Social media has been around long enough for most businesses to ‘get’ what social media (online media that supports social interaction and user contributions) is and why it matters (it amplifies the word-of-mouth effect).

So we’re seeing ever more attempts to harness the referral value of social media, and Tesco – the British multinational grocery and general merchandise chain, and world’s third largest retailer (by value – after Walmart and Carrefour) – is experimenting with a three week (July 3- July 22) Facebook-based ‘share-and-earn’ trial as part of its popular Clubcard loyalty program.  Shoppers earn extra loyalty points if they ‘like’ and buy products from Tesco’s online store Tesco Direct, and get bonus points if the shared Like leads to a further purchase.

Perhaps not as compelling (or controversial) as Dell’s five-day cash-for-shares experiment (£5 for a share leading to a purchase (£70+) – we think these micro-affiliate initiatives are missing a trick.

Referral rewards work best when they offer two-sided incentives – the referrer and the referree are both rewarded for the share.  Better still, from a reputational perspective, is to reward only the referree, not the referrer for shares – by allowing customers to forward a special discount to a friend; theses pass-it-on initiatives have none of the controversy associated with effectively paying consumers to share positive ‘stories’.  Rewarding referred customers simply for being referred makes good business sense; customers who are referred in tend to be more valuable (spend more, more often and for longer) than those hauled in via advertising.

If you’re interested in how sharing and incentives work (or don’t work) together, we cover incentivized sharing in chapter 4 “Incentivize Intelligently” of our new book –  The F-Commerce Handbook – 10 Secrets for Unlocking the Sales Potential of Facebook (paper version, Kindle version, free chapter)…


[hr]

Today’s article is sponsored by Milyoni: The Leader in Social Entertainment

[hr]