If you haven’t used a referral marketing program for your business, you’re missing out.
According to a study by G2 Crowd and Heinz Marketing, up to 92% of B2B clients are more likely to buy after reading a trusted review, with a big emphasis on businesses being able to promptly respond to them using tools such as AI chatbots.
The importance of referral programs has been discussed before in the Daylite blog. Generally, it’s wiser to encourage existing clients to be your advocates since they are the ones that know your business well and also have an established relationship with potential new clients.
So if you want to learn how to create your own referral program from scratch, you’re definitely at the right place! This article will look at the definition of a referral program, the pros and cons of referral marketing, the essential steps for a successful referral program, and some practical examples you can use as inspiration for your own business.
Let’s dive right in.
What is a referral program?
You might have noticed that when researching sources about referral marketing, almost all the results talk about customer referrals. In this article, however, I will talk about client referral.
In case you don’t know the difference between clients and customers, let me give you a quick explanation.
Customers are people who are subscribed or have purchased your product or service but their participation is usually short-lived and they don’t return to your company after this one instance.
On the other hand, clients are loyal customers that have an established relationship with your brand. Customers are essential, of course, but clients are the ones that truly bring value and purpose to a business. Purely money-wise, loyal clients are the ones that you can profit from the most as they typically have ongoing engagements with businesses on a long-term basis.
A financial company might hire a law firm for a one-off case, making them a single-use customer, or have this law firm be their only legal consultant with whom they work exclusively. This is an example of a long-term business-client relationship that benefits both parties.
And more often than not, such valuable relationships start with a referral.
According to the 2021 Legal Trends Report, 81% of businesses look for referrals when seeking legal counsel.
In simple terms, a referral program has the purpose of using existing loyal clients to convert other people into new clients. Usually, the referral process includes some sort of reward for both parties, but in the long run, your business will be the one that wins the most.
To make things easier, let’s take a quick look at the pros and cons of referral marketing programs:
Referral marketing program benefits
- It’s a budget-friendly marketing strategy that significantly reduces client acquisition costs.
- It’s a great way to retain existing clients as it shows you value them enough to trust them with referring to your business. The referral rewards also help.
- It’s very flexible in terms of choosing how to encourage referrals and win new clients.
- It’s proven that client referral programs lead to more user-generated content.
- It’s easy to track results and improve future referral campaigns as long as you have the right software to manage your relationship with customers and clients.
Referral marketing program disadvantages
- The value of the referral might get lost if the new client knows the referring client will get paid for this process.
- The referring client might take advantage of the incentives and recommend your business only to get rewards.
- The incentive needs to be valuable; otherwise, both the referrer and the potential client will not be motivated enough to participate.
- The first purchase might be the last one if the referred friend is unsatisfied with the service or product. This might put them off even more and produce bad word of mouth for your business.
6 Steps to creating a unique client referral program
To create a referral program that works, you need to start planning early. It all begins with defining your goals. Let’s take a look.
1. Setting the correct KPIs and goals
Do you want to increase your brand awareness or have 100 successful referrals in one month? Knowing your end goals is the thing that will determine the entire marketing strategy and will make sure that your referral program works.
Set clear goals from the beginning, decide on what the referral messaging will be, and get ready to change them in the future. Depending on the results, you will see which KPIs are achievable and beneficial to your company. What you thought you might need in the beginning might not be what you need.
2. Research your buyer persona
You need a clear target audience. If you’re looking for more clients that have just founded a new business, then the referring client needs to have access to such people. It’s also important to communicate your expectations and the buyer persona with your existing clients so that the referral campaigns reach the right person.
Focus on people who will genuinely benefit from the service you offer so that they will quickly turn from one-time customers to loyal clients.
3. Identify the outreach and referral channels
Now that you have your goals and buyer persona, you can start researching channels to reach potential clients easily.
Personalized outreach is always the most effective one since it’s based on mutual trust and rapport. If you have influential clients that have access to other people with power, then reach out to them one by one, explaining the referral campaign, the rewards program, and what is expected of them.
With Daylite, for example, you can make this even easier by arranging a meeting with the client and linking an agenda to the appointment. Putting keywords in the description will allow you to segment all similar meetings and keep track of your referral-related appointments and tasks.
