Blog

Transforming The Customer Experience

Keys to Setting Up a Customer Referral Program That Works

Posted Aug 24, 2017 9:50:00 AM

customer referral program Header.jpg

A marketer’s job is to promote a business so it attracts more customers and clients. But, marketers don’t have to do all of this work on their own.

Marketers can find a promotional support team by tapping into an existing network -- their current customers and clients.

A customer referral program allows a brand to reach more people by turning their happy customers into an army of advertisers, promoters, and supporters. Using existing customers in this way is a powerful marketing approach as:

  • People are four times more likely to buy when referred by a friend (Nielsen).
  • 92% of respondents trust referrals from people they know (Nielsen).
  • 81% of U.S. online consumers’ purchase decisions are influenced by their friends’ social media posts (Market Force).

If you haven’t implemented a customer referral program at your business yet, you could be missing out on opportunities to gain new business. So start planning a referral program for your business today, and use these key elements as you set up your system.  

Brand Advocates

Before you can set up a strong customer referral program, you need brand advocates. You won’t be able to encourage your customers to promote your business if they are not already impressed with your products or services.

Start your referral program by laying the foundation with a fantastic customer experience so customers will embrace the idea of helping promote your brand.  

Also, consider looking for brand advocates that already exist and asking them to join your referral programs. Check social media to find people who are positively talking about your brand, find people who have left great reviews, and scour your customer base to connect with the people most likely to participate in your program.

Incentives

The incentive is an important part of a customer referral program because it is the driver that motivates the customers to act. As you develop incentives for your program, consider the following approaches.

  • Discounts: offer a discount percentage or dollar amount
  • Gifts: offer an item or product
  • Two-sided incentives: give the incentive to both the person who refers and the person who is referred
  • Charitable donation: donate to a charity for each referral
  • Percent of customer spend: give a percent of the dollar amount the person who is referred spends to the person who referred them

To find the incentive that will best motivate your customer base, ask them. Ask them what they would want most from your organization.

Referral Methods

To get your customers to go out there and promote your business, you need to make it easy on them. Give them ideas and tools that make it simple to collect and drive referrals.

Help guide them by sharing the outreach tactics they can use. Advise them to:

  • Share their positive experiences with your brand on social media.  
  • Offer a referral when they see someone looking for recommendations on social media.
  • Pass out a promotional cards or flyers for your business when they know someone who needs your services or products.
  • Use a unique link to your website to track their referrals.
  • Use a unique discount code to track their referrals (and make the special feel exclusive).

Giving ideas to your customer on how they can refer people to your business will make them more likely to follow through with the activity.

Tracking System

To execute a customer referral program, you need a tracking system. When a customer refers someone to your business, you need to register the referral and reward the person who sent it.

Some point of sale (POS) or customer relationship management (CRM) systems can integrate referral programs into their software. Or, you can use third-party solutions like ReferralCandy and ReferralRock or integrate affiliate systems that automatically pay people for their referrals.   

Gamification Components

As you seek a tracking system, look for solutions that also offer an element of gamification to your referral program.

Gamification is an approach that turns your customer referral program into a game. It utilizes a point system, scoreboard, or series of badges that reward people for their referrals. It may also allow brand advocates to compete against each other. This type of competitive approach can make it more fun and engaging for your customers as they promote your brand.

Referral Program Promotion

Once you have a customer referral program, you need to let your customers know about. Promote and highlight your program though:

  • Direct mail. Mail postcards with program information to past customers/clients.
  • Email. Utilize your email list to promote your program to people already interested in your business.
  • On-hold messaging. While customers are on hold with your business, share info about your program through your hold messaging.
  • Overhead message: While customers are in your business, promote your program though your overhead messaging system.
  • Receipts and bills of sale. Get your program information in front of a customer as soon as they do business with you by promoting your program on the bill of sale or receipt.
  • Flyers in your shopping bags. Another way to connect with customers right after their purchase is by placing program promotion flyers in their shopping bags before they leave the store.
  • Digital signage in your location. Catch the attention of shoppers in your store by promoting your program on digital signage screens.
  • In-person communication. Don’t forget to train your team to tell customers about your program.

Referral programs are an effective way to grow your client and customer base, but the system only works if your advocates know about it. Make marking your program a priority if you want it to bring in a large and consistent wave of new clients and customers.

Another Way to Get Your Customers to Work For You

A customer referral is just one of the ways to leverage the happy customers you have to bring in more business. Another powerful tool for using this audience to expand your reach is customers reviews.

Like referrals, reviews are trustworthy and powerful, and they lead to higher sales.

So learn how to create a customer review system and increase the number of customers who are positively sharing their opinions about your business, by checking out our guide on: Why Your Business Must Be Focused on Collecting Customer Reviews.