Deciding where to eat a delicious dinner in a new city can feel overwhelming. The hungry customers may ask themselves, “Do I trust this restaurant? Do they use quality ingredients? Do they make the best chicken cacciatore?!” In sorting through the options, a customer may consult a friend or an online review site like Yelp or OpenTable for restaurant recommendations, to then choose the recommended option. That hungry customer will be enjoying the best chicken cacciatore thanks to their friends on Yelp in no time.
It is proven that customer referrals attract new customers. According to Deloitte, 1 in 3 buyers come to a brand through a recommendation. New customers referred by a loyal customer have a 37% higher retention rate. According to McKinsey, word of mouth is the main factor in 20-50% of purchasing decisions, particularly for first time or more expensive purchases.
Purchasing decisions are as complex as ever. A leading factor in the decision-making process is advocacy from a trusted source. Why not make your company’s brand advocates your trusted source today?
Referral leads can result in a shorter sales cycle and increased win rates and order sizes (Inflictive). Here are a few tips (thanks to HubSpot) to build a customer referral program to reap the benefits of referral leads that may average 4-10x more valuable than regular leads!
Steps to Driving Referrals
- Locate Advocates
Who are advocates? Advocates are consumers who actively recommend a product or business without monetary compensation. An advocate can have a large influence over your target market (Zuberance). But how do you find these advocates?
- Social Media: Social media is a great avenue for customers to spread the word and way to find your advocates. Customers constantly promoting your product on social media would be considered an advocate.
- Review sites: Online review sites are the best place to find brand advocates! Anyone who organically or upon request submitted a review of your business is a definite advocate to encourage referrals from.
- Word of Mouth: Use your colleagues to find customers who they commonly work with to solicit feedback. Use your sales and marketing team to generate reference calls or case studies. This should develop a list of customers willing to help your business thrive.
- Set a Benchmark
It is important to set a goal for your referral program. If you are starting a new program, base your target on the amount of referrals you receive organically. Talk to your sales and marketing team to learn how many and often they receive referrals. If this number is irretrievable, set a goal to grow your advocates by 10% at the baseline (Friendbuy).
- Pick an Incentive
It is crucial to reward your advocates for their organic promotion of your brand, and to do so in the right way. Spend time determining what type of incentive would continue to motivate the advocate’s efforts to continue advocating your brand. A double-sided incentive program, where both the advocate and their referral receive rewards, drives better results (ReferralSaasquach). Be sure to test both double and single-sided incentives to see which increases your referrals best.
- Choose a Promotion Medium
You are now ready for the next step in creating your referral program. You have located your advocates, a goal, and an incentive program to increase your referrals. Now how will you promote your incentive program? A few ways to distribute the program is through email receipts, newsletters, the company blog, social media, or word of mouth. Find which avenue works best with your company and advocates in getting the word out.
- Track Data
Finally, be sure to track your data. Log activity such as numbers, names, and purchasing timeline of your referrals to know your progress. Work with your technology and operations team to form a central hub for the referral program data. This data will help answer questions you may have to improve your referral program and increase your customer base!
There you have it! A referral program to drive warm leads, increases your customer base and strengthen your company fan club. Through your well-crafted incentive program, you will be sure to increase your business through referrals in no time.