How to Create an Effective Referral Program

Niki is a huge fan of using referral programs to bring in new customers. Referrals can be a very effective means of attracting solid leads. These leads are typically easier to “close” and are already disposed to be loyal to your company because they come from a trusted source. Basically, their friend or colleague has already vetted your company, so they feel more comfortable utilizing your product or resource.

Creating an Effective Referral Program

At the same time, you can’t just slap a “refer a friend and get $100” on your website and call it a day. Here is how to create an effective referral program:

1. Make the reward worthwhile: Think about who your current clients are and what they find valuable. Though offering a percentage off their next bill sounds appealing in theory, we have found that most people would just prefer cash. If you give cash, it really feels like a bonus. If you give a discount, it reminds them that they are still actually giving you money out of their pocket…so it doesn’t feel as good.

2. Make the reward generic enough: We have tried giving people various types of gift card, but we always come back to a Visa gift card because it allows for the most flexibility. It doesn’t depend on someone living near a Target or King Soopers in order to be appealing.

3. Create a marketing plan for the referral program. Even if you have the best reward ever, it doesn’t matter if no one knows about it! So you have to spread the word. Think about using a mix of email marketing, social media, and direct conversations with current clients (for instance, during your regular check-in meetings).

4. Implement a tracking system. You need to know who is referring customers and who benefits from the referral. In certain companies, there are many layers to what is considered a “customer” (managers, regional managers, etc.). You need to make sure that the ones who are really out there sharing the word about your company are the ones being rewarded. The best way to track referrals is usually just a good ol’ fashioned spreadsheet (unless you use a tool like Salesforce).

Let us know if you have any additional questions about creating an effective referral program. Contact Niki at [email protected] if you’d like to set up a consultation regarding your marketing plan.