A referral program is a powerful way to motivate customers to send business your way. First, because the referrer has usually already pre-sold their friend or colleague on using you–so it tends to be a much easier to close the deal.
And of course, the person doing the referring is likely to use you again too if you make the person they refer happy.
Referral programs are a lot like affiliate programs in that they give someone (although not necessarily a customer) a commission for sending sales your way. And the sheer fact that the affiliate is recommending your product to their readers boosts sales, because they have a relationship with that person and trust their suggestions.
And like affiliate programs, referral programs work best when BOTH the referring and prospective customer receive an incentive.
After all, it’s natural to hope that happy customers will naturally send people your way, and some will. But with referrals, it take a little more effort than just sending someone a link to click on.
On top of that, most people are busy and have a million other things on their mind. So, showing that you’ll appreciate their efforts will go a long way in jogging their memory.
It also helps to give them an incentive to pass along so they feel like they’re doing their friend a favor–instead of just badgering them to talk to you.
AND…if the person being referred gets an incentive, it’ll be much easier for you to track who sent them, since they’ll have to give you that information or show a card they were given to get it. (You won’t believe how many people forget to say they were referred unless prompted!)
Of course, that brings up the question…What do you offer them?
Choosing Referral Program Incentives
The good news is incentives don’t have to cost a lot. Sure, you can give items that you’ll have to buy–such as…
- Restaurant gift cards
- Having cookies delivered to their office
- A leather portfolio for note-taking
Costco offers discounted gift cards to a variety of places or you may be able to find items with bulk pricing or clearance discounts that you can use. I recently suggested a martial arts school give away gloves to new students. It’s something they can easily get a wholesale price for and gives students one less thing to worry about when they sign up.
But you can also give away items you don’t have to hand over cash for–such as…
- A percentage off
- Bonus service
- Special training sessions
- Other products you already sell (and have on hand)
For both customers and prospects, the key is to find something they actually want that you can reasonably offer. But for prospects, keep in mind that it should also:
- Be special–something the prospect can’t get from one of your ads or your website, so the customer feels like they really do have something of value to offer
- Include a deadline–so the prospect is prompted to take action now instead of procrastinate
Have you used a referral program for your business? If so, what did you offer and how did it work?