By THI NGOC TRANG LE on Apr 28, 2023
Business is tough. According to the Bureau of Labor Statistics, half of all businesses fail within the first five years. 70% fail within 10 years. So, you need all the help you can get. One of the best ways to get the help you need is through your own customers by setting up a structured customer referral program.
Though all small businesses are happy to take referrals, they rarely set up an organized program to seek referrals or make it drop-over easy for their clients to give them referrals. Your loyal customers are likely to have friends, family or colleagues who could benefit from your products and services. But it’s up to you to leverage your existing customer relationships in order to generate new leads from your current customers’ connections.
There are a whole lot of benefits to building a structured customer referral program. Here are some of them.
Compared to other marketing strategies such as advertising, referral programs are relatively low cost even if you offer rewards in exchange for referrals. Since a reward is only given when a new customer is acquired, businesses only pay for results.
Referral customers tend to convert at a higher rate than other types of customers. That’s because they know and trust the referring customer. When a customer makes a referral, that trust is transferred to your business.
By offering rewards to customers who refer new business, companies can encourage customer loyalty and engagement. Referral programs can help foster a sense of community and reward customers for their support of the business.
Referral customers are often more targeted and qualified than other types of leads. Since they are recommended by someone who knows them, referral customers are more likely to be interested in the business and more likely to become repeat customers.
Referral programs can help increase brand awareness and reach. As customers share their experiences with their networks, they help spread the word about the business to potential new customers.
In other words, a customer referral program can be a powerful way for small businesses to generate new leads and grow their customer base while also rewarding existing customers for their support.
Like any aspect of marketing, there are a lot of ins and outs and possibilities to set up a customer referral program. But here are the broad-brush steps.
Before creating your customer referral program, it’s important to think about what you want to achieve. You need to establish clear goals before you set your program parameters. Some examples of program goals include:
Defining your program’s goals will help you tailor your rewards, referral process and promotional strategy to best meet these objectives.
Set up a simple customer referral program where you always ask for referrals in a specific way at a specific time during the sales cycle. This is certainly better than going at it in a hodge-podge fashion
In order to motivate customers to refer their friends and family to your business, you may want to offer attractive rewards. Rewards can take many forms, such as:
When deciding on rewards, consider what would be most appealing to your target audience and what is financially feasible for your business.
The referral process is how customers will submit referrals to your business, and how you will track and reward those referrals. There are many ways to set up a referral process, such as:
Whichever referral process you choose, make sure it’s easy for customers to understand and participate. You should also consider using referral software or tools to help you track and manage referrals. See this article for customer referral software you may want to consider.
Once you’ve defined your program goals, rewards and referral process, it’s time to promote your program to your existing customers. There are many ways to promote a customer referral program, such as:
Make sure to clearly communicate the benefits of your program, such as the rewards customers can earn and how the program can benefit their friends, family and colleagues.
Your team members are the front line in promoting your customer referral program, so it’s important to train them on how to effectively communicate the program to customers. This might include training on:
Once your customer referral program is up and running, it’s important to track and analyze its effectiveness. This can help you identify areas of success or improvement and make adjustments as needed. Some metrics you might want to track include:
Use this data to make adjustments to your program, such as tweaking rewards or promotional strategies, to optimize its success.
Finally, it’s important to show appreciation to customers who refer new business to you. This can help foster loyalty and encourage further referrals. Some ways to thank customers include:
For a free consultation about how a customer referral program can affect your particular business, contact us here to set up a free consultation with an Umbrella Local Expert or call (646) 440-1426.
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