Spread the Word! How to Effectively Get Customer Referrals
By Beau Peters Jul 28, 2020
Every customer you engage with makes an impact on your business. For small businesses, finding new ways to expand your reach can make a significant difference in your ability to hit your goals. One of the most effective ways of generating new business is by leveraging the influence of your existing customers.
Word of mouth has long been a key resource in business growth, but sometimes it just doesn’t occur to customers to go out of their way to promote your brand. This doesn’t mean they don’t value your services! But adding a little incentive to talk about you can give a prod in the right direction. For many businesses, this means setting up a formal referrals program.
We’ve put together a short guide exploring some important areas that can help get those referrals flowing in no time!
Set your referral goals
Before setting out to build any customer referral program, it’s vital that you plan ahead. First, you need to get a grasp of what your goals are. Obviously, the general goal is going to be “finding more customers” but you’ll need to get a little bit more specific than that. You’ll want to put in place goals that are data-driven that you can measure your success against.
Here are some examples of small business referrals goals:
- Revenue — Set a goal to garner a specific level of income as a direct result of referrals. Calculate how much revenue per customer is brought in currently, and assess how many new customers would need to be referred in order to meet your financial targets.
- Active referrals — Focus on the activity of your loyal customers. This goal can be to specify the percentage of current customers that you want actively engaging in referrals on a regular basis.
- Quality — Your goals don’t need to entirely focus on the number of new customers you generate, but whether they convert to becoming loyal customers themselves. This is more of a long term goal and measured by the frequency that new customers return to you.
- Return on investment — Referral programs will require a budget. Therefore, you can set your goals around your desired return on this investment. For every dollar spent on your referral program, what would you like to see come back?
Learn how to incentivize
Understanding how your customers make purchasing decisions is key to building a successful referral program. By researching this, you’ll learn what factors are important to your customers and also what psychological obstacles they face in making purchases.
One of the important parts of the buying journey is advocacy — the stage at which customers are happy with the brand and making referrals. Survey and talk to your customers about their journey. Make note of the roadblocks and incentives that help get them to the advocacy stage. Then, build your rewards around this.
Here are a couple of ideas on how to incentivize customer referrals:
- Promotions—For those who value cost-saving, set up promotion codes for 10%-20% for both the referred customer and the one doing the referring. Uber users receive a $10 discount when they refer their friends through the app.
- Gifts—Reward referrals with a gift based on common purchases, for those who enjoy the personal approach.
- VIP treatment—Offer exclusive products or deals on products for those who prioritize loyalty and advocacy.
- Partnerships—Partner with other local businesses for gift cards for those who value your place in the community.
- Alternate options—Set up other ways for people to talk about you, like customer testimonials, and case studies.
- Links—Add forward links to the bottom of your newsletters asking people to forward to their friends the content they find helpful.
- Web page—add a web page or submission form that allows your site visitors to add their contacts as referrals.
- Leverage social media—Ask your happy customer base to share information about your brand on their social channels. Make this easy by creating impactful and informative social media graphics.
Talk about your referral program
People are 90% more likely to buy from a brand that’s been personally recommended to them. This means encouraging customers to talk about their experiences or leave reviews is definitely a form of promotion you want to invest in!
The way you talk about your referral program matters. After all, nobody’s going to engage with your program if they don’t know about it, don’t understand it, and can’t see how they fit into the picture.
Here are some communication tips when developing your customer referral program:
- Be on-brand— Establishing a consistent brand voice for your all communications helps your customers feel more closely connected to you, your business, and your brand values.
- Raise awareness— Use your content (blog, newsletter, and social media) to talk about your referral program, the benefits, and what you hope to achieve. Keep a regular schedule for these posts. Analyze how people are responding to this to see where you can make improvements to your content and schedule.
- Provide tools— Make it easy for your customers to make referrals. Email them with testimonials they can forward to friends or affiliate links to promote, and content about your business to post to their social media. Create a landing page on your website that clearly explains the rules and rewards for referrals.
- Invite feedback— Keep the conversation open with your loyal customers. This not only helps to inform your process moving forward, but it serves to remind the customer of their value to you, and how they can contribute.
Track and adjust
Finally, you can’t just let a referrals program loose on the world, and hope it’ll bring in customers. You have to schedule regular assessments of success, and see where improvements can be made.
In order to evaluate how effective your program is, you’ve got to track data along the way, including:
- Which customers found you by referral?
- Who referred them?
- When they were referred?
- How they’ve engaged with your business (revenue received, return visits, referrals they’ve made)?
There are tons of referral tracking software options that can make collecting and assessing this information easier. Many are all-in-one tools that help manage your referral campaign from start to finish. They’ll also provide access to metrics that you can use to gauge success.
Be thankful
Keep track of customers who are referring other people to you and go out of your way to send a personalized thank-you note. A little gratitude goes a long way in keeping customers happy!
Time to get those referrals flowing!
Customer referrals can result not only in more visitors but also better quality customer relationships. Taking time to confirm the goals for your referral program, learning about your customers, and keeping the channels of communication open can be instrumental in getting the most out of your rewards system.