6 Steps To Developing A Referral Program To Increase Sales

by Mary Jezioro

Sep 1, 2015 7:00:00 AM

referral-program

Finding effective marketing strategies is a common problem for small business owners and entrepreneurs.

The truth is, your advertising dollars are wasted if they are not directed towards people who will actually be interested in your products or services. Therefore, it's crucial to find ways to reach out to this ideal customer base, and creating a referral program is the perfect way to do just that. 

Here's six steps for building a successful referral program: 

Step 1: Don't Be Afraid 

The fear of the unknown frequently prevents entrepreneurs from achieving their goals.  And let's face it, talking to people about your business can be somewhat intimidating, especially at first. You don't want to get rejected, or harm the reputation of your business.  

But don't let these insecurities hold you back. If people are excited about your business, they will be happy to refer everyone they know. Build your confidence by creating a rock solid marketing program with a system that is proven to work. 

Step 2: Take a Systematic Approach 

Creating a systematic referral program will ease frustrations and ensure the success of your marketing strategy by making it quick and easy to implement. While every business' program will be different, follow this outline to help create your own program: 

  • Know your “ideal customer”  
  • Create a script to use on the phone or in person 
  • Introduce the referral program to every new customer
  • Make it simple and easy for customers to sign up 
  • Offer a tempting incentive or reward for referring someone 
  • Follow-up with anybody who uses the referral program so they know their efforts are a valued by the business

Step 3: Using the Right Incentive 

The incentive is perhaps one of the most essential parts of any referral program, so creating an effective incentive is critical for success. You don't want to break the bank with whatever incentive you offer, but you still want it to be enticing for your customers. Here are some ideas: 

  • Give money to a charity in their name
  • Free products or services for referring multiple people 
  • Offer a premium discount on a future purchase

A tempting incentive makes it much more likely that people will refer you to their friends and family. It's a win-win for everybody, and it helps you build relationships with customers and increase profits at the same time. 

Step 4: Follow up 

The follow up is a frequently underutilized part of the referral equation. Keep your customers in the loop, and let them know that they are appreciated for sending you referrals. 

Make it a habit to send simple thank you notes, and let them know what is happening with the people they have referred to you. This will make your customers feel good about the referral process so that they will continue to send customers your way. 

Step 5: Training Your Team 

No matter how many team members you have, make sure all of them are well versed on your specific referral program. Train them how to effectively spread the word and encourage customers to participate. 

Step 6: Find Suitable Partnerships 

Once your referral program is up and running, contact companies who might be interested in participating. Reach out to businesses who have a similar customer base and offer to send referrals their way, and they will be happy to return the favor to you. 

Conclusion

Starting a referral program is an incredibly powerful marketing tool for anybody who wants to grow their business. Follow the simple steps above to find new customers, gain trust, and increase sales. 

10 reasons why service providers need to get serious

Topics: Business Growth

blog author

Mary Jezioro

Mary Jezioro is the Vice President of SHIELD Security Systems. As the Marketing and Sales lead at SHIELD, she is focused on strategic planning and company growth. Mary is involved with the UB School of Management as former CELAA's Vice Chair, SCORE, WPO (Women President's Organization) and is also coached youth soccer. She and her husband, Ken, are proud parents of five children.