Offer referral incentives If customers are happy, you’ll get some organic referrals even without implementing a program. The best customer referral programs offer incentives to both current as well as new customers. The customers know they’ll get a $100 credit if they can convince just five people to make a purchase. At a rate of just $1 to unlock a scooter and an additional $0.15 per minute, the $5 reward translates to nearly 30 minutes of free riding time. While $5 may not be a big incentive for other referral programs, it is for this one. Focus on a fast ROI Just like with any other marketing campaign, you want to make sure your referral program makes sense from a financial standpoint. Once they make that first purchase because of the incentive you offered, what’s next? Use your email marketing strategy to create an actionable drip campaign, and encourage these customers to buy again in the future. Now they went from a happy customer, who wants to refer their friends, to a dissatisfied customer, who thinks you’re trying to take advantage of them. Next, you’ll have to come up with an incentive that encourages the current customer and prospective customer to make a purchase.
As a business owner, you have to keep coming come up with creative ways to attract new customers. But as you know, this type of marketing can be expensive.
It’s much more cost-effective to market to your existing customers than to find new ones. Acquiring a new customer is six to seven times more expensive than retaining a current customer.
Sure, you may be very profitable right now without putting too much emphasis on acquisition. However, that business model isn’t sustainable forever.
You can’t grow at an exponential rate without expanding your customer base. Sooner or later, you’ll need to run marketing campaigns to attract new customers.
That’s why you need to implement customer acquisition strategies that won’t break the bank.
A customer referral program is one of my favorite ways to do this. Your campaigns will leverage your existing customers to bring in new business.
Take a look at the most significant driving factors of retail revenue:
As you can see, retention and acquisition ranked first and second on the list. Combining both of these into one marketing campaign will be very beneficial for your business.
If you can properly implement a customer referral program, you’ll get new customers without having to do much work. All you have to do is set up the program. The rest will take care of itself.
Don’t get me wrong. It’s not as easy as it sounds.
The key here is coming up with the right referral program that gets your current customers excited enough to participate.
Whether you’re creating your first customer referral program or trying to improve your existing one, this guide will help you. I’ll tell you everything you need to know about referral programs that drive sales.
Prioritize the customer experience
Before you start worrying about the logistics of your referral program, you need to make sure your existing customers are properly taken care of.
After all, this strategy won’t work if your customers are unhappy. Research shows that 89% of businesses named customer experience as a key factor for customer retention and loyalty.
In fact, customers care more about the customer service than the quality of whatever they are purchasing.
Research indicates 86% of consumers are willing to pay more money for an enhanced customer experience.
This type of service starts at the top of the organization and works its way down. As the owner, you need to set the tone and make sure all your employees know how important customer service is to your success.
Unhappy customers are bad for business. Only 1 out of 26 dissatisfied customers will complain. What about the other 25? They’ll leave without saying a word.
According to research, 68% of customers say they left a company because they believe the brand didn’t care about them. Don’t let this happen to you. Let your customers know how much you care.
Happy customers are much more valuable. In fact, more than 80% of customers say they are willing to make referrals.
That’s why your referral program will need to provide some extra incentives, but we’ll talk about that in greater detail shortly.
Offer referral incentives
If customers are happy, you’ll get some organic referrals even without implementing a program.
But for the most part, you can’t rely on such referrals alone when it comes to driving sales and getting new customers. It’s not scalable.
Give your customers a reason to refer their friends and family. Discounts and other monetary benefits will be the most actionable.
Put yourself in your customers’ shoes for a minute. Think about some of your favorite brands. Are you going to spend a ton of time trying to bring them new customers? If it comes up in a conversation, you might make a recommendation. But I assume you’re probably not actively going out of your way to do this.
However, I’m willing to bet that if the company offered you a credit, discount, or reward for these efforts, it would probably change your approach.
On the flip side, let’s say someone refers you to a new company. Sure, you may be likely to try them out. But an incentive would definitely boost your motivation to do that.
The best customer referral programs offer incentives to both current as well as new customers.
Here’s an example of this strategy implemented by MeUndies:
It’s a simple concept.
When one of their customers refers a friend, the new customer will get 20% off their purchase. Once that purchase is made, the original customer gets a $20 gift card.
That adds up fast. The customers know they’ll get a $100 credit if they can convince just…
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