Nowadays, consumers tend to trust the opinions of others more than ever before. People are more likely to purchase a product or hire a company if someone recommends it to them first. And with so many fraudulent businesses and competitive markets, who can blame us? At the end of the day, every business wants a slice of the pie. Unfortunately, not all companies are able to achieve this. Therefore, I decided to treat all you with a simple yet practical insight into the benefits of having a referral program. With people starting their own businesses on every corner, this is something that can definitely give you a push in the right direction.
To begin with – what is a referral program?
Let’s start with the basics here. What exactly is a referral program and why is it that your company needs one? If you were led by the opinion that what we are talking about here is a simple matter of telling someone about a product or business, you are mistaken. What we are discussing here is so much more than singing praises. It is about using word-of-mouth to motivate your community to help develop your brand.
So, when you take any referral program into consideration, what you come across are four basic steps:
- Your company provides an exceptional service that results in a satisfied customer.
- The customer praises your services, recommending them to others, becoming the referrer.
- That recommendation reaches others in need of your services, making them referees.
- As a result, you provide services to others and reward both the referrer and referee with an incentive.
This right here is what you would call your typical referral program – what is now a default tool in a lot of business development strategies.
Why do service businesses prosper from having a referral program?
As I already mentioned, the notion of referrals has a long-standing history in the corporate world. People trust other people when it comes to the quality of services and products. And do not let anyone try to persuade you otherwise – we care about the opinions of others. So, if you know you have a great service to offer, recommendations from clients are the best way to ensure new leads for your business.
As an example, we will turn to the moving industry trends and statistical analysis. Relocation is not something people put themselves through every day. However, when we do move, we want it to go as smoothly and simply as possible. And that is why we go ahead and hire professional moving companies to help us. If the moving process turns out to be a complete success, it is an experience we will want to share with others. When some of our friends decide to relocate and hire a company, we will be inclined to point them towards the moving company we used. However, we will be even more inclined to do so if that company were to offer an incentive in the form of a referral program.
So long as your company decides to offer a bonus for past and future clients – you will all be on the winning side. Having a properly developed and structured referral program helps with this.
How could your business benefit from such a program?
Rather than talking about employee referrals, which are something completely different, we are focusing here on customer referral programs. The foundation might be the same, but the approach and benefits are completely different. Here, you are making a double sales pitch, one that affects both current and potential clients. So, you need to adapt to the needs of your target audiences and play your cards right. And as long as you are able to do that, the benefits for your business could be quite practical:
1. Social Presence
Social influence can take businesses to new heights in record time. There is nothing quite like a rapidly-spreading buzz about a company that can sky-rocket them in the eyes of the public. And that is exactly what a referral program can bring you – into the spotlight of conversations. The direct result here is that people will pick you out of the line-up with your competitors, growing the influence of your brand significantly.
2. Focused Targeting
By now, you should already be familiar with the appeal that content has on audiences. Once you manage to get through to your audience, you are practically on your path to stardom. Having a referral program is just another way of advertising your business, but with better aim and more focus. It saves time while securing new high-quality leads for your business.
3. You Only Pay For Dumb Deals
Unlike your typical movers’ marketing efforts, where you invest time and money and hope for the best, things are far more certain here. With referrals, you reduce risk and ROI to a minimum. How? Simple – you are only paying for sure deals. Your current customers only get the reward once they actually bring in a new client. So, you end up with a minimum to zero loss from this approach. You dictate the terms and hold all the cards at all times.
4. People Trust the Messenger
Whether it’s TV, radio, or the Internet – consumers trust in messages that they receive. Otherwise, most of us would be out of a job. And as far as advertising goes, nothing beats the influence and power of word-of-mouth marketing. If someone you trust gives you advice on where to go for services or products, there is no ad that will be able to trump that. And that is why referrals hold such strength.
5. You’re Re-Targeting
Having current or past customers spread the word of your business reminds them of the experience they had with you, to begin with. So, you are basically re-targeting your offer to them, keeping them interested in your business. Add to that the incentive your referral program carries, and you will have a close to impossible chance of losing them to your competition.
