Small businesses can gain new customers by using a referral program. This is a win-win scenario. Not only will you gain a new client, but also the person who referred them receives a reward for their efforts.
How do you create a successful customer referral program? What kind of rewards should your company offer? These are just a few of the questions we have.
Why Start a Customer Referral Program?
There are many reasons to start a customer referral program…
- With today’s technology, a strong word-of-mouth marketing campaign doesn’t have to be expensive. People can share relevant content with large audiences at no cost via social media sites such as Twitter and Facebook. According to some studies, companies could receive $7 for every dollar they spend on these social media campaigns.
- Referring to customers shows appreciation and loyalty. Referrals are often from satisfied customers.
- Good programs encourage people to promote your company online. This gives you more search engine exposure and costs less than other types of campaigns.
- Your existing customers are experts in your industry and product so they know who would be most benefit from them using them. And where to find them! The Best Referral Marketing Program
Referring customers is a cost-effective way to get new business. However, not all referral programs work for every situation. These are the most popular referral programs.
Cents to Customers
Cents for customers is a great way to get more prospects interested in your company, but who have not yet bought anything. Referrers get a small commission depending on the referral’s purchases or uses. This commission is usually around 5%.
Power Partnerships
Peer Power Partners or Power Partnerships are great for introducing new products or services to people who might not know about them. This type of referrals is great because they reach out to people who don’t know much about you but want to learn more about your products and services. You can often get an email list and sign-ups for free, so they don’t charge anything. This type of campaign allows you to offer higher commissions, typically around 10%.
[mpp id=”4″]
Power Referrals
Power Referrals are a great way to launch new products and services. This referral program is the most lucrative, with a 15% commission or more. It encourages conversion right away.
Steps to a Successful Referral Program
- Talk to various groups to promote your referral program. Professional associations can help you promote the program via their newsletters or website.
- You can set up an email address that people can use to send referrals. Let everyone who uses your product, and anyone who refers them, know that they will receive an incentive.
- You will need to decide what your referral reward will look like and how much you are willing to pay. People won’t refer friends if they don’t know!
- You can set up a simple tracking system to track referrals and ensure everyone is paid promptly.
A customer referral program is a great way for small businesses to gain new customers without spending too much money. It’s easy to determine which one is best for your products and services. Then, let people know about this wonderful opportunity to make extra money.
Unless your business is new, chances are you already know the names of your most satisfied customers. Reach out to them and ask for their opinions on building your referral program. What process would they prefer? Which type of incentive is most appropriate for your business?
Be Sure the Program is Easy to Understand and Use
Make sure to place a clear and visible “Call to Action (CTA), on your website and at your checkout counter, so customers are aware of your program and how to access it. Your employees should be able to mention the program and answer customers’ questions. Consider including an FAQ if your company uses ecommerce. If an incentive is included, be sure to describe it clearly so customers can make a mental calculation of how much they will receive if they refer friends. In addition to the incentive, make sure you harness the customer’s desire to help others and spread the word. Use positive language, such as “Excited about your [product]?” Share your order with a friend to get a discount
Consider Automating the Program to Make the Customer Experience Smoother
Your referral program should be designed in a way that reduces the number of steps and clicks required for tracking (for both you and your customer), and that allows your potential customers to join your program without any hassles or conflicts. This will increase your program’s conversion rate. You can make your program enjoyable to use. Get feedback from customers and keep it improving!
Be Clear About Your Terms and Conditions
You can find terms and conditions on many companies’ websites for referral programs. Look at their examples to see best practices. Some companies restrict discounts to new customers. Others limit credit limits and some use unique referral links. Some companies allow discounts or credits to be used in certain circumstances. You should think about the possible ways that your referral program might go wrong. Could a serial referrer create thousands of referral credits that you are not able to use? Fake bots have been known to generate general referral credit for companies or multiple customers using the same email address. Be sure to plan and protect your program. When drafting your terms and conditions, make sure you consult a licensed attorney to ensure that you have covered all bases.
A referral campaign is not expensive, but it can cost money to set up your website. If you don’t have the budget to pay for customer referral programs, there are lenders such as Progressive Business Capital can assist you in obtaining the funds that you require. Please call us at (800) 508-4532 to discuss further.
