to be very popular with our customer base.

Summary

It takes time and money to build and maintain an effective referral program. Organizations that choose to go it alone find that they are putting Referral Program Calm Watersmoney and time into an unproven, incomplete referral platform, which more times than not results in lackluster referral results. This blog has focused on the turbulence of in-house referral programs as compared to using referral software. In subsequent blogs, I will address specific capabilities that the most successful enterprise referral platforms use to calm those stormy in-house waters.

 

Questions? Email me at lbloom@amplifinity.com

 

The orange cat: A brand advocacy fable

My family has two cats. One is an orange cat. One is a black cat. And we have this weird thing that happens in our house– my nine year-old son and his buddies like to have Nerf Gun battles, and they shoot these fluorescent orange foam bullets at each other.

Nerf bullets for brand advocacy The bullets end up behind curtains, under sofas – everywhere. The weird thing I mentioned, is that a couple hours after they finish a fight, our orange cat walks mechanically around the house, collects the orange bullets, and deposits them in a specific location – just outside our kitchen. Then he meows repeatedly, at a very specific pitch, sort of like a submarine sonar. My daughter pets the orange cat and tells him he is a good kitty while he picks up the bullets. The black cat watches all of this without helping in any way. The black cat has never retrieved even a single foam bullet.

Having looked at data across many of our clients here at Amplifinity, I can tell you that these cats are a lot like your customers, and my daughter has the right idea. Be good to the black cat, but don’t spend too much time trying to get him to do stuff he isn’t going to do. Likewise, don’t waste too much money chasing customers who will never advocate for you.

We consistently observe that there will always be a segment of your customers who take on the role of serial brand advocate. These customers will dutifully and tirelessly serve your brand whenever you ask. And like my daughter rewards the orange cat for gathering up the bullets, you need to reward these customers every time they refer a new prospect or advocate for your brand. In fact, once this group gets going, they will become upset if you don’t give them an extra pat on the back. Our orange cat now meows loudly until someone tbrand advocate cathanks him for retrieving each individual Nerf bullet. Trust me, you don’t want to get a call from an angry customer like him! He might sharpen his claws on your sofa if you forget to show him your appreciation.

At Amplifinity, our data shows that escalating rewards is an excellent means by which to nurture serial brand advocacy. Our software platform makes these types of programs possible, even if it is across thousands or even millions of customers. And, our detailed process flows and integrations make sure that the orange cats get rewarded every time.