Should Your Business Start a Referral Program?

referral marketing vertical

Customer referrals are an excellent way to bring in people who might otherwise be outside of your target market.

By the numbers, referral marketing programs are wildly successful. More than 90% of people trust what their family and friends say about a business, and people who are referred by a friend are four times more likely to make a purchase. Overall, referrals account for 65% of new business.

That’s certainly nothing to thumb your nose at.

Referral programs are highly customizable, simple to set up, and can provide huge results. Here’s why your business should get on board.

Pros of a Referral Program

Increased Trust

Let’s be honest: Most of us don’t trust an unknown business as far as we can throw it. A lifetime of false advertisements and disappointing customer service experiences will do that.

If the business has great online reviews, we feel a little better about opening up our wallets, but we’ve still leery.

But what if our sister, college roommate or dog walker has had a great experience with the business and refers us to them? That’s something we can work with. We trust our family and friends, so we feel we can trust the business, too.

Warm Leads

With traditional marketing, you go out in search of the prospective customer and work your tail off to draw them into the fold. A referral program brings the people straight to you — and they came straight to you because they’ve already made up their minds.

When a customer comes to you on the strength of a referral, you get to skip the awkward introductions and go straight to the sales phase.

A Closer Relationship with Existing Customers

A referral program puts you and your customers on even ground. Suddenly, they’re part of the team, working with you toward a shared goal. Your success becomes their success, which makes them want to work even harder.

Referral programs help you build good relationships with your existing clientele, which will keep your regulars coming back for more and bringing their circles along with them.

Exponential Reach

Referral programs allow you to reach a massive amount of people by planting just a couple seeds. If one person refers you to two people, and each of those people refers you to two more people, and all of those people refer you to two more people — well, we’re a marketing agency, not a mathematician, but eventually, you’re going to end up with a lot of people.

Referrals can create a virtually unending loop of new business.

Cons of a Referral Program

We … couldn’t really find any, actually. Referral programs are awesome.

5 Quick Tips for Creating Your Referral Program

  • Make sure there’s something in it for referrer and referee. Always incentivize both parties. “Bring a friend and you’ll each get XYZ.”
  • Offer the right rewards. Your customers are going out of their way to bring you business, so don’t waste their time. If it takes five successful referrals to get 15% off their next order, they’re probably not going to bother.
  • Keep it super simple. The easier it is for someone to do, the better the chance that they’ll do it. Don’t make people jump through any hoops; all you really need is a name and an email address.
  • Make a game out of it. Who can get the largest number of successful referrals in a set amount of time? Offer a great prize and set up a daily leaderboard on your website or social media channels.
  • Offer sincere thanks. A referral bonus is great, but don’t forget to take the time to sincerely thank people for their recommendations. A little appreciation can lead to a lot of loyalty!

Referral Programs Really Work!

Not much beats word of mouth, and when you run a great business, your customers will be only too happy to shout your praises from the rooftops. A referral program will help you reach the masses without a ton of effort on your part.

Do you need some help making your business referral-worthy? Mischa Communications can handle all of your marketing needs. Let’s exchange information.