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Set the Hook and Reel Them In: Customer Referral Programs That Work

Phillip Reinhardt

Starting something new can be tough, especially so when you’re facing a sea of competitors who are determined to undercut your pricing or steal your customers. Constantly finding new customers to pitch to and ultimately sell to is not only difficult — it’s also expensive — but you’re having trouble retaining current customers and simply dealing with the churn. Wouldn’t it be great if there was a way to not only reward the current customers who help support your bottom line, but leverage them to help grow your business?

Great News!

Customer referral programs are the answer, and are often one of the cheapest methods to acquire new customers who are willing to engage with your brand. Having a referral program is like having access to a Rolodex for each of your customers (you remember what those are, right?!?), with easy access to the contacts who are most likely to make a purchase of your goods or services. What used to be called word of mouth marketing now requires a little more structure, but is still essentially the same. You look for ways to incentivize or reward current customers for taking positive action to share your brand — what could be easier? Of course, nothing in marketing is that easy and there are plenty of landmines that you can fall into when setting up a customer referral program.

Customer Referral Statistics

Market Smart

The last thing you want to hear when you launch a referral program is crickets from current customers, because that means your program is too complex or confusing or people simply don’t understand it. Well, technically it could also mean that no one wants to promote your brand, but that’s definitely not the case! Promoting your referral program should be a comprehensive project that goes across all of your communication channels: web, social, email, app, phone and in person. While studies show that nearly 85 percent of people would be willing to refer a favorite brand to friends, only 29 percent actually do so unless someone prompts them to take an action. So, get prompting!

Make it Easy

Smart editors know that you should often cut original copy in half, and marketers can definitely learn something from this philosophy. If you’re putting together a form for customers to register for the program, scrutinize every field to be sure it’s pertinent. Same goes for process — be ready to rigorously defend each step of the process, because each hoop that customers have to jump through in order to gain the benefit is one more group of customers who will give up on the process before they really get started. 

Stay Active

Continuously monitor your customer referral program. This is not something you can simply “set and forget”; a vibrant program requires constant supervision and tweaking. Get to know your customers and analyze each step of the program to determine which communication channels drive the best results, what type of customer is most likely to generate a referral and their stage in the customer lifecycle. Many businesses introduce a customer benefit program directly after a sale, when customers are already in a positive frame of mind and want to share their great deal with their friends (and get a little kickback themselves!) while others start teasing the program before customers make a purchase.

The best way to be successful at a customer referral program is to find just the right hook for your particular customers, and then put yourself in their shoes. What type of incentive would make you want to take an action to refer a particular brand to friends? Are there barriers or difficulties to overcome? Once you detail these concerns and iron out your process, you’ll find yourself reeling in newly-engaged prospects on a regular basis.

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