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How to Create a Referral Program That Works for your Small Business

According to Nielson, “84% of people trust recommendations from people they know. Making them the most influential form of advertising.

One of the most effective ways to drive sales and increase profitability within your business is through a referral program. Sure, there is a slew of these kinds of programs out there. Many that can be easily adapted and executed, but which ones really produce the results you seek?

According to the New York Times, around 65% of new business/customers generally comes from referrals.

Many are easy to deploy but fail to drive the kind of engagement needed to make any referral program, especially one used by a small business worth the time and resources needed.

Referral programs, when done correctly, are ideal at generating word-of-mouth buzz for your business. Your newfound brand recognition will go a long way to help you generate sales and a healthy ROI.

Referred customers are about 18% more likely to stay rather than other customers. (Straight Talk about Word-of-mouth Marketing – Wharton)

That being said, here are three ways, according to small business loan platform Kabbage, one can help make their referral program a success.

Use enticing relevant incentives

Value, like beauty, is in the eyes of the beholder. One man ( or woman's) art is another's " I am not sure what I am looking at".

People gravitate towards and will invest their time and money in things they deem valuable. Keep this in mind as you work to build your referral program and only offer stuff that your customers will find valuable as incentives.

Then and only then will they take the time to follow the steps needed to refer their friends and family to your business.

You may want to offer both customers and their referrals some sort of incentive. The trick is to think about your brand and business type before settling on a reward because if people don’t think the reward is worth it, they likely won’t put in the effort to share.

  • Cash/Gift Card – This is great for all business types but especially for those who sell a one time buy item, like a car or mattress.

  • In store credit – If you have a business where people may buy from you multiple times, like an ecommerce or service-type business, you can offer credit or a discount. This can keep customers happy enough to keep spending money at your business.

  • Special perks – Think of a VIP club, or a group who gets offered all the best or new products first. You could even offer special treatment for referring members – like a special parking spot or an early access party.

  • Entry for a drawing – This can be a good one for any business, but can be even more rewarding for businesses with repeat customers as they will be incentivized to purchase more if it means they will acquire another entry. However, the reward has to be pretty outstanding in this sense, like concert tickets or something else of value.

Provide a clear message

This can’t be mentioned enough. If there is any confusion on what the customer or their referral has to do, they will likely give up before trying.

So be sure to provide very clear and direct messaging. Don’t scare them with a bunch of confusing wording, or a long list of jumbled instructions.

It’s important to remember that the more convenient it is for someone, the more likely they will be to do you the favor of referring.

No one is required to refer, but if the messaging is clear, and the process isn’t overly complicated… You’re likely to have customer happily refer you.

Keep the process simple

If you make the process of referring overcomplicated, it can deter people from sharing. So, you’ll want to be sure that once your customers are in the zone to refer, they are able to do so quickly and easily.

The process needs to be convenient for the referring party. Meaning, let them know what you want, and give them the breadcrumbs to complete the desired action.

To make it even easier, allow the user to refer right from the same page. By offering a quick email message or social media sharing option directly from the landing page, users can complete the desired action without having to jump through hoops.

And the same should be said for the new customer’s experience. They shouldn’t have to jump through hoops either. The easiest way to do this is to use cookies that can tie the referrer directly to the referring customer as soon as the referral link is clicked.

The Fiverr referral program, is a good example of this. They offer an easy-to-refer form for the customer. The customer has a few options for referring as well, including email and social media.

The referred customer receives a nice message, followed by a clear call to action.

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