Before we get into referral program basics, think back to a time you had a really great customer service experience.
For me, it was back in my college days. I had taken my wife (then girlfriend) to a Logan’s Roadhouse for a date. We were having a good time, just chatting after ordering our dinner, when a gentleman came over and knelt down beside us. He asked us how our dinner was going. We told him that everything was great, but to our surprise, he introduced himself as the manager and said he felt we had been waiting too long.
It had probably been about twenty minutes since we ordered. He apologized for our wait and offered to pay for our dinner. On top of that, he told us to get some drinks and dessert on him. This generous gesture wowed us. We hadn’t even thought that we had been waiting very long, and the manager had comped our entire dinner. The retail cost was about $80, and while I’m not sure what their actual cost for the food and drinks was, it was still impressive.
As a result of that small gesture, we went back to our dorms and told everyone we knew how great the service was. We raved about how much we liked the restaurant to family and friends. It’s been almost twenty years since that happened, and it is still cemented in my memory as a great experience.
I like to tell this story to illustrate how powerful good customer service and word-of-mouth advertising can be. A positive experience can create demand for your products or services without any marketing effort on your part. A few basic actions, if done right, can get your referral program off to a fantastic start. We’ll cover those here so you can start taking advantage of word-of-mouth advertising. Let’s dive in!
Referral Program Basics
1. Identify your reasons for creating a referral program.
When we talk to potential users, they often say they want to start using our software because they’ve seen another company using a referral program. Or maybe they Googled something like “how to get more customers.’” No matter how they got the idea, their reason is usually the same. When they see data from referral programs, something clicks. Referrals work.
Like my Logan’s Roadhouse visit, a great experience encourages customers to refer people they know to a company, product, or service. 84% of consumers trust recommendations from family, friends, and colleagues. That’s word-of-mouth marketing, and if you want to take advantage of it you need a referral program.
Before you go start your own program, though, you need to figure out your “why.” It is important to know if your goal is to grow your business, customer base, or sales. Depending on your reasons for creating a referral program, you may want to focus on different aspects of the recommendation process. What channels you use and the incentives you offer will all need to tie back to those goals.
2. Focus on the client experience.
While the existence of a referral program can help your business grow, there’s no point if no one uses it. You want your clients to be so satisfied with their experience that they share it with the people they know. Take a look at your average client experience and see where it can be improved. Listen to feedback from customers, too. Find areas where you can increase customer satisfaction to ensure that they are pleased with your product or services.
One way to do this is to audit your customer experience journey. Go through the same process that a client would. Discover where you can focus more energy or time, and which parts of the process are working well. If you want to create a memory that your clients will look fondly back on in twenty years, you need to perfect their experience as much as you can.
3. Create incentives for people to expedite the growth of your referral program.
While an amazing experience will encourage people to refer others all on its own, you also want to create incentives to expedite the growth of your referral program. When clients recommend your product or service to someone else, they can be rewarded with a discount or other incentive.
By incentivizing your referral program, your clients are much more likely to actually recommend your business. Think about the last time you recommended something to someone. Was it solely based on a positive experience, or was there an incentive involved? Brainstorm some ways that you can reward your customers for bringing in more clients. We suggest using specialized incentives and limited-time offers, so the opportunity feels urgent.
By knowing why you want a referral program, focusing on your customer experience, and incentivizing recommendations, you have all of the referral program basics in place to grow your company. Market your business without the work or cost of traditional advertising, and utilize word-of-mouth through referral marketing.
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