A referral program can do wonders for your business’s bottom line—if implemented correctly. Reviews are extremely powerful, and what better way to leverage your word-of-mouth recommendations than by creating a referral program?
After all, according to one study published by McKinsey, word-of-mouth referrals comprise roughly 20% to 50% of the majority of purchasing decisions. Of course, first and foremost, your product or service has to be top-notch. And when that’s the case, a referral program can give them the extra push they need to recommend your business. Here’s what you need to know:
Make a List of Potential Sources
When you’re just starting your referral program, it can be difficult to find a solid place to start. Fortunately, if you have contact information for customers who were recently satisfied, you can start with them. Make a list of those connections, and start to reach out. This initial batch of connections doesn’t have to be just customers who you know have reviewed you positively, but also friends, family, colleagues, and other people in your inner circle.
Decide on Your Referral Incentives
So, you’ve decided on a starting referral list and have a good idea of where to begin. Now it’s time for you to decide on your referral incentives. This is the reward your customer gets when they refer someone to your business. You can choose between an cash reward or a non-cash reward, but choose carefully depending on your business. According to a study conducted by the University of Chicago, non-cash incentives were actually 24% more effective at boosting performance than those that weren’t incentivized at cash.
Decide on Your Goal
When you create a referral program, you have to have clear goals in mind. Of course, an obvious goal is to increase revenue. But it’s always good to have a clear, concise goal. Do you want to increase user engagement? Get more people to sign up for your newsletter? Increase website traffic?
When you have a clear goal, you can better examine your metrics later on. For example, if your goal was to decrease your customer acquisition costs, then you’d do the math to compare one month’s acquisition costs compared to other months after your referral program began.
As you’re brainstorming your goals and toying with different ways to start your program, it helps to get inspired. Take a look at some of the referral programs offered by other businesses. Notice what incentives they’re providing, as well as how those programs are marketing on their website and across other channels. This will give you some ideas on what to do with your own program.
Let Your Customers Know
Once you’ve started your program, launch a campaign geared towards letting your customers know. Anyone who has ever done business with you should be aware of your program. This helps capitalize on previous customers that you might have missed otherwise. Your previous customers are a great source for referrals because they’ve already purchased from or worked with you. You can then send email reminders as time goes on.
Advertise It On Your Website
Now that you’ve created a solid referral program, you need a place for new customers to discover it. You should advertise your referral program prominently on your website once all the kinks have been worked out. Be sure to create active pop-ups that appear across your website and serve as a reminder for customers to take advantage of your offerings.
Keep in mind that once you launch a referral program, you may experience an influx in traffic, especially if everything is going well. You should consider upgrading your hosting plan if you start to notice some extra referral traffic. When you upgrade your hosting plan, you essentially safeguard your website against crashes or lost resources due to other websites on the same server. You wouldn’t want to lose any referrals because of downtime or other shared hosting issues.
Start Tracking Your Referrals
In order to truly understand how effective your referral program is, you need to start tracking them. No matter how small or large your company is, it’s important to have a solid grasp on who referred them, when they were referred, and whether that referral actually made a purchase or took some kind of action. This is where customer relationship management platforms come in handy, which houses all of your contacts and communication history with every customer.
You should also take advantage of referral program software, like ReferralCandy or InviteBox. With platforms like these, you’ll be able to design, customize, and track your referral program all in one place. Here are some effective and valuable ways to boost your business referrals. You’ll also be able to generate detailed reports that detail how well your referral campaign is going and what you can do to improve it.