By taking advantage of word-of-mouth marketing, customer referral programs are a low-risk, high-return way of growing a business. Dropbox is an example of a company that's famous for massive growth -- over 3900% -- thanks to its simple referral program.

The model is simple. Customers promote your products and services, and you give them an incentive. But, when combined with a winning customer success strategy, your referral rewards can enhance your reputation and bolster overall sales.

That's because you're not just increasing customer referrals; you're increasing referrals then delivering on the promises you're making to customers. This solidifies your credibility as your customer base grows with loyal advocates.

Our simple, five-step process can optimize your referral program by attracting the right people to represent and promote your brand. Let's review this strategy in the section below.

Free Download: 45 Customer Referral Templates

1. Utilize your customer success team.

Most often, the customer success department's main goal is to ensure your existing customers are successful and happy, not to acquire new ones. However, because of their connection with loyal customers, they're the perfect conduit for pushing your referral program.

Your customer success team can become one of the best sources of referrals because they're the face of your business. They can ask happy customers for reviews and referrals after a good email exchange or phone call. You just need to empower them with the tools to promote your referral program effectively.

At Improvado, we have our customer success team constantly thinking about our referral program. Since we're a B2B business, our customer success team is on the front lines building those relationships with our customers. When a customer is happy, it's a great time to remind them of our referral program, ask for a video testimonial, or encourage a review on G2Crowd or Capterra. Even if a customer reaches out with a challenging data analysis problem, our customer success team can swoop in to save the day then amplify this moment by asking for a referral.

Another way our customer success team promotes our referral program is by including links to the program in their signature. That way, customers are reminded about this opportunity with every email interaction.

2. Create a customer success strategy.

Whether you have a customer success team or you're bootstrapping with a small number of employees, harnessing the knowledge and passion of the customer success team can be invaluable compared to other marketing channels.

When formulating an internal strategy, here are some considerations:

  • Identify happy customers you have existing relationships with and have your team reach out to them.
  • Add a link to your referral program to the footer of all external emails.
  • Provide your employees with a short script to promote the program when they're ending a call.
  • Consider a small prize and leaderboard as an incentive and a way of tracking employee referrals.

The important thing is to educate and train your employees about the program. Outline who they should and shouldn't be promoting it to and maintain a central list of outreach targets.

There's a real risk of "referral fatigue" if you keep hammering home the program to the same people and businesses. So, the process must be tightly managed.

3. Offer attractive and sustainable rewards.

Deciding on attractive incentives might be the hardest part of setting up a program that rewards customers for referrals. It's also a big decision for your customer success team.

If you set your offer too low, you'll be investing time and money only to hear crickets for weeks on end. But when done correctly, you can get some high-quality customers and sales through your existing customer base. In fact, 78% of B2B marketers say a referral program generates leads of good or excellent quality.

To give you a starting point, here are some of the ways you can evaluate the market.

Look at what your competitors are offering.

The first place to start is by looking at any referral programs your competitors are running. What kind of incentives are they offering for customer acquisition? Can you realistically match or do better than them?

You don't necessarily have to outbid their incentive. In fact, doing so might start an arms race that drags you and your competitor down into a price war. Instead, look for unique offers that target different segments of your collective audience.

Survey affiliate partners.

Don't be afraid to send out questionnaires and ask potential partners what they would be looking for in terms of compensation.

Affiliate partners tend to be honest with their answers. After all, they stand to profit from the partnership as much as you do. This is also a great way to set up a follow-up email when your program is up and running. It's a valuable affiliate growth hack if this is a direction you decide to pursue.

Test the market.

Bringing an idea to market before going all-in is a common business tactic. It's perfect for referral programs because it's easy to tweak the rewarding system to target your ideal customer. If the test program works, go live with it.

Before signing off on all your sales copy, you can test the market with a conservative offer and send it out using your email marketing software. If it's obvious your offer is too low, it's not going to burn many bridges. The only real loss is time.

4. Remove roadblocks for signups.

Incentivizing and attracting current customers to refer others is the first step. Having them sign up and start using your referral program is the second.

It's surprising how the smallest roadblock can cause someone to get distracted and navigate away from signing up. Removing even minor inconveniences can significantly improve the customer experience and increase your participation rate.

Here are some things to consider when setting up your signing up process:

  • Set up, test, and track dedicated landing pages.
  • Use referral program software with an intuitive dashboard and clear reporting features.
  • Ask the fewest number of questions as possible, leverage auto-fill forms where applicable, and display a progress bar on the page.
  • Be available to answer any questions via webchat, phone, email -- you should treat current customers with the same urgency as new ones.
  • Generate referral links for partners to copy and share.
  • Include an FAQ page addressing any questions you anticipate partners will ask.

Ask for feedback from your referring customers after your program has been running for a few weeks. One of the biggest gripes of any referral program is a lack of communication. Yet, this is an easy fix if it's something you're willing to focus on.

5. Promote your customer referral program.

The harder you promote your referral program, the more people you'll reach. It's marketing 101. However, when marketing a referral program, you get to dangle an incentive in front of people for working with you.

There are dozens of ways you can promote your referral program. Your approach is going to differ depending on your industry, the size of your business, your offer, and more. The good news is that most promotional channels have a low entry cost and complement each other's strengths and weaknesses.

Below are some of the best tactics that some of the big brands use. See which ones work well for you.

Email Marketing

One of the quickest ways to reach customers that are already engaged with your services is through email. However, you may want to segment your email list for a more targeted approach. This should be one of your first efforts, as it involves leveraging existing relationships.

Blog Content (SEO)

Start adding a call to action on your blog content and publish some SEO-focused content regarding your program. This is a long-term strategy because it can take months for content to fully mature. But, it has the added benefit of giving you content to promote, a way to provide detailed information about your program, and free organic exposure.

Homepage

Add a link to your homepage for your referral program members' area. This has both an SEO benefit and catches the attention of visitors on your site.

Webinars

If you have access to webinar software, you can set up a webinar in a matter of minutes. Host an educational webinar for your current customers and include a call to action that directs them to the signup page.

Social Media

Social media can also have an immediate impact and a wide reach. Put word out on your social media accounts and politely ask for shares and likes. This is one of the most cost-effective channels for promoting your program.

PPC Ads

Paid ads are a direct way to put your brand in front of the right people. These ads target specific keywords and display content based on user activity. You might run thin on your margins in the short-term, but it's the long-term goals you're chasing.

Manual Outreach

Even in this advanced digital age, picking up the phone and talking to someone is still a great marketing tactic. It's one of the best ways to establish a meaningful, trustworthy relationship with a potential client. You can, of course, do this via email if you prefer.

6. Nurture your customers and partners.

It's good practice to look after your customers, especially the ones who refer new customers to your business. They are, after all, representing your brand and bringing in new leads for your company.

Start by sending them a personal thank you email when they sign up and offer to answer any questions they may have. Keep in touch regularly, too. Offer support, keep them up to date on any changes to your products and services, and keep open a clear line of communication.

Most importantly, always pay them on time and resolve any queries as soon as possible. A happy collection of partners translates into a happy customer base. And, a happy customer base translates into growth and a healthy bottom line.

For more ways to increase customer referrals, read about the diffusion of innovation theory.

Free Resource: How to Reach & Engage Your Audience on Facebook

 45 Free Customer Referral Templates

Originally published Nov 6, 2019 8:00:00 AM, updated November 11 2019

Topics:

Customer Retention