How to get more referrals for your small business

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When people love something, they want to talk about it—especially when it comes to local businesses. Many of us are eager to share our favorite coffee spot or a great experience with a particular chiropractor. Some of us might even be convinced to divulge the identity of our hard-to-book stylist.

Horror stories about Yelp and other review platforms may make some businesses nervous when it comes to soliciting customer feedback. But the truth is that most consumers enjoy sharing positive moments more than airing their grievances.

Sometimes, all it takes is a little encouragement.

That’s where a referral program comes in. In this article, we’ll look at the impact that positive word of mouth can have on your business, as well as tips to help you generate more leads through customer referrals. Let’s jump in. 

Why customer referrals are big wins for small businesses

Social proof, peer insights, unsolicited advice—call it what you want: people trust the opinions of others. Rather than pay our money and take our chances, most of us prefer to follow the advice of someone who has already vetted a company’s service and products for us. That’s why consumers are 4x times more likely to make a purchase if recommended by a friend.

But that doesn’t mean your business has to sit back and wait for people to (hopefully) spread the good word about your business.

A referral marketing program lets you take an active role in shaping people’s impression of your business by encouraging existing customers and clients to others your way. The result: a win-win scenario where people are connected to enterprises they can trust with little hassle—and businesses are connected with customers and clients who are 18% more loyal and spend 13% more than their non-referred counterparts.

And the power of positive buzz doesn’t stop there.

Beyond the bottom line

During the first few months of 2020, companies across the US watched their referrals grow by 425%. Why? It’s not just because people found themselves with a little more time on their hands during lockdown.

It’s because consumers everywhere are actively reevaluating their relationships with the businesses in their lives.

Today’s customers and clients are spending their money more thoughtfully, preferring to work with companies that value them as people, not just transactions. By treating each person you serve as a potential advocate for your business, you’re not only ensuring that they receive a higher level of service—you’re also helping your business: 

  • Bring in more valuable leads: When it comes to generating leads, a referral program does most of the heavy lifting of both your sales and marketing programs. People who’ve been recommended to your business have already been qualified, are likely in your target audience, and have a 71% higher conversion rate compared to other leads.
  • Increase retention: Acquiring new customers and clients is always going to be more expensive than holding on to the ones you already have. Asking your existing audience for referrals helps keep your business top of mind and opens up opportunities to discuss how you can better serve them.
  • Build a stronger reputation: Boosting brand awareness can feel like an uphill battle at times, especially in crowded industries like home services and retail. Creating a legion of passionate brand advocates is an easy (and cost-effective) way to increase organic engagement and outshine your competitors.

Getting started with a referral program.

There are two key things to keep in mind when starting a referral program: you need to make it easy for your existing customers—and you need to make it worth it to them.

It’s important throughout this process to show existing customers—as you’ve already demonstrated time and again—that you appreciate their business and want to reward their loyalty in a way that’s both feasible to you and meaningful to them. Here are our tips for getting started: 

1. Evaluate your current strategy

Start by breaking down your current lead generation efforts. Who’s coming to you? Why? When? How did they learn about you? From there, identify all possible referral sources (e.g., those who know you best, or use services you want to provide more of) and build your initial strategy around them.

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2. Set your goals.

The success of your referral program will be measured differently according to your business’s long-term goals. Maybe you want to bring in more customers or clients from a specific area. Or you’re interested in reducing your churn rate. Once you know what you want out of your referral program, you’ll be able to create more specific offers for the audience you’re targeting. 

3. Create incentives.

Not every customer needs an incentive to refer others in their network to you. In fact, offering exceptional service might be the only offer they need to become a champion for your business!

That said, gifts can be important motivators in convincing someone to advocate on your behalf—especially for newer customers and clients. Cash, free products, and discounts are all common incentives, but feel free to get creative to find what works best for your audience (and your budget).

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4. Get the word out.

Once everything is in place, it’s time to let your existing customers know how they can participate in your referral program. We recommend promoting it through: 

  • Email campaigns
  • Social media
  • Announcements on your website or newsletter
  • Blog posts
  • Your email signature
  • Conversations with your customers or clients

However you decide to spread the word, make sure to attach calls to action that send customers or clients somewhere to learn more—whether that’s a landing page or connecting them directly with someone on your team. 

5. Time it right.​

Like comedy or soufflé preparation, timing is everything when it comes to asking for referrals. The best time to encourage someone to talk about a positive experience they had with your business is usually right after they have a positive experience with your business.

For attorneys, this could be at the end of a case you’ve won in favor of your client. If you’re a plumber, it’s probably right after you’ve saved a homeowner from a flooded basement. 

Whatever industry you’re in, capitalize on your wins. Don’t be afraid to ask if the moment feels right! 

6. Consider using a referral platform.

If you’re low on time, resources, or both, using a referral platform can help streamline the process for you. In addition to automating things like email campaigns and alerts, these platforms allow you to track the success of your referral efforts and leverage customer data to create more effective campaigns.

7. Treat your new (and existing) customers and clients like VIPs

You can’t just ask your audience to talk the talk. Your business also has to walk the walk. People who have been referred to you are going to be coming in with high expectations, so make sure that each new prospect is given the VIP (er, VIC?) treatment they’ve heard about! The same goes for your customers and clients who made the referral. The more valued they feel, the more referrals they’re likely to keep bringing in.

Invest in your customers, and they’ll return the favor.

More leads. Higher retention. Increased profit. There are a lot of benefits to referral marketing, but the best part about it? 

The sky’s the limit. 

Every business is different, which means that the ways you go above and beyond for your customers and clients—and the stories that come from those efforts—are unique to you. There are a million ways to encourage the people you serve to share these experiences with others. It’s all part of the customer marketing journey, something that we’ll be talking more about in the coming weeks! 

In a time when there are more ways to market your business than ever before, remember that often the simplest, most cost-effective strategy is to start with the customers you already have. Give them great service, reward their loyalty, and sooner or later, they’ll return the favor.