August 28, 2018 ByCheryl Dykstra
Before we delve into the logistics of setting up a referral
program, take a second to think about the first place you turn to when you’re
looking to purchase a new product or service.
Usually you turn to a friend or family for a recommendation.
In fact, a study by Nielsen showed
that people are 4 times more likely to buy when referred by a friend.
Another study done by the Wharton
School of Business discovered that the average lifetime value for a new
referral client is 16% higher than non-referrals.
So how do you take that referral magic and turn it into a
more automated system that will continue to provide your business with fresh,
Set up a referral
What is a Referral
The best way to get referrals for your business is to start
with amazing products or services. When people are impressed with what you
offer, it’s more likely they’ll spread the word.
However, happy clients don’t always think to tell their
friends or family about your business without someone asking them directly
about it. If no one ever asks, they never tell anyone.
A referral program is a process in which clients are
rewarded for telling their friends, family, or other people about your
For example, a carpet cleaner might offer clients 20% off
their next service for referring a new client. The new client would also
receive the same deal for their first appointment. There is an incentive on
both sides to spread the word by referring a friend and act on the referral by booking an appointment.
This type of referral system can work on just about any type
of business in any industry too. You just have to find the right offers to
incentivize your clients.
Setting Up a Referral
While it may seem easy enough to set up a referral program
like the one described, building them for more sophisticated business models is
Here are a few of the things that will need to be
accomplished in order for your referral program to be successful…
1. Pick a reward that
Having a referral program is very dependent on your clients
feeling motivated to share their experience with others. Therefore, your
program needs to give rewards that match their motivations.
To figure out what type of referral program will work with
your clients, think about what they’d benefit the most from.
For example, a cosmetics brand’s clients might like to
receive a free product or sample for making a referral. Meanwhile, clients of a
software company might prefer an account credit or access to a paid feature for
There are a ton of ways to reward your clients and their
referrals, just make sure whatever it is, fits your company. It’s also
important to remember that the same types of incentives won’t work for all clients.
It takes a little A/B testing to figure out what will work best for your
2. Share your program
Once you have your rewards planned out, the next step is to
share your program with your clients.
Promote your referral program just as much as you would
advertise your business to new prospects. If you want people to be promoting
your business or your products, you have to let them know why they should AND
what’s in it for them.
Post it on social media, write about it on your blog, send
out email reminders, mention it to clients in person, include a note in all of
your delivered packages – whatever you have to do to make sure people know
The more your clients are aware of the benefits, the more
referrals you’ll see come in.
3. Reduce friction
Getting clients interesting in sharing the word about you is
only half the battle. The next step is to help them sell it!
Create some sharable content for them to post on their
social media or to email to their friends. Set up promo codes to share.
Then make sure that you’re not making the referral process
too difficult. Make it quick and easy for your clients and their referral to
get their reward.
4. Analyze and
Just like with other aspects of your marketing, a referral
program will have some kinks to work out before everything is running smoothly.
Running tests, analyzing the results, and adjusting where
it’s needed is an essential part of the “set up” of your program.
You might find that a certain incentive works better than
another or you might find that having the referred client enter in their phone
number and email address reduces the number of conversion. Tweaking these types
of things can increase your number of leads tremendously.
5. Follow through
Possibly the most important part of your referral program is
making sure your follow up process runs smoothly. If someone is willing to
share your referral program with a friend of family member, you can be sure
they’re willing to share if they had a bad experience with your referral
Make sure if you set up a program, you are able to respond
in a timely manner and follow through on your offers. One thing that really
helps with this process is a customer relationship management system (CRM). A
CRM can allow you to set up automated responses to your current clients and
referred clients with their offers.
Having an automated response for referrals makes it easy to
ensure everyone stays happy and allows you to focus on your business.
Referral marketing programs have the power to increase your
business 25-50% within a year. When coupled with a CRM, they can work like an invisible
selling machine operating in the background.
If you’re interested in setting up a referral program for
your business, call us at (407) 682-2222 for a free consultation with one of
our marketing experts.