A customer referral program is about encouraging your happy, satisfied clients to recommend your business to their friends in exchange for a benefit, such as coupons, gift cards, points, etc. This can be a really powerful marketing technique since it promotes Word of Mouth Marketing (WOMM). Keep reading to learn more about the benefits of implementing a solid referral program.
1. People trust their friends more than they trust you.
Of course, you think you’re awesome, you’re you! A friend, family member, or coworker is more likely to give you a brutally honest opinion. According to a Nielsen study, 92% of consumers believe suggestions from friends and family more than they do advertising. That’s pretty much everyone.
2. Referrals keep your current customers engaged.
The longer you keep your existing clients engaged, the more likely they are to spend with you again – and keep sending new clients your way! A longer customer lifespan equals a higher customer lifetime value.
3. They’re not just new customers…
Harvard researchers concluded that customers obtained through referral programs are more loyal than those who come through other channels. Referrals also generate more profits – a 60% ROI in their test case. When well-executed, a referral program won’t just bring you new paying customers; it’ll bring great, loyal ones!
4. It only costs money if it works.
Because you only give out benefits if your existing customers bring you new buyers, you only pay if their recommendation pans out. In other words, you only pay money after you’ve made money. There’s absolutely nothing to lose with a customer referral program! You dictate the exact benefits people receive and when, so there are no surprises with a properly planned and executed referral program.
5. Go viral — kind of.
Not in the new social media sense of the word (trust us, you don’t want that), but picture this: You blast an email to your existing client list of 300 – raving about your new referral program. Of those 300, only 20% actually follow through. Sixty people each recommend someone who becomes a paying client. Those new people can then recommend more new people, and so on and so on for the rest of forever. Now you’ve grown an entire network and someone else did the convincing for you!
Customer referral programs are an excellent way to spread the word about your amazing products and services. You’ve worked really hard to build your client list, why not let them work in your favor? Are you ready to build out a great referral program? We’d love to help you develop and market a plan! Contact us to get started!
