Build a Better Referral Program

Build a Better Referral Program

Referral programs have been a great method small businesses can use to increase sales, traffic to their website, awareness, etc. You may already have a referral program in place, or perhaps you’re just starting to think about one. In any case, we’re here today to talk through some of the ways you can build a great referral program—or improve upon the one you’ve already got! Let’s get to it…

The idea of a referral program is to turn your most loyal customers into advocates for your business, in a sense. You incentivize them with discounts, gift cards, or freebies; in return, they spread the good word of your business to friends and family—even their social media following. We already know that folks are more likely to stick with a brand when people in their network have recommended it, which is what makes (and keeps) referral marketing a top tactic used by business owners. According to Signpost, “92% of consumers trust referrals from people they know.”

Get the Scoop from Customers

The first step to creating a great referral program is to go straight to the source: your customers. Talk to them and find out what would incentivize them to be an ambassador to your business. Perhaps you were thinking a free trial of a new product would work, but upon talking to your base you learned they’d rather have a discount on their entire purchase instead. You’re not going to get referrals if the bonuses you’re offering don’t align with what your customers really want. This type of communication also allows your customers to feel like they’re truly a part of your business.

Get the Scoop from Your Network

As a small business owner, you’ve likely got a nice network of peers or mentors you turn to for advice. Outside of your customer base, these people are the most likely to have sage wisdom to share about the creation of a referral program, tips and tricks, things to consider, and tactics to avoid. Reach out to them for assistance as you build out your plan.

Find the Right Format

There are essentially 3 types of referral program “formats”: rewarding the referrer, rewarding the referral, or rewarding both parties. Rewarding the referrer is generally the most common tactic, since they’re the one doing the work of promoting your business. Rewarding the referral (or the friend/family member) obviously incentivizes the person “signing up” for your program. But the most effective strategy—albeit the most expensive—is to reward both parties. Test these varying formats to learn which works best for your business model. You may find that incentivizing the referrer doesn’t work as well as incentivizing the referral, or vice versa.

Seek out Influencers

Influencer marketing is huge these days, what with the prevalence of social media and the fact that there are so many new brands out there to keep up with. One thing is for sure: influencers are a key demographic to get on board with your business. They have a trusted following of sometimes millions of people, and their reach can go far beyond anything you may be able to do on your own. Consider implementing a specific referral program just for influencers. You could do this by creating a referral program targeted solely at the preferences of the influencer’s followers.

Make it Simple 

You could build the best referral program on the face of the planet. But it’s likely to fail if it’s impossible to navigate. Above all else, make sure it’s simple for customers to refer your business. Don’t make them jump through hoops to sing your praises, and definitely don’t make it tough on the people being referred to. This can be done by creating automated email referral templates, templated social media posts, even unique URLs that can be sent to friends and family in a snap. The easier it is to refer your business, the more folks will contribute.

Referral programs are an excellent way to bring awareness to your business. And done right, they can bring a significant boost to your revenue. For even more marketing tips and tricks, stop by the Financial Pantry at ARF Financial for industry news and advice from our expert staff.