Customers that come to you by way of referral will typically be better quality leads with a higher chance of becoming a returning client. Referral programs come in many shapes and sizes so choosing one which suits your business should be a breeze. Let’s take a look at popular referral programs to help give you an idea of your options!
Your customers are more likely to refer a friend if both parties receive benefits. 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 (Source: Referral Candy).
Here’s another example of a give-to-get referral:
This tactic works very well if you have an e-commerce business because it’s so simple 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 an 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. Win-win.
An advocate marketing strategy is a two-tiered process but strengthens your relationship with existing customers while creating greater brand awareness and generating referrals. Comb through your customer database to find a group of loyal patrons and offer them rewards for sharing your social media content or writing a positive review. Afterward, reach back out and make the ask for a referral. They’ll be more apt to go the extra mile since you were generous with them!
This is a super simple 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 one free personal training session or a free buddy pass.
You can also award 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 competition can generate quite a bit of buzz from your clientele. Verafin, a fraud detection company, ran a month-long campaign to generate referrals (Source: Influitive). They prepped their customers by providing customer personas and various ways to submit their referral (email, social media, etc.):
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:
• Lash bars
• Massage therapists
• Children’s classes (swim class, gymnastics, music lessons, etc)
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 Musk’s 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? Easy! 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.
Make sure you have the following elements in place prior to launching your referral program:
• List of customer advocates
• Clear description and terms of referral program
• Simple way to submit referrals – multiple options are a plus
• Referral tracking system
• Appropriate and desirable reward
Don’t forget to keep in contact with your referring customers along the way. You’ll need to reach out to them, whether that’s using an automated email when a referral is made or a personal phone call, so they’re confident their efforts aren’t going unnoticed.