Referral marketing is an incredibly effective way to generate leads and new customers, but most small businesses lack a formal process to get referrals predictably and consistently.
Check out the chart below from a study completed by Demand Metric. Although acquiring new customers through email and events tops the list of the most commonly effective methods, referral marketing is still a force to be reckoned with.
Here are a few more interesting referral marketing stats that might shock you:
Are you starting to see how referral marketing can be really beneficial?
What exactly is referral marketing? How do you create a referral marketing strategy? What are referral marketing best practices you should apply? And are there tools you can use to help make it easier? I will answer all these questions now...
Referral marketing is a strategy that uses a current pool of customers to pull in new ones. It's a segment of word of mouth marketing that occurs when a person tells someone else about a business, product, or service. Referrals are very personal and direct.
Some businesses will incentivize or reward customers who successfully refer other people. They use this tactic to push the referral program even further.
Some types of businesses that employ referral marketing include retail stores, specialty stores, restaurants, automotive service companies, airports, hotels, travel agencies, and MANY MORE!
The first step in implementing a referral marketing program is creating a plan...
Creating a referral marketing plan can be tedious work. However, today is your lucky day because in this section you will learn a simplified referral marketing strategy that actually works.
Let's start with...
Setting goals is a very important step in building an effective referral marketing plan. You should know what you want to achieve from the get-go. Without a clear set of goals in mind or in writing, you will be starting with a shaky foundation.
Here are a few common goals your referral marketing plan might have:
Some companies choose to reward people for referrals and others do not. I don't necessarily think there is a right or wrong answer here.
But you need to decide if you'd like to reward people for making referrals, and if so, how you're going to do it.
Rewarding people can be a great way to get people excited and increase their incentive to refer you business.
There are all kinds of examples out there of incentive-based referral programs. Here are a few articles to get your creative juices flowing:
Now that you know what type of referral program you are going to offer you need to map it out. Your outline should include at least some of the following items.
Quick Tip: Think about all the different customer touchpoints you have in your business because any of them can be a great place to promote your referral program or ask for referrals.
To measure the effectiveness of your referral marketing program you must keep track of the referrals you receive, the source of each referral, and how many ended up doing business with you.
Without keeping track of these important numbers you'll have no way of knowing if your referral program is effective.
Aside from creating a referral marketing plan that works, you also need to keep in mind some industry best practices to get the most referrals.
Here are some to consider...
Before a customer even buys your product, start setting expectations that a referral program is waiting at the end of the transaction.
On the sales pages and other pages about your products, explain that your mission is to make customers so satisfied that they will want to spread the word about your company.
It's exactly like hitting two birds with one stone:
To get referrals you need to wow your new clients. Having a new client onboarding process or system to ensure every new client has a positive experience is critical.
This will help ensure every new client has a top-notch experience.
Learn the crucial points in your business process where you should be asking for referrals, and how to do it in a way that your customers feel safe and want to refer you to their personal connections.
An awesome way to do it is to ask for referrals during your customer onboarding process or after a support or assistance request. If you've done your job correctly these are times when your customers will be extremely happy.
Here are 25 Ways to Ask for a Referral Without Looking Desperate.
Don't be shy to say "THANK YOU" by sending a thank you note to your new referral, and especially to the client who sent them your way.
Acknowledge referrals from a business associate, networking group member, or referral partner to build better and healthier relationships.
So how do you get more people to know about your referral program? Use some of the ways below:
Now, let's talk about some of the referral marketing tools out there to make your life easier.
Let's begin with...
Invitebox is a platform that allows marketers to distribute instant rewards for anyone who is participating in their offers. You can also offer goal-based rewards or a point system for customers to get their prize when they reach a certain amount of referrals.
Woobox offers tools to promote a business through the means of referrals and rewards. It lets you run sweepstakes, photo contests, video contests, and much more to really build engagement.
ReferralCandy is an easy way to add a refer-a-friend program to your store using their design, approach, and content. It integrates so seamlessly that anyone who becomes your client will refer people in a heartbeat.
With the most experienced team, the most advanced platform, the most powerful suite of tools and the simplest integration, buyapowa has worked hard to make referrals easy for you.
Ambassador is a referral marketing tool for anyone who wants to track sales, customers, and performance.
Annex Cloud delivers fully integrated customer loyalty, referral marketing, and user-generated content solutions. Their best-of-breed suite of solutions and expert team of Customer Success Managers combine to help you tackle even the most complex acquisition, conversion, or retention challenges.
Extole is referral marketing software to help you drive brand advocacy and influence.
InviteReferrals is a powerful and yet simple to integrate referral program software that helps to grow your business and acquire new customers through Referral Marketing.
That's it! You've got enough info to get started on your referral program today.
Keep in mind, your referral program won't be perfect! Just take action and make adjustments as you learn what works and what doesn't for your business.
What's working for your referral program? We'd love to hear from you in the comments below...we'd be honored if you feel this content is worth sharing.
Need more lead generation tips? Check out our entire Ultimate Guide to Lead Generation.
Header image courtesy of Pixabay.
Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we help local service-based businesses eliminate the confusion of marketing. As a marketing partner, we help clients put in place and manage a simple marketing plan so they can grow. Marketing your business shouldn't be a challenge. We can help.