How to Start a Customer Referral Program to Get More Business

customer referral program

A customer referral program can help your business grow faster. When your customers endorse your products and services to their friends, you have instant credibility that boosts your chances of making new sales. Here are 10 ways to set up a successful customer referral program and ideas for customer referral program names.

What Is a Customer Referral Program?

A customer referral program is a specific marketing tactic that encourages your customers to provide referrals for your business. Unlike word-of-mouth referrals, customer referral programs use an intentional, structured approach to generating referrals.

Referrals are often the most qualified business leads you can get because there is trust on all sides. Your customer trusts your business and their friend trusts your customer. As a result, the chances of closing a deal with a referred prospect is much higher than with most other leads. Customer referrals are usually qualified leads.

Customers who are raving fans of your business may even want to provide referrals without any form of compensation. They simply get a good feeling by telling others about your outstanding products, services and customer support. Bestselling business author Ken Blanchard wrote a wonderful book on this topic called Raving Fans – Amazon affiliate link. (This book is required reading for all of our customer support staff.)

Another key benefit of customer referral programs is that they essentially create a sales force for you that is entirely incentive-based. That means you don’t pay anything until you make a sale. Plus, you don’t have to hire any additional sales people. Your customers effectively become part of your sales force.

10 Customer Referral Program Ideas

1. Send an email to customers requesting a referral

Many won’t respond, but you’ll be surprised – some people just need to be asked. A referral request letter is different than a sales cover letter.

2. Call your customers and ask for a referral

Sounds simple enough – and it is. Just like emails, sometimes customers are happy to give you a referral. They aren’t thinking of you all the time and the thought of passing along a friend or colleague’s name isn’t their highest priority. Call and ask if they know someone in their network who could benefit from your products or services.

3. Tag along at events that customers attend

If you go to conferences or other networking events that your best customers attend, you will likely be around others who are just like your best customers. During a networking event, stand in the same circle as your customer. They will automatically become your ally and introduce you to others they know.

4. Use a customer satisfaction survey to start a conversation

Once the survey is submitted, if your scores are high you can immediately prompt your customer with a note like “Thanks! We’re so happy that you’re happy!” – then ask for a testimonial or a referral. They’re most likely to participate right after expressing their happiness with your service.

5. Create a regular newsletter that customers can share

Email newsletters are very powerful. They are one of the best ways for you to keep in touch with your customers. Send useful information, not just sales material. Then, encourage your readers to share your newsletter. Add a note that reads “Know someone else who would find this information useful? Please share” and include a ‘forward to friend’ link, which is usually generated automatically by your email marketing software, like MailChimp.

6. Include a “powered by” line that links to your service

At the bottom of each email you send, include a line in your footer that reads “powered by <your company>.”  You may have seen emails like this from tools you use. Anytime you send an email message to customers or prospects, add this line. You can probably set it up as a default line in your email templates. Do this for all of your emails, including transactional, educational and marketing messages.

7. Offer an affiliate program

Affiliate programs provide a financial incentive for your customers to send referrals. These programs reward customers with points or credits towards their future purchases.

8. Expand your affiliate or rewards program

Don’t stop at a standard affiliate program. Expand it to allow customers to earn points for sharing a note on social media, writing a review, posting a picture using your product, or participating in a contest.

You don’t have to create a program on your own. A powerful tool that includes numerous options to launch your referral program is Referral Candy – if you use our affiliate link, you’ll also get an extended free trial for your business. It allows you to reward visitors with coupons and other options to capture their contact information and encourage referrals automatically.

9. Offer a bonus to both your customer and their friend

When a customer refers someone, offer a discount or some other financial bonus to both your customer and their referral. An example promotion could be “Tell a friend and get 20% off for each of you.”

10. Run a contest that offers a daily giveaway

Contests often provide one opportunity to enter to win something and that’s it. This means that customers who participate will quickly forget about you. Instead of a one-time win, create a giveaway every day for 30 days so customers are encouraged to continue participating daily instead of entering once and stopping. Your contest should have some referral component, such as getting a reward for promoting your brand on social media.

Customer Referral Program Names

Customer referral programs can have a variety of names. Depending on your industry and the referral incentives you provide, you can use customer referral program names like:

  • Rewards Program
  • Loyalty Program
  • Points Program
  • Referral Program

Choose one name and stick with it so your customers don’t get confused and think you have multiple programs that are really the same thing.

Your referral program can help you generate more sales without hiring additional staff.

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