• CaribbeanCollective

What is Referral Marketing and why use it?

Referral Marketing or Member Get Member is a process to get your customers to get their friends and family to become your customers as well. So how do you start?

Here at Caribbean Collective, we like to take a look into the trends of the upcoming year. MGM has been around for a while but this year with more people becoming comfortable with shopping online, and using tools to make online purchases, we predicted that MGM will see a huge growth spurt this year.

We have already seen many companies starting to use external agencies to grow their MGM channel, and with constantly evolving technologies, this marketing tool is becoming easier and easier to action. So what is MGM and how can you use it today?

MGM (Member Get Member) is otherwise known as a Referral Marketing, or Rewards Scheme, to make your current customers refer their friends and family to your product.


It’s an unwritten rule that your current clients will know people who are a similar demographic to them and are therefore far more likely to also need and use your services.

So how do you get them to do this?


Well, it’s as old as the hills: they need an incentive.


So Customer A buys your product. They’re happy with it and talk about it to their Friend B. Now, their Friend B might also go and buy your product. But how can you lean on them to incentivise Friend B to convert? Give them both a reward.


Once Customer A has purchased, they receive notification that they will get a discount on their next purchase, IF they refer the company to Friend B and IF Friend B purchases. Friend B also receives a discount. To give a real life example, Customer A buys a T-shirt. They then receive a unique code along with their receipt, that they can forward to friends to use when purchasing.


Friend B sees the T-shirt and likes it. Customer A gives their unique code to Friend B.


Friend B purchases the T-shirt with a discount. Now, Customer A can now purchase another item with a discount too. Everyone wins! Although the technology around how you implement the Referral scheme changes, the principle doesn’t. Both Customer A and Friend B gets a discount and the business has got a new loyal customer and two more purchases they would not have had without their referral scheme.


So how can you implement it today? Well there’s 3 simple ways that may work for you depending on your budget, size and timeframe:


1. Manual

This is the simplest and slowest way of implementing a Referral scheme. Customer A and Friend B have to purchase the item in-person or on the phone and quote the order number or their unique code in order to get the discount.


2. In-house

Using the back-end of your website, set up a bunch of voucher codes that give a referral scheme discount (e.g 10%) and then these are automatically emailed out to a person when they are purchased. You rely on the good will of the customer to only use them once.


3. External

The most expensive option is also the most slick. Hire the technology to plug into the back-end of your system that generates unique codes, and knows when a person has referred the scheme to someone else so that their discounts are automatically applied.

Whichever works for you, the Referral scheme is a no-brainer for fast growth. As you tap into one loyal customer, you are also tapping into their family and friends who are more than likely willing to purchase from your company as well.


Uber, Deliveroo, Lyft, DoorDash - pretty much every massive fast-growth startup app company has grown using this tool. Giving massive discounts improves conversion and growth. But don’t forget this usually comes out of your pocket so do the maths and make sure it works for you.

If you do it right, this scheme won’t disappoint.

If you have any questions or comments, or want us to help you with setting up your MGM channel, comment below, or email us at hello@caribbean-collective.com so we can give you the advice and tools you need to start and grow this channel.

Get free updates, offers + marketing tips direct to your inbox



1 view0 comments