A 4-step guide to starting a referral program
Now that we’ve gone through the benefits that you can gain from this tactic, time to focus on creating the program itself. How does one go about implementing referrals into their company growth plan? Don’t make the common mistake of overthinking this process. It’s a simple notion – you need to find an incentive that is beneficial for both current and potential customers. Don’t rush it – take the time to plan it out and find the best possible solution for your business and customers.
1. Consider what it is that you are offering here
Remember – you are asking people to recommend you to friends and family. So, you need to be able to give them something worth offering. Nobody will want to risk their relationship with others by pushing them into a harmful business decision. Make sure that the reward you offer is beneficial enough for your current clients. Consider what it is that they would expect for doing you this favor. So long as you put their needs first, you should have no trouble securing them as collaborators.
2. Offer a piece of the cake to both parties
Securing the recommendation from your current customers is good, but you can always sweeten the deal further. Why not go the extra mile and offer the new clients they bring in something as well. That way, you are building a trustworthy relationship with both parties from the start, while presenting your company in the best light possible.
Having a referral program means offering a reward in the first place, no matter how big or small that reward is.
3. Make it as easy as possible!
The most successful referral programs are not the ones that are just visually attractive, but also the ones that are simple to share. It should be as simple as forwarding a link to a friend and having them open it. Hit the CTA and boom – you both get a discount or coupon! And that is what will make this process worth the consideration – understand what makes your consumers happy clients and willing to refer you to others. Since you are asking them for a favor, the least you can do is make it as simple as possible for them to do so.
4. Make the offer
One of the essential questions here is whether or not your business can even afford to have a referral program, to begin with? This is something that usually requires extensive research on current marketing trends and consumer behavior in your industry. Once you gather all the data, you need to find an offer that will benefit both your company and the users.
What are the usual downsides and concerns about having a referral program?
To put it as plainly as possible – you risk giving away too much money and time. Choose the wrong approach in what your referral program offers, and you will need to fight off unwanted business losses. Instead, you need to be smart – monitor how consumers react to your referral program and adapt it accordingly. However, if the program gives seldom results, then you need to reconsider the application of it in the days to come.
Why are referral programs great for marketing?
With the overall influence that social media networks have on advertising today, word-of-mouth marketing is stronger than ever before. It has become easy to recommend products or businesses to others via social media channels, especially if you are an influencer. And many companies are aware of this, prompting them to invest in promotion through such 3rd party channels in large volume.
Once you add the bonus of a referral program to word-of-mouth marketing, what you get is a winning formula for expanding your business. Easy sharing and visually appealing designs – the strong basis behind every enticing referral. And with the added effort of tracking results and conducting studies on what works best with your target audience, there is little that can stop your campaign from being a smashing success.
Referral marketing ideas and tips
Simple as the concept of having a referral program is, there are still ways to make it better. So, here are three simple ideas that can help boost the overall effect that your campaign will have:
1. Use referral program software
It’s all about making the entire process as smooth as possible, so using software can be an advantage. It will automate the entire process while enabling easy integration and handling repeatable processes. Not only will you help your customers make simple work of the referral process, but your company will benefit from it as well. Monitoring the overall effect of the program and making necessary adjustments to it will be a breeze.
2. Test the reward you offer
Consumers react differently to the incentives companies offer them for referrals. Hence, you need to find a reward that works best for your particular audience and industry. Make sure to test out several options before choosing any particular one. Too often, the sheer success behind a referral program will be the reward it offers.
3. Always promote the referral program
Referrals are a marketing campaign like any other. You need to make sure to always promote it to customers. After all, how can you expect people to refer your business if they don’t have access to the benefits they might have from it?
Having a referral program is a battle-tested strategy that all experienced marketers believe in. Even if you have the best possible modern marketing available today, you still need to consider the added benefits of referrals. Content and ads aside, people will still want to recommend you to others if they are made aware of the quality of your business. Referral programs are great for small businesses, but they have to be done right. Consider this method in the context of your brand and give it a chance!