How to Build an Irresistible Customer Referral Program
If there’s one powerful tool that business owners often forget (especially in the middle of their digital marketing frenzy), it’s gotta be word of mouth.
In a study by Nielsen, they found out that 92% of consumers listen to recommendations made by their family and friends.
That’s an amazing number!
So how can you take advantage of word of mouth?
You need a strong push that will make your customers feel the need to refer your products and services to their peers.
The solution? A customer referral program.
The AMA Journal of Marketing published a study that says referred customers actually bring in profit margins that are higher by 25% compared to other customers.
If that doesn’t convince you, I don’t know what else will.
Here’s how you can create an effective customer referral program:
1.Set your goals.
Think about what you want to accomplish. Are you hoping for better sales? What about a wider reach in specific locations? Do you want to retain first-time customers?
With these goals laid out in front of you, it’s easier to figure out your next steps.
2.List potential sources.
Where will these referrals come from?
Your current customer pool. Past customers that didn’t come back. People who’ve been considering your products or services, but have not really made that purchasing decision just yet. Even your vendors can be potential sources of referrals. The possibilities are endless!
3.Shortlist your strongest contacts.
You probably have a lot of people on your list, so let’s cut that down to a shorter list.
Think about people who would refer you even without an incentive. These are your strongest contacts. These could be people who’ve been loyal to your brand, or vendors who you’ve come to trust. They could also be industry insiders.
Note that we’re not discounting contacts who would possibly ask for an incentive (we’ll discuss that later on). We’re just segregating your contact list into different categories so that we can plan a more strategic approach.
4.Plan your incentives.
Before you start computing how much cash you’re gonna give out, look at this study from the University of Chicago first. It says that non-cash incentives are actually 24% more effective in getting the results you want compared to non-cash incentives!
What kind of non-cash incentives can you give out?
Airbnb gives a $20 credit for every successful referral. Dropbox gives you more storage when you refer friends. Be creative! There are more non-cash incentives you can give out that you think.
5.Find ways to alert customers.
Now, let’s find ways to spread the word.
Of course, some platforms are a given – social media marketing, newsletters, blogs, and even email signatures and calls to action.
It’s also important to prepare something that would detail the entire incentive program. Prepare scripts for your customer service associates to follow. Create a referral kit that people could use to share information about your business, products and services to their friends. This kit could contain ebooks, case studies, posters, videos, etc.
You could also have a solid landing page where people can give details about their referrals. If you have a different system for your referral program, then make sure you have detailed information that people can easily understand.
6.Track your progress.
This part is probably the most crucial step in the process.
Having a solid tracking system will show you whether your strategies are bringing in the results that you need. If you feel that you’re not going towards the right direction, then it would be easier to tweak the process along the way.
More importantly, you need to track every referral (who referred them, when they were referred, etc.) simply because you gave a promise to your contacts, and proper tracking is the best way to see if your promises are being fulfilled for every result they deliver.
Sure, you already gave them an incentive. But more often than not, a simple word of gratitude is more important than any incentive in the world.
Always thank referrers for their contribution. Remember – they’re also part of your team!
Are you ready to get started?