Brand evangelists and word-of-mouth marketing have been around for centuries–they just spread the word differently than in days gone by. In today’s digital age, referral conversations have evolved from water cooler banter to online reviews, video testimonials and personal endorsements via social media.
In fact, according to Nielsen, 83 percent of consumers trust referrals from people they know. Which means what a customer hears from others, reads online and scrolls through on social media matters.
So, it should go without saying that referral programs should be a staple strategy baked into every marketing and business development plan.
But, consider this statistic: While 83 percent of satisfied customers are willing to refer a business, only 29 percent actually share their positive experience with others.
There’s ample evidence out there proving our customers need a nudge. This means harnessing the power of referrals requires a dedicated process–one that is both easy for business owners to implement and provides simple yet compelling engagement opportunities for referral sources.
However, the question I hear most often is: What does this “nudge” look like?
With two decades of experience spanning sales leadership, business ownership and supporting the growth of small business owners and entrepreneurs, I’ve learned a thing or two about what makes a successful referral program. Here are some best practices you can apply when building and implementing your referral program.
1. Audit your network for referral sources. Think broad with this. Existing customers are a natural source. But so are fellow members of organizations and associations, industry peers, even alumni networks. If you use CRM software to manage these relationships, be sure to include relevant fields for capturing and tracking referral data, such as when you make the ask, if the source follows through and when you follow up.
2. Identify a referral incentive that makes sense for your business. Get creative and think about what will really motivate sources to help you win business. Incentives like a percentage off a future order, a referral fee for closed business, a gift or gift card, and charitable donations are a few considerations. Clearly communicate the terms of the incentive to keep all parties on the same page.
3. Determine how you will make the ask. This will depend on your particular business and the relationship you have with the source. In-person, email, social media, phone and direct mail are all options. But, regardless of how you make the ask, remember to personalize your message.
If you’re active on LinkedIn, connect with referral sources and utilize the messaging feature to make your ask. Consider timing too. Asking new clients if they’re open to recommending you if they have a positive experience is a great way to prime them for your specific ask at a later date.
4. Identify what types of referrals are most beneficial to your business. This is where customer insights come into play. How and where do your customers research the product or service you offer? Today, most research begins online, so online reviews are critical. This can include writing a review on Yelp, for your business website or Facebook business page. In fact, 72 percent of consumers say that positive reviews make them trust a local business more.
Traditional word-of-mouth is important too. Recommendations are shared at tradeshows, conferences, networking events and over coffee or cocktails. Offer business cards or branded promotional products to sources so they can easily pass along your information to others.
Don’t forget about co-ops (an in-kind exchange of some sort). Utilize sources who can raise awareness of your business through their marketing efforts. Ask to be featured in a customer’s newsletter, mentioned on their website or included in a mailing.
5. Make sure the ask allows for simple follow through. People are busy, inboxes are cluttered—your ask should be neither. Keep it simple and turnkey. This means:
If you’re asking for an online review, include a direct hyperlink where sources can submit. You can generate these links on sites like Yelp and Facebook. For your business website, capture reviews via an online form (Google Forms, Survey Monkey) or use a ratings and reviews software (PowerReviews, Rating System).
If you’re asking for social media shares, provide sample channel-specific copy with any appropriate @ mentions and hashtags. Some rating and review software integrates with social channels, making it easy for customers to share reviews on social.
If you’re asking for traditional word-of-mouth sharing, arm your sources with business cards, promotional products and possibly a unique promo code they can offer to prospects.
6. Follow up and track performance. You’ve asked a source to refer or recommend your business. Now it’s your turn to follow through. If the source didn’t take action, follow up. If the source took action, say thanks–and track what happens next. As your referral program grows, understanding which sources generate the most qualified leads will help hone your efforts.
Referrals are not new. It’s word-of-mouth marketing at its best. And given there is little to no upfront cost, it really does pay to put referrals to work for your business.
As CEO of AIA Corporation, Matt Gresge helps propel idea people by providing industry leading financial, technical, sales, marketing, and purchasing solutions to entrepreneurs in the distribution business.