Some of the most important people who are vital to your company’s success are your employees and your customers. Your customers are a very valuable source of promotion for your business. Customers who are delighted with your business and the services you provide can refer many people to you. In an ideal world, satisfied and loyal customers will automatically start referring people they know to your business. Unfortunately, that isn’t really the case. Customers will want to be incentivized to refer people to you. This is where you should start planning to create an effective customer referral program.
How Valuable are Referrals to Your Business?
Referrals can be very valuable to your business as they don’t cost you much, or in some cases, anything. As a matter of fact, 20% to 50% of purchasing decisions come from word of mouth marketing (WOM), including referrals. Referrals can help you save money, and you can use that money to acquire other new customers or clients, or on any other parts of your business.
Do Referral Programs Entice Customers to Take Action?
One of the more common questions people have before creating a referral program is if the customers actually take some sort of action using the program. The answer to that is yes; customers will take action. A customer will more than likely refer your business to a couple of other people they know if they believe your business provides solutions to what they need. According to a study, 14% of people referred to your business will take some sort of positive action. The potential chance of a conversion is one that you shouldn’t just let slip on by.
Having a good customer referral program that offers a great incentive and gives those new referred customers a great onboarding experience, the chances of conversion can be potentially high. That is why you shouldn’t avoid having a customer referral program as it can be a great source of driving conversions for your business. It can also reinforce your business’s brand loyalty from the customers who are referring others to your business.
Building An Effective Referral Program
Patience and consistency are very important when initially activating your referral program as it may take time before referrals become a constant. Here are some things that are important to building an effective referral program.
The first step you should take when building an effective referral program is setting your goals. What do you want to accomplish with this program? Do you want to get more customers to your business? Or do you want to grow your business at a faster rate? Finding out what your goals are is crucial before deciding on how to reach or accomplish those goals.
From there, find out how your business has been handling referrals before the referral program. This is a great opportunity to discuss the process and how it can be improved for a better customer experience.
List and Reach Out to Referral Sources
The next step in creating an effective referral program is to list some possible referral sources and start reaching out to them. These referral sources should be customers who know your business’s value and are likely to refer others to you. Depending on the kind of business you’re in, you might have to encourage customers to refer to other people in your first engagement with them or in the latter stages of the buyer’s journey.
Determine What Incentives to Offer
Determine what kind of customer incentives you want to provide. An incentive may be a gift card or perhaps credit towards their next purchase. Whichever your team and you decide, start planning out how to promote your new referral program so that your customers are aware!
Promote Your New Referral Program
Promoting your new referral program is very important. Two things can happen without promoting your program:
- Customers won’t refer to as many people as possible if they knew about the program.
- Customers may not refer to anyone because they never find out about the program.
Some ways you can promote the new referral program is through emails, blogs, and announcements. Inside each of these sources, you should make it clear what program you are starting, what incentives you are offering, how to take advantage of it, who will benefit from it, and how the process works. Leaving out any of this information in your messaging during the promotion may lead to confused and frustrated customers.
Track Your Referrals
You should have a system to track your referrals to know who referred the customer, the date the customer was referred, if the referral converted, and how to follow-up with them. Without a tracking system, your referrals will likely get lost and forgotten. Also, tracking will help you analyze if the referral program is working successfully or what needs to change.
Thank Your Referrers
The last step in building an effective referral program is to say thank you or provide an offer to the customers who’ve referred new leads to your business. Referrers allow your business to acquire new customers at little to no cost. Make sure to thank them properly.
Having a customer referral program for your business is something that you should seriously consider. Without it, you are potentially leaving out a good portion of potential customers. Get to planning today so you can start driving new customers to your business at very little cost!