Referral Processes for Small Businesses

Many businesses use a variety of marketing tactics to attract new customers, and it may feel like a struggle to figure out which tactic works best for your business. Over time, the search for the right marketing tactic can become costly. However, there is one tactic many businesses forget about: referrals, which could be a saving grace and very affordable if given the chance. It is a tactic to have in your marketing mix. In this blog, we are going to review the basics, some stats, some example processes, and more!

What is a Referral Process?

A referral process is a system or program that your business has in place that allows past and present customers, employees, and members of your network to refer others to your business. Referral programs are a great way to attract new customers and build your business’ relationship with its current customers. They require little to no financial investment but can be very valuable due to their ability to bring in warm leads.

Here are a few statistics on referral programs:

• 90% of people are more likely to trust and buy from a business recommended by a friend.

• 83% of customers say they’d refer businesses they shop with, but only 29% of customers do so without being prompted.

• Referred customers have a 37% higher retention rate than those not referred and are 18% more loyal than those acquired from other means.

• Brands are mentioned 90 times a week in conversations.

• Referrals are rated as the 2nd highest source of quality leads for businesses.

• Only 30% of businesses have a formal referral program in place. • Referral programs increase word-of-mouth marketing.

What Makes A Good Referral Process?

Not all referral programs are the same, and implementing one that isn’t structured well and that your customers don't want to use is something you want to avoid. Many factors go into implementing a good referral system. Let's look at some aspects you should consider when creating a referral program.

Incentives

For some customers, having the chance to benefit from referring your business to people they know is just the thing they need to follow through. Putting in place incentives that help both the person referring people and the people being referred to is a great way to make people want to share your business. Some popular ways this is used is in online contests where sharing and tagging get people entered, emails, which we’ll get into in another section, cash rewards or gift cards for referring people, and coupons or discount codes specifically for people who use your referral program.

Know Who Has Been Loyal

Knowing the specific audience you’re trying to reach with your referral program can help you tailor it to what that audience will respond to the best. The best way to do this is to pay attention to your customer pool and find out who’s a repeat customer, who has already shared your business with someone else, who has positively reviewed your business, and who has proven to provide positive testimonials. Finding them and determining what they want from a referral program is critical to maximizing the referrals you can get from them and those they recommend your business to.

Use Technology to Your Advantage

Technology today can help your business in many ways, and that includes your referral programs. There is referral software your business can pay to use (or some even have free options and demos to try) to handle all your referral needs. They can handle everything from providing templates for your programs, tracking conversion rates, providing analytics, and managing your business’s campaigns, plus many other features depending on the software you use and if you pay for any of the packages. Some popular options are:

• Referral Rock

• Birdeye Referrals

• Tremendous

• Snoball

For more information and options, check out this list by Capterra of referral software and what they can offer.

How Can You Get Referrals?

There are many ways your business can get referrals. Some examples are:

• Service agreements - For some businesses, having a referral requirement in their service agreements can be beneficial. These agreements typically outline a professional relationship between a product provider or business and a referral party and usually state that the referral party can earn commissions on sales brought in through their referrals to the business. There are many examples of agreements like this online through online influencers who can give out unique codes linked to their agreement.

• Asking customers to refer your business - Many customers are willing to refer your business to people they know. Most just don’t do it unprompted. If you take the time to ask your customers to tell people about your business, it could be the little push they need to do so.

• Email - Having your referral program work through emails can be an easy way to combine the program with email marketing. In this setup, a customer would share the email of someone they knew, and usually, both the referred person and the current customer benefit from this, usually either a discount on a product or service or a free gift upon purchase. This is an easy way to get customers to share your business with their contacts, as it takes little to no effort. Implementing a referral program into your business’s marketing campaign can be a game-changer if done correctly, and it doesn’t have to cost much compared to other marketing tactics.

If you’re interested in learning more about how a referral program can help your business and would like help in finding the right type of program for what your business needs, feel free to contact Comprehensive Consulting Solutions for Small Businesses to schedule a free consultation. We’d love to help your small business!