Referrals are among the most valuable sales leads a company can get. They can provide your business with high-quality potential customers and clients who already have some level of trust in your company. Because of this inherited trust, these newcomers are likely to become loyal, recurring customers who are quite valuable to your business and its growth. Customer referrals are also more telling than you may realize and speak volumes to your company’s success and quality. After all, a customer won’t refer a company, especially to friends or family, that isn’t worthy of referral.
The importance of getting referrals from clients cannot be understated. If you have not taken active efforts to encourage customer referrals, or have not incorporated customer referral program ideas into your marketing strategy, you’re missing out on a precious source of potential revenue.
In this post, we’re going to cover:
Having a referral program can be a major benefit to your business, and will not only expand your customer base but also their loyalty to your business. What kinds of benefits? Check out these stats:
Did you just say 65% of new business comes from referrals?
Yes, cute pup, yes I did. And that’s why you should read on.
Before starting any kind of referral marketing strategy, you have to first know who can refer business to your company. Below are the most common and popular referral sources that you should consider targeting.
By far the most popular, existing customers are one of your greatest sources of new business. If they absolutely loved your product or service, there’s a good chance that they will share their experience with friends and family that have the same pain points and desires.
You’re not just selling customers on the fact that your product or service is great, but your employees too. When you have employees that genuinely believe your product is helpful, or you have a rewarding referral program in place, they’re much more likely to spread the word. This is why it’s important to keep your employees clued in on not just your offerings, but your overall mission—the “why” behind what you do and the impact you’re trying to make.
Rather than keeping your sphere of influencers narrow, cast a wider net by tapping into referral partners. These can be individuals that can send valuable traffic to your company through review articles or feedback that they share with their following via social media or their website. Or, you can partner with associations centered around a particular niche within your audience.
Lastly, don’t forget about the vendors with whom you’ve formed a symbiotic relationship. This is a crucial part of networking and relationship building. Once you have loyal vendors to whom you send business, they’re more likely to reciprocate and send their customers your way.
Before implementing your referral marketing strategy or program, be sure to take these points into consideration.
Determine your offer
What is of most value to your customers? Is it cash back? Freebies? Double the rewards points? Steep discounts? Keep in mind that you don’t have to offer expensive incentives. In fact, one study showed that offering a reward increases the likelihood of a referral, but the size of that award doesn’t matter. So whether it’s a dollar or a $50 voucher, it’s worth trying!
Make it easy to find
If you do have an official program, include an element in your main navigation for your referral program information page, or add it to a sticky sidebar that persists regardless of the page or post a reader is on.
Promote it regularly
You’ll of course want to promote your referral program or offer once it launches, but it’s also important to continue reminding customers over time. Post about it on social media once or twice week, include it in your emails, and keep a sign or flyer up in your store.
When you’re creating content around your referral programs, be specific about the details. It should be crystal clear to customers exactly what the program entails. Be sure to outline:
The more details your clients have about your program, the more comfortable they will be with participating.
Keep it simple
On the flip side, be sure not to bombard your customers with all of the details upfront. A tidal wave of text is the best way to scare them away. Lay out the important facts at the top of your page, and then get into details further down or in a separate link if necessary.
Get the timing right
When is the best time to encourage customers to refer your business? Is it right after a purchase, when they’ve got your excellent customer service experience fresh in their heads, or is it a little further down the road when they’ve had a chance to use your products or services more consistently? Or is it after they leave a review for your business?
Track your referral data
By tracking referral data, you’ll be able to easily pinpoint who’s actually sending over interested customers and who’s coming up empty-handed. After all, you don’t want to be wasting your budget and efforts on something that’s never going to pay off. You may be surprised to find that your best referrals are coming from customers that purchased a particular product, or from a referral partner with a highly targeted audience. Once you gain these invaluable insights, you’ll be able to harness the strengths of your campaigns to yield even better results.
As obvious as this may sound, it cannot be stressed enough. While giving the referrer a discount or some kind of gift will surely incentivize and reward them, it’s still imperative that you individually thank your customers who refer you—whether through a simple greeting card, a personalized email, or an in-person thank you. This little gesture can go a long way in strengthening your client relationships and encouraging ongoing referrals.
Now that you understand the benefits and best practices of referral marketing, let’s talk about ways to gain more referral traffic for your business.
One of the easiest ways to begin collecting referral information is by implementing a submission form on your website. Capture the attention of your existing customers by telling them about rewards or special discount codes for new business they refer. This can be a form on an existing page or even a landing page where they input their and the referrer’s information. To make the process simple and enticing, provide them with a clear outline that states their reward and how they can redeem it.
Another strategy that can have you reapin’ in the referrals is through referral cards. These simple cards are perfect for handing out to customers upon purchasing so they can then share them with friends and family. You can decide on the special offer or discount which is redeemable to anyone who has the card and makes a purchase. And you can track them by asking for the name of the referring customers. This will allow you to provide an extra reward to the customer that refers the most customers in a time period.
If your business has a mobile app, incorporating a rewards program into the interface is a good move. Did you know that 70% of internet traffic comes from mobile phones? Plus, consumers have access to their social media feeds and contacts in just a few taps. Some referral program apps for small businesses include InviteBox, Referral Candy, and PayKickstart.
At the end of the day, every business wants to make money. Whether you want to network through LinkedIn or attend local functions, building relationships with businesses that have the same target audience as you (though not competing with your product or service) is a great way to create a steady stream of new customer referrals.