Another way of reaching out to loyal customers and clients is to check who is subscribed to your newsletter, if you have one, or who has been a non-stop client of your service in the past 3, 5 years and more. A personalized email outreach campaign will do the trick here, and the referral software you’re using will even generate a unique referral code that the clients can use.
I also recommend that you put the referral program on your landing page so that all your customers and clients can take advantage of the marketing campaign. If you don’t want it to stay permanently on the landing page, you can choose the right pop-up strategy that will present the information. You never know what can be the thing that will encourage customers to become faithful clients.
If you’re using a chatbot, you can add information about the referral program at the end of every conversation. This will target people that have already engaged for a certain period of time with your website and have a bigger chance of recommending your business, especially if they were satisfied with the services.
4. Choose a tempting incentive program
This is another reason why you need to thoroughly research and get to know the existing clients and the ones you’re trying to attract. A successful referral program needs an incentive that will motivate your best clients to recommend your business. However, it also depends on your budget and the number of people that will participate.
Later in the article, I will look at the most effective referral incentives, but whatever you choose, just make sure you’re not at a loss.
5. Select the best softwares to help in your referral program
To ensure great reach in your referral campaign, you will need good marketing softwares and a reliable Customer Relationship Management (CRM) system to outreach your prospects.
As I mentioned before, if you’re outreaching on a global scale, you will need tools that can help send out your message and the unique referral link clients can use to promote your business. You’ll also need a good CRM to help manage those relationships.
In case you’re working with a Mac, the Daylite CRM tool is a great choice for a CRM if you’re looking to build stronger relationships and turn customers into loyal clients. There are also other tools such as Voilanorbet who can help with emails, and Affise that can help make tracking referral programs much easier too.
6. Track results and improve your referral campaign
In order to be successful, referral programs need to be tracked. You can use something like the Opportunities Referral Source Analysis that will show you exactly how many referrals you’ve gained, which are the people who have had the most success referring new customers and clients. Using this data, you can improve your methods and pay attention to the most successful clients in your circle.
Client referral program examples
A two-way incentive program
This method offers referral benefits to both parties. There are many ways of doing this, such as extending free trials of a tool or offering credit or cash.
As an example, many Financial tech (fintech) software services such as Wise – an online money transfer company – offers money to you when you refer a friend that makes a transfer. In return, that friend gets a waive off their first transfer fee:
You can easily change what that reward is to fit the nature of your business and clients better. Just make sure to calculate everything, so you don’t end up losing money.
A referral bonus for the existing client
As you probably guessed, this referral program rewards only the existing client.
Here, you can offer a more significant incentive since it will reach only one person. For example, they can get a free add-on to their service for every 50 people they successfully refer.
Another, and more popular way of doing this, is having cash incentives. Justworks, a software for managing things like payroll and HR, offers a hefty $200 for every employee in a company that is referred.
A referral reward for the new customer
Here the roles are reversed.
This can make it a bit hard to motivate your current clients to promote your business. It usually works only when you have an excellent established relationship with them, and they value your company enough to refer people for free.
A good example of this is pro bono work at different legal firms. If you fit the criteria, existing clients may refer people to your company’s pro bono program. From there, these customers get free legal assistance and may eventually turn into potential clients.
A tiered rewards system for each successful referral.
This is a very interesting way to reward your best clients. Again, it uses unique referral links that your clients can use to refer friends and business partners, but with each referral, they get a different reward or a different amount of the same reward.
A real estate firm, for example, can include a number of benefits that will add up with each referral such as free inventory check, free legal counsel for landlords and homeowners, lowered taxes, etc.
This can be combined with the first option, where your old clients will get different rewards, and the new clients will get a similar or different incentive.
Just as any other marketing campaign, the success of your company’s referral program depends entirely on your planning and the already established relationship with your clients.
As you can see, there are many ways you can go about it, but at the core of a great client referral marketing program is knowing your clients and what attracts them to your business in the first place. You can do this by using Daylite to track your efforts and communication history, keep relevant client lists, segment your clients, and much more.
Be honest, creative, and persistent – and with tools like Daylite for Apple users that can help, you are sure to find success in your referral program.
Jessica La is a content marketer with over six years in AI and Tech startups. In her blog ByJessicaLa.com, she explores all things AI and is passionate about the unique ways individuals and businesses can improve, innovate and grow. You can reach her at firstname.lastname@example.org.