When I think about all of the programs a brand can implement to acquire new customers cost effectively and relatively quickly, I can think of none more effective than a customer referral program. Are you a business that creates raving fans? Do you have a group of customers that spend a significant amount of money buying your product or service, and doing it repeatedly? Do you have customers that regularly rate your brand, product, service, etc. a 9 or 10 on a scale of one to ten when you survey them? If not, then you have bigger projects to implement. But if you do, then you must consider a referral program.
One insurance company I worked with saw their agents who had a referral program in place double their growth rates. Those agents not having a referral program experienced flat to negative growth.
Key #1: Be sure you have a positive value equation.
The first key is to provide a valued product or service to your target market, and make sure the experience they have is the best possible experience they can have for the money. The value equation must be positive in the customer’s favor. You are more likely to give out a referral to someone who has provided you with stellar service, so don’t expect anything different from your customers.
Key #2: Be sure you ask the right people.
Next, are you measuring customer willingness to refer on either a post-sale or post-service satisfaction survey? If you are, then you can leverage those giving a top score on the question “Are you willing to refer a friend to company X (or product X or service X)?”. Start with all those giving you a 10, and gradually test your way into those giving you a 9 or even an 8. Use success in getting business from a referral as your KPI. You should never ask for a referral from someone at a lower threshold. I would personally not go below asking an 8, unless I was personally able to turn someone around from a lower score by resolving an issue.
Key #3: You have to ask for a referral.
The above covers who to ask, but how do you ask? If you have data from the above feeding into your CRM system (and you should), then kick off an automated campaign (email works) that thanks the customer for their business. Tell them that you want to provide the same great product or service that they enjoyed to a friend or two. Then say “Will you please refer us?” It helps if you can link to a site where they can provide you with this information. If you provide a link and collect referral info, then you can reach out to these friends, but be sure to reference the referrer. Of course, work with your ESP and Legal/Compliance team to be sure to have the correct and legal process in place. Your email campaign can also provide links to social networks like Facebook or LinkedIn or popular review sites like Yelp! or TripAdvisor where customers can post testimonials, in the event they are shy about providing specific names/info of friends.
Or you can ask over the phone or face-to-face if you regularly have contact with these individuals. A handwritten thank you note that specifically asks for referrals is another nice way to ask.
Remember, your likelihood to get referrals increases with your willingness to ask. If you don’t ask, you don’t get ’em.
You can provide small gifts to individuals who provided you with referrals. The store at which I have purchased my eye glasses recently offered a $25 credit for every referral I gave them that resulted in a purchase, in addition to giving my referral a similar credit on their first purchase. But, again, you must talk to your attorney on this too, as some verticals like Insurance and Financial Services have strict regulations on compensating for a referral.
Key #5: Be transparent
Finally, if you ask for referrals, be sure your customer knows what you are going to do with that referral. Transparency is a huge concern for most consumers these days. So if they know how you are going to use the referral they provided to you, they likely will be more trusting and willing to provide you with a referral.
Please tell me what works for you from a referral perspective. Or, if you want me to work with you to craft a successful referral program for your business, contact me at email@example.com.