You can implement a standalone referral contest or use one to augment and remind customers of your current referral program. Spread the word about your contest on your website, through email blasts, and on social media. There are many referral contest ideas that can be found online, but standard contests most commonly offer exclusive prizes or cash bonuses after a certain number of referrals is achieved.
Markers can be placed at 10, 20, 50, or 100 referrals, for example. You can also offer a bonus for the person who refers the most people during the contest.
A great way to kick up excitement for your referral program is to offer a seasonal or event-related contest or campaign. Papa John’s, for example, is famous for offering discounts on its pizzas on game days. Occasionally, they’ll offer special bonuses if you refer a friend who buys a pizza in football season.
Rocket Mortgage recently ran a squares contest during the Super Bowl in which registrants started out with one square, but could get an additional square for every friend they referred—with a maximum of ten.
Businesses who work with patients like dentists and chiropractors are sometimes limited to what they can do in terms of referral programs. If giving a discount isn’t an option due to insurance entanglements and what not, try giving out a gift card—maybe even to a neighboring business across the street!
The holiday season is the most popular for shopping. Starting with Black Friday and all the way through to Christmas and New Years, consumers are emptying their wallets for gifts, winter items, and more. It’s a great time to recruit new customers! Huckberry, an ecommerce site, ran a short referral contest prior to holiday season offering referrers the opportunity to win a first-class ticket home, with a pack of Huckberry swag to boot!
While this is a big-ticket item, you can easily do the same by offering referrers a special holiday-themed product or mini service for referring another customer to your business during the holiday season. Or, in the spirit of giving, part of the reward could be a donation to a particular charity in the referrer’s name.
Here’s a client referral program type that is gaining in popularity. What is social gifting? Some referral programs offer no monetary or financial reward. Instead, the incentive for the referrer is pure altruism.
Subscription boxes, for example, offer referrers an exclusive code that they can use to gift a free trial to a certain number of friends. This lets the referrer spread the love to anyone of their choice, who can cash in at no cost. And chances are, they’re going to pick the friends, coworkers, and family members to whom the gift will benefit best.
After experiencing a free trial of your offering, they are more likely to convert into returning customers. Just make sure they don’t get looped into an automatic renewal situation where they get charged if they don’t cancel. That’s a bad look for both the referrer and your business.
Your customers are more likely to refer a friend if both parties receive benefits. For example, DropBox ran a “give-to-get” program that helped increase their registered user base from 100,000 users to 4 million over the span of just 15 months.
This tactic works very well if you have an ecommerce business because it’s so easy to make the referral. Simply asking your customer to enter in a friend’s email address to reap the benefits of the recommendation is a no-brainer.
You may opt to hold off on administering the referral benefits until a specific action is taken. For example, your referral program offers the referrer a $15 credit toward their next purchase while the referred gets $15 off their first purchase with a minimum order amount of $50. This increases the odds that both parties will eventually make a purchase since the benefit is only applicable if they spend money with you. It’s a win-win.
Victory demonstration courtesy of Alfred Forns.
This is a simple referral program to run and fits just about any business model. Essentially, you award points to customers for sending you referrals. The points should be redeemable for benefits or activities that get your clients more engaged with your business. For example, if you run a small gym, your client may redeem points for inviting a friend to a class, a free tour, or an event, and points can be used for a free personal training session or branded gear.
You can also award extra points if the referral turns into a paying customer. Once the referral makes their first purchase, award your client additional points or benefits so their one-time action sees multiple rewards at various stages. This not only keeps your original client engaged with your business but motivates them to encourage their friends to spend money with you.
Turning the referral process into a campaign with a catchy name can generate excitement and increase participation. Verafin, a fraud detection company, ran a month-long campaign called Referral Rally. They maximized results by creating customer personas and providing three different ways to submit their referral (email, social media, etc.)—with how-tos on each method.
Choose a different winner every week to keep people interested over the life of the program. At the end of the campaign, Verafin provided various prizes customers could use their points to purchase – think tickets at an arcade.
If you have a subscription-based product requiring monthly dues, stackable rewards are very enticing to your users. Examples of businesses whose customers would benefit most from a stackable rewards program would be:
Offer the referring party and the referee permanent discounts on their monthly dues for as long as both parties are members. You may choose to stop here but the program becomes “stackable” if the customer receives that benefit for every successful referral they provide. The idea is they could eventually pay $0 for your services and you would have at least 10 new customers. Remember, that benefit only lasts as long as both parties are active members.
While we may not all be Elon Musks, we can certainly take a tip or two from his Tesla referral program. Offering exclusive perks—the type that money can’t buy—is a tremendous incentive to produce referrals. Benefits for passing on quality referrals range from straight cash to (here’s the exclusive part) an invitation to their next VIP unveiling event and an early access token to be one of the first Tesla owners to have a Solar Roof installed. They even created a Facebook page dedicated to the program.
Ok, so how do we turn this into something a small business can use? Customer events are likely part of your marketing mix. Think about holding an exclusive customer appreciation event, by invite only, for customers who have sent you a predetermined number of quality referrals. Be sure to spice the event up to motivate your customers by having killer giveaways, a keynote speaker, special guests, and interesting activities.
As you now know, customers attained through referral marketing are of the highest long-term value for your business. We’ve covered a lot in this post so let’s go over some key takeaways when it comes to referrals:
Now it’s time to implement these best practices and ideas to generate your best customers yet through referral marketing. Get started today!
Kristen is the Senior Managing Editor at WordStream, where she helps businesses to make sense of their online marketing and advertising. She specializes in local SEO, copywriting, and conversion optimization, and she finds life to be exponentially more delightful on a bicycle.
See other posts by Kristen McCormick
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