By: First Union
Implementing a Referral Program For your Small Business
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How do you get customers to refer you to friends, family, co-workers, whomever? This is an important question and one that more small business owners should be exploring. Referrals are hugely important to any company. In some instances, your best clients will come from referrals, as someone who is referred to a business is more apt to buy from that business versus someone who simply sees an ad or promo.
Regardless of industry, from hair salons to construction companies, referrals are necessary for the continued success of your business or practice. So how do you implement a solid referral program? What steps should you start taking now to ensure your customers start enthusiastically referring to you?
Referrals and Marketing
A recent study has shown that referrals by and large are the most trusted form of advertising. As noted, if someone tells you about how wonderful an experience they had with a particular company, you are ten times more likely to go out and try it for yourself.
Now certainly this is not to say that your small business should not spend money on advertising and marketing; however, referrals are after all free, and if you can integrate a robust referral program, you may be able to cut back somewhat on the dollar amount you spend every month for advertising. Think of it this way, you are in essence developing a solid base of customers who are going out there and doing your advertising for you, via word of mouth.
Understanding what a referral program is
If you offer great products and services and your customers have a satisfactory experience, the hope is that they will then spread the word to the people they know. However, this isn't always the case. People lead busy lives, and often they don't consciously think about referring you. Therefore, they may need a bit of prompting. This is where a well-devised referral program comes into play. Customers get rewarded for actively referring to others. They are given an incentive to talk about how terrific your business is and consequently convince other people to purchase from you.
So what exactly can this do for you…For one, it'll help you gain new customers. Not to mention, the customers who are getting the reward become even more satisfied with your business.
It's been shown time and time again that customers who do come to you by way of referral are often better customers than those gotten by other means. A recent study demonstrated that customers who came through a referral tended to spend 17% more.
How to Build Your Referral Program
All businesses and industries are different, so your referral program will be tailored to what you provide and sell. First of all, you want to take some time to consider what customers would benefit from. For instance, would they appreciate a free product? Or perhaps they'd be better off with a credit on their account? Discount on a future service? You can get creative with the types of rewards you provide. You might, for example, offer a gift certificate for a dinner out.
Also, it's good to keep in mind that the best referral programs not only reward the current client, but they also offer an advantage/discount to the incoming customer as well.
Make sure your products/services are exceptional
This is where your referral program truly begins. If you're not offering exceptional products/services to start with, then customers simply aren't going to want to recommend you. If you do great work, have top-notch customer service and provide an all-around amazing experience, the word of mouth marketing may just kick in on its own to some extent.
Make the process easy for all customers
The last thing someone wants to do is to have to jump through a multitude of hoops just to refer someone and subsequently get their reward. The easier you can make it for people, the better. Studies have shown that people simply are not interested in putting too much time and effort into executing a referralreward exchange. Convenience is thus key here.
You might, for example, send an email to your current customers offering a 25% discount if they share a link. The ease part comes in the fact that all the customer has to do than to collect their reward and 25% off is to click on a link in the email which then brings them directly to your site and the link that they are to share to qualify for the discount. Too many complicated steps and this will turn people away. Make it super simple for them to execute.
Don't forget about analytics
You want to keep tabs on whether or not the referral program is working. After all, why keep spending money and giving discounts if it's not producing results. There are various software programs out there specifically designed to help you track the analytics involved with your referral program. Google Analytics also has a section that can show you where users are coming from—while not as thorough as specialized software dedicated to referrals, it can be of use.
First Union Lending can certainly help you with your plans for a new referral program. If you need cash to get started, we have the funds ready now! Call today to find out more about our business loans.