How Referrals are Making the World a Better Place
Whats a referral? A referral is a trusted recommendation from another individual. As a business owner, you want to make sure that your customers are recommending you. Friends, families and co-workers tend to share experiences and offer each other tips when it comes to businesses and services.
“Hey Nancy, have you tried that amazing new place on Fairmont? You’ll love it”.
Referrals are relevant to businesses of all sizes an across all industries. Whether you run a restaurant, a salon or a law firm, you need a program that will supply you with a constant flow of new customers.
Referrals are important because people often act on advice of their friends and family. When someone asks for a recommendation, they often already have an intent to purchase, and the real question is where will they make that purchase. A recent study by Nielsen showed that referrals are the most trusted form of advertising.
You can spend thousands of dollars a year on advertising and marketing. Referrals however, are often free. If you're a marketing savvy business owner, you might know your “acquisition” costs, meaning, how much it costs you to acquire a new customer. The simple math between this is in most cases the cost of my advertising divided by the amount of customers that came to my business through this channel. By creating an army of happy customers, you can get your customers to do a lot of the work for you at a low cost.
When your service is amazing and your product exceptional, getting a referral should be simple. Customers will be happy to refer friends and family. But, like we stated earlier, unless prompted for this specific type of business, they might not bring it up. A referral program is an organized program to reward customers for spreading the word.
For example, a pizzeria might give a customer a free pizza if he brings in a new customer. This gives the original customer an incentive to get his friends to come and try the tasty pizza. Customers coming to your business through a referral program tend to be more loyal based on research by Harvard Business Review.
Here are our tips for a successful referral program:
Product and Service- If you expect your customers to refer your product, make sure it really is THAT good. If you still have a way to go before your service can offer real value, you won't want to use a referral program until you have your offer sorted out and seamless.
Simplicity- Make sure your referral program is simple, if your customers think its complicated or messy, they will give up before they even try. Using a double promotion is a great tool, for example, refer a friend to sign up for a yoga studio, and you both get a free class. A simple referral program provides a clear a beneficial incentive, one that makes the effort worthwhile.
Online vs. Offline- You can create referral programs on websites using digital software like Referral Candy or Invite Referrals. Track and monitor what users have brought in new ones, and value of new users. But programs can also be offline and tracked manually. It's important to track and monitor these programs to monitor the value and effectiveness of the incentive.
Referrals can come from anywhere- happy customers, friends and family. The key is to have a program that will encourage all your customers to refer you. A program that will get customers on a mission to get that free yoga class or free pizza, because hey.. Who doesn't like a free pizza?