We hear too much about the overhyped success stories of expensive refer-a-friend marketing campaigns that drove revenue for the roof for a select few companies. I wanted to hear more about how useful refer-a-friend marketing campaigns were for companies without multi-million dollar ad budgets.

For that, I turned to Matt Roche, CEO of Extole, a startup that specializes in referral marketing.

The first month after PayPal's website launched, the company acquired 100,000 users, in part thanks to its $60 million dollar referral program.

Dropbox grew its user base from 100,000 to 4,000,000 in just 15 months nearly entirely driven by their invite-a-friend program.

These staggering numbers are the ones that make headlines and cast a shadow over the thousands of successful referral programs that fly under the radar.

But don't let these industry giants intimidate you into believing that referral marketing is a one-in-a-million success story. Properly implemented, referral can prove to be a sustainable and incredibly powerful strategy for reaching new audiences and building your customer base--the trick is just knowing where to look.

Small, hyper-focused improvements to specific stages of the referral funnel often have the most dramatic impact not only on conversions but on the rest of your marketing efforts as well. Here are three best practices that are guaranteed to drive referral success.

1. Open up Advocacy

The first mistake a lot of companies make with referral is throwing up roadblocks to advocacy, out of fear that people might game the system. They only allow existing customers to refer friends, and they're uninterested in pursuing coupon-clipping strangers without any long-term interest in their products.

What they don't realize is that in doing so, they drastically underestimate the value of these advocates. The more advocates take advantage of your referral program, the wider the reach of your brand, and the more touchpoints you build with potential customers. So even if an advocate spends a minimal amount of money on your product, one of his six hundred Facebook friends might spend much, much more. The trick is to target your customer base, but make the referral process accessible to all.

Something as simple as having the Refer-a-Friend option front-and-center on the homepage--rather than nested somewhere in your site--makes it 300% more likely that a visitor will share. Don't hide your secret growth weapon, and then still expect it to have an impact.

2. Personalize the Referral Reward

People are overwhelmed with offers from companies that they don't know and don't care to know. They've grown blind to advertising, making it difficult for these to stand out amidst all that noise. But referral is unique in that it taps into one of the only remaining trusted forms of advertising: word-of-mouth.

Many marketers forget what precisely makes word-of-mouth recommendation so valuable--it's personal. Your friends and family know who you are and what you like. The suggestions they give you are far more targeted than anything Google AdWords can come up with. It's the personal stamp of approval from someone you know and trust that makes referral work, and you need to replicate this with your referral program.

Small touches--like placing an advocate's name in the subject line of an email or their picture in the referral invite--provide friends with that additional layer of context that helps nudge them through your funnel. By sending a referral email from the advocate instead of your company, you rescue the email from getting flagged as spam and move it to the top of the friend's inbox.

Although personalization is one of those things most marketers know they need to do, only 6% actually factor it into their marketing campaigns. That means that personalizing the referral experience will increase your click throughs and get you that competitive edge.

3. Create a Beautiful, Seamless Referral Experience

Once you've gotten a friend to click through, you've gotten to the make or break point. Everything else has led up to this moment--the impulse that dictates whether a friend will engage and stick around, or get bored and desert your site.

It only takes 7 seconds for visitors to decide whether or not they'll stay on a website, which means that you only have a tiny window of opportunity to convince this potential customer that you can provide him with the amazing experience that he is looking for.

This means that the first impression you make is everything. From the onset, the referral flow should be a seamless extension of your brand--a flawless, easy-to-use, beautiful experience. It should be accessible across all devices, and remove all friction from this process such as logins and pop-ups. You didn't work this hard to get the user onto the page, only to scare him off with the painstakingly difficult process of checking out.

Iterate, iterate, and reiterate

Maximize the impact of the referral by testing everything--from copy to referral offers, to banner color-- so that you can ensure that you are picking the most effective strategy at every stage of the referral process. Because referral marketing doesn't just drive conversions, it spreads brand awareness.

With some granular-level adjustments, your marketing success won't just be amplified through the referral funnel, but you will also gain a massive amount of touch points in audiences that you didn't even realize you had the potential of reaching.

And so once you've set up an optimal referral process, you can sit back, relax, and watch your client base grow.