Like any typical business person, you might be adopting a passive approach to customer referrals. You grind out your best product, push it out to the market with some publicity, attract customers, and just hope that they tell their family and friends how good your brand is – if they like it. Sometimes this works quite well; but it’s usually more likely that they would simply forget to spread that gospel on your behalf.
What if you’re able to get satisfied users of your product to consistently tell their acquaintances about your offerings? You achieve this by taking hold of referrals and turning them into a vehicle for boosting patronage and sales. There’s one well known (but infrequently deployed) way to achieve this: setting up a customer referral program.
What is a customer referral program?
A customer referral program is a framework in which customers are rewarded for getting other people to purchase your products or services. The rewards for ‘referers’ might be anything from discounts on product prices to valuable gifts and even cash payments. Because customers have an incentive to point people in the direction of your business, they’ll be more keen on convincing their friends to buy from you.
It’s easy to tell that there are benefits accruing from referral programs. An obvious one is a potential growth in the number of customers and sales. There’s also the potential strengthening of the bond between businesses and their existing customers.
Does Your Business Need a Referral Program?
While it’s true that a referral program could greatly improve your business’s sales numbers and increase the number of loyal customers you have, it isn’t necessarily certain that it will give you such positive outcomes. A referral program has a good chance of succeeding if you are able to tick these boxes.
- The program should be a proper fit for your business type, scale, aims and budget.
- Your business should have a large enough transactions volume to support the program, i.e. afford the business the chance of generating referrals that cover the program’s execution costs (at the very least).
- Ascertain that your customers will be receptive to or enthusiastic about a referral program.
How to Set Up A Customer Referral Program
These are the steps you can take to design and build a customer referral program that works for your company.
- Sell a brilliant product
Unless your customers think your product is great, they won’t be enthusiastic about telling other people to buy it. Not even when there’s a token to be gained from doing so. Who wants to sacrifice their friend’s trust in their judgement and advice for a discount on furniture prices or a gift washing machine?
When you are consistent at offering quality products and services, your customers will be your business’s greatest ambassadors. Incentivizing their advocacy will take them more eager to urge other people to purchase your products; but then they will only be doing something that they’ve been involved in already- speaking positively of your brand.
- Maintain a healthy relationship with your customers
Customers will be more responsive to your reward schemes when you have a good relationship with them. This might not be the case if your company hasn’t developed a healthy connection with them apart from regular transactions.
A point to note here is that properly developed relationships encourage and feed off trust between the parties involved. When a good relationship does exist between a business and its customers, the latter party are likely to believe that the former has its interests at heart. They may be less inclined to dismiss a referral program as just another way for the business to exploit buyers.
- Decide what rewards you’ll be giving
As has already been hinted at, you may choose one or a combination of numerous possible rewards for referrers. The type of reward you go for will be a function of the nature of your business, the extent to which the business can afford distributing rewards, and what your typical customers might prefer.
- Come up with a simple and straightforward referral system
So your product is top notch and you have a wonderful relatiomship with your customers. There’s something else you’ll need to make this program a success: a simple, straightforward referral system.
Make sure the channels for submitting and collecting information from customers who have referred people are easily accessible. The process of referring and reporting referrals should be as simplified as you can manage without altering the program itself. It should not be difficult for anyone to register their successful referrals; getting their rewards to them should not be made to take forever either.
- Monitor the program’s performance
Here, you should be looking out for the trend in sales and specific customer numbers, and comparing them with similar indices from the period before the program was implemented. If there’s no noticeable improvement, you’ll have to examine why this has happened. But if it’s clear that the program has triggered a significant improvement in your business’s indices concerned, you may continue with it.