5 Steps to a Successful Referral Program

Word of mouth marketing is a force to be reckoned with, especially in today’s consumer sharing universe. The way we discover and share information has changed. With 1 click, we can share, pin, tumble, yelp, and tweet our opinions, likes and dislikes. This change has given us an opportunity to harness the power of our most effective salesforce, our customers and why wouldn’t we? Consumers trust their friends over us, an astounding 92% of customers trust recommendations from their friends (Nielsen) and according to the New York Times, 65% of new business comes from referrals.

Companies are now realizing the importance of utilizing their customers to grow their business but a referral program is a tricky project to undertake. You have to incentivize correctly, promote, ensure the program is user-friendly,  monitor your program, and assess. A referral program must be built as an end-to-end marketing system.

1.) Incentivize

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Creating an offer that attracts your customers attention is crucial because it gives your current customers a reason to share and encourage their friends and family to use your services and buy your products. Once you have an offer that attracts your current customers, be sure to entice your new leads to become a customers, by offering unique rewards for them, such as a percentage off their first purchase. Be aware of all the different types of incentives that you can offer: money, coupons, loyalty points, store credit, free timed usage, donations, content, special events and many more. Optimize your reward strategy by testing different incentives to find what your customers find most valuable.

2.) Promote

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If you aren’t going to drive awareness for your program who will and how will it thrive? How can you expect your customers to know about it and realize the potential to earn rewards for referring if you aren’t driving awareness? Referral programs are not something that you can just “create”, sit back, and watch as your sales magically grow. Promoting your program through all of your available hot spots is crucial to getting the most coverage, which in turn gets you the most participation. Promoting your program through your top hot spots: social media, emails, in-store, post-purchase and website help you gain visibility at all the places where you interact most with your customer base.

3.) User-Friendly Tools

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Understanding your customer base is crucial for understanding what “user-friendly” really means. I like to think that if my sweet, sweet grandmother could not figure out to refer one of her gal pals, then it’s too complicated. Because hey, my grandma has tons of people that she would love to tell about the fantastic tattoo parlor that did her eyebrows. User-friendly means giving all of your customers the ability to share through whichever channel they find most efficient: email, social media, a simple link, as well the tools to input their referrals information, landing pages, pop-ups, a smartphone application or just a simple phone call. Our new favorite tool? Smartphone applications.  According to Nielsen, we (people aged 18-55+) are using an average of an AVERAGE of 26.92 apps a month. So why not incorporate a referral structure into your application? Give your customers even more reason to have your app on their phone, to earn rewards while they help their friends to unique offers as well.

4.) Monitor your Program

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Monitoring your program is an ongoing initiative that will be the driving force behind your programs success.
Monitor the content: Are you sharing the same picture each week with the same deal? Spice it up! Run a quick campaign with an extra bonus incentive if someone refers that week.

Monitor the visibility: Is you program reaching your audience at all your hot spots?

Monitor your team: Do you have a sales team? Are they getting the word out to all of their clients, friends and family? Have your sales team write personalized thank you’s, emails, or give a quick call to your customers to let them know about the program and the offer that will incentivize them to start sharing.

5.) Assess your Success


Once you are able to assess your program, you will be able to tell which hot spots capture the most participation, visibility and conversion. Which incentive offers drove the most referrals. Which promotion strategies work best and which tools your customers prefer to use for sharing and referring.  Observing these items gives you the insight needed to test and adjust to garner the best results possible.

Take – Away?
Word of mouth marketing has existed since the cavemen wandered this earth and told each other where to find the best sticks for fire and it has proven itself time and time again to be the most powerful form of marketing, yet so few embrace it. Which means, having a referral program is the type of competitive edge that breeds success. Having a referral program will continue to be crucial to a brand’s success as online sharing power grows and our friends continue to be our most trusted advertising source.