5 components of a successful referral program
Most small business owners know the value of referrals. And today's technology makes their impact on your sales even more powerful. Rather than crossing your fingers and hoping happy clients recommend you, set up a referral program that increases your odds. Here are five things your referral program should include.
According to Ben Landers, president and CEO of the digital marketing and analytics company Blue Corona, effective referral programs are customized for your target audience. The key, he says, is understanding the psychology of the person making the referral.
"Too often, the marketers setting up referral programs fail to understand the drives and motivations of the person making the referral," says Landers, giving a business owner referrer as an example. "The marketer mistakenly believes that the business owner will be highly motivated to give a referral in exchange for a hefty discount, a free month of service, or a large gift card."
Landers predicts that program will most likely flop because most business owners aren't interested in racking up gift cards. They are probably more interested in something that genuinely helps grow their business, like increased online exposure.
2. A dedicated team
"With referrals, you have to get it right every single time," says Landers. "So you need to set up a system to capture all your referrals and make sure your A-team handles them."
Landers recommends assigning your best customer service rep, your best sales rep, and your best account services team to referrals. But he also says you can use technology to assist their efforts. For instance, he suggests setting up a special tracked phone line with a whisper file.
"A whisper file is a recording that plays for the person that answers the phone while the caller hears a ringing tone," Landers explains. "The whisper file tells your customer service rep that the call on the line is a referral, so turn on the charm!"
Clearly, you want to give customers a reason to join your referral program. But Howie Zisser, a digital marketer with the marketing agency Matchnode, says both the referrer and referral should get something out of the transaction.
"This incentive can vary from straight cash to credit at the company to pretty much anything else! The key is to make the incentive aligned with the company and exciting enough for the people to act on it," says Zisser.
Shareability is another key part of a successful referral program, according to Zisser. In part, that's because of the current business climate. Generation Y seems particularly eager to share.
"Millennials trust their friends' opinions and tastes more than any generic review could ever do," he says. "So a referral from a friend is a vote of confidence in that brand."
You can leverage interest in being part of the crowd by creating "shareable links that can be sent through email, social media, or text." Zisser adds that you want to make the link unique so you can track referrals and properly reward everyone who participates.
It's not enough to simply set up a referral program. According to Justine Beauregard, owner and founder of the marketing consultancy Mirelle Marketing, you also have to maintain it. That may mean…
Promoting your program
Beauregard recommends emailing your referral program's terms, benefits, and incentives to customers and placing an ad with a clear call to action on your website.
Refining your program
"Freshen up the rewards, test different recruiting tactics, and ask existing referrals what is working well and what they would like to see change," says Beauregard.
She adds that the time and money you invest can pay off huge dividends in the long run.
"Studies show that even as little as a 5% increase in customer retention because of a successful loyalty program can lead to a 25% increase in profits," she notes. "Talk about a motivating statistic!"
Get more referral marketing ideas in the blog post "How to get new business with referrals."
Compare insurance quotes with Insureon
It's easier to build customer trust when you have the right business insurance. Complete Insureon’s easy online application today to compare quotes for general liability and other kinds of insurance from top-rated U.S. carriers. Once you find the right policy, you can get coverage in less than 24 hours.