If you are a Facebook user, you’ll have noticed that they have recently added a Looking for Recommendations feature for people seeking to find businesses. This comes as no surprise. Word of mouth can have a big influence on where people shop, especially if the recommendations come from people they know and trust, such as friends and family.
Whilst the Facebook feature is new, customer referral programs have been around for some time and, just like word of mouth recommendations, they can also send new customers flocking to your website. In this post, we’ll explain what customer referral programs are and how you go about setting one up.
What is a Customer Referral Program?
A customer referral program is a marketing technique whereby you give existing customers an incentive to recommend you to their family and friends. This can include social media followers, workmates and acquaintances.
Of course, this is only going to work if you have a business that customers like. No-one is going to recommend you to anyone, incentivised or not, if you offer a poor service. However, if customers like your business and you give them the right motivation, you have a good chance that a referral program can bring new customers to your company.
The benefits of customer referral programs
As mentioned in the introduction, people trust recommendations from friends. In fact, recommendations from friends are trusted more than any other kind of recommendation, including online reviews. This makes them a very powerful marketing technique.
Another advantage is that your customers are only going to recommend you to people who will benefit from your business. For example, if you are a wedding photographer, your customers might recommend you to people they know who are getting married. In this sense, referral programs are highly targeted on those potential customers who are actively looking for your services.
In addition to this, the customers you gain through your referrals can then join your referral programs themselves and recommend you to even more customers. This can enable your program to grow exponentially and your business with it.
Steps to setting up a customer referral program
Here are five important things you need to do in order to set up your own customer referral program.
1. Find out what incentive you need to offer
Referral programs only work if you give customers the right incentives. To do this, it is important to find out what kind of reward will give them a good enough reason to recommend you. Getting the reward right requires you to understand your customers, and the best way to do this is to ask them directly or give them a range of options to choose from.
Popular choices for rewards include things like discount vouchers and cash rewards. If your customers pay monthly for your service, you could also offer them a free month or a reduced monthly fee.
Do make sure, however, that you work out the costings of your referral program. If you are going to make £10 from each new customer you gain, you cannot give your referrers a £15 a reward.
2. Find out the ways customers will refer you
Different customers will recommend you in different ways and finding out how they want to do this will enable you to give them the help they need to promote you. For example, millennials are more likely to use social media to recommend you and they may want to post images with links or send tweets with text links.
Older people may prefer to hand their friends a printed-out voucher with a code that can be entered on the website. Having a facility for them to create the voucher and putting an enter code here box for new customers on your website enables this to happen.
Your task is to ensure that you give your customers everything they need to promote you in the way they want to. The simpler and easier it is for them, the more you will benefit.
3. Choose the most appropriate referral software
Referral software enables you to run your program on your website. The software is usually added in the form of an add-on or plugin. What type you choose will depend on the software you use to build your website as they will need to be compatible. For example, if you use WordPress for your website, you will need a WordPress plugin.
Once you know the ways in which your customers will do their referring, you can then decide which referral software is best for your program. Each piece of software will have different features and its own interface. Your aim should be to strike the right balance between ease of use and functionality. The easier it is to use, the more people will use it. However, if it lacks functionality, you may end up limiting the potential of your program.
4. You’ll need to promote your referral program
Having a referral program doesn’t mean that all your existing customers will know that you operate one. To make sure you get your program up and running you will need to advertise it. This should include the following:
- Advertise your referral program on your web pages, emails, texts, social media, printed mailouts, invoices, receipts, etc., so that customers are constantly reminded.
- Create a dedicated landing page for your referral program that details all the rewards you offer, how to join, and what the customer needs to do to earn their rewards.
- Prepare marketing materials that your customers can use themselves, like prewritten emails, images with embedded links, standard text links, etc.
5. Make it easy for customers to get their reward.
Not every customer will go to the trouble of joining your program. Those that do are the ones you want to keep happy. The more they benefit from recommending you, the more they’ll try to keep doing it. The best way to keep them happy is to make it quick and easy for them to get their reward.
The simplest way to do this is to automate the process. If you are paying cash, take their bank account or PayPal details and set up automated transfers. If it’s a money off voucher, send the voucher automatically via an email or send a discount card through the post. Alternatively, choose software that has a My Rewards page where users can choose to manage their own rewards in the way they want.
A referral program is a great way to keep existing customers happy and attract new customers to your business. When set up in the right way, it can be a highly effective way to extend your customer base and lead to exponential growth. You just need to make sure you have the right incentive, the ease of use, the most appropriate software and the necessary marketing materials in place.
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