When you think of the marketing strategies that can help you to reap the highest returns on your efforts, do you think of email marketing? Social media? Direct mail?
In truth, one of the most effective types of marketing (in terms of ROI) is referral marketing.
Referral marketing grows your business from a base of existing partners and customers. It leverages one of your greatest assets (your top clients), and encourages them to spread the word about your business to like-minded connections and colleagues.
One of the most effective types of marketing in terms of ROI is referral marketing.
A referral marketing program is more than simply asking for referral. It’s systematic and intentional. A referral program should track your successes, automate your processes, and thank those who bring other people to your business.
Referrals can happen in-person, over the phone, online in reviews, or on your business’s LinkedIn page. And your referral program methods will vary depending on your resources, your clients, and the best avenues for new leads to come to you.
Benefits of Referral Marketing
Choosing to embark on a referral marketing program can produce a big return on your investment. Why?
Because leads who come to your business via referrals from their peers are more likely to sign on for your services. This is due to the power of social proof — in other words, when we hear positive things about a business from others, we’re more likely to trust that information than if we’ve heard it from an ad.
Think about it: are you more likely to choose a product off the shelf because it talks about its benefits on the label? Or would you choose it because a close friend told you it works, and gave you a concrete example of how it helped them? Typically, we humans have a stronger response to the person-to-person referral.
Other benefits of referral marketing can include:
Longer client retention rates
Audience targeting (referrals are typically passed along to the peers of your best customers)
A word-of-mouth referral is the most influential type of recommendation in the marketing world.
How to Implement a Referral Marketing Program
If your team has the drive, tools and commitment to manage a referral marketing program — fantastic! Referrals can be one of the most reliable ways to grow your business and transform your sales for the better.
If you’re ready to get started, below are the essential steps you’ll want to take to ensure the success of your program.
Step #1 (The Most Important Step): Be Referable
Even the best referral campaigns will only get you so far if your teams aren’t delivering on your brand promises. This means your sales, marketing, production, field and customer service teams all need to be on board with providing a rave-worthy experience.
This is always the first step — all of your other efforts will hinge on your full team’s ability to meet or exceed your customers’ expectations.
Step #2: Identify Your Top Referral Sources
First, determine which of your clients or community connections are the most likely to give you a referral, and the best ways to reach them. These can be your premium clients (the ones who understand and appreciate the value of your unique services), as well as business community friends, networking groups, partner businesses or vendors.
What information do you have about these connections? Do you have their physical addresses, phone numbers, or email addresses? This contact information will govern how you reach out to your clients.
After compiling your list of top referrers and their contact information, you’ll want to use this information to nurture your relationship with each person at a regular interval, whether quarterly or annually. It’s important to invest your time in these valuable connections — your referrer relationships are golden, and it’s essential to keep them close.
Next, you’ll use this data to decide who you’re targeting, and how you’ll go about doing it.
Referrer relationships are golden, nurture each one at a regular interval.
Step #3: Set Up Automation
Once you know who your best referral sources are (your top customers) and how to reach them (mail, email, phone, etc.), you can begin to set up your automations. Here are some ideas:
Direct Mail: Consider creating a direct mail campaign that delivers quarterly reminders to your referrals’ mail boxes.
Email: Put together an email campaign that automatically sends information about referrals to your best customers’ inboxes. You can also add a link in your email signature that sends your customers to an information page, if you typically communicate via email.
Calendar Reminders to Call: If you generally engage with your customers and clients via phone, then you can outline specific calendar dates where you will personally reach out, or add language about your referral program to your phone tree or outgoing voicemail greeting.
Whichever marketing method you choose, find ways to make your outreach efforts automatic. Even a direct ask (“Do you have any connections in your network who could benefit from this as well?”) can be automated with calendar reminders and templated emails. Remember, it’s common for this type of marketing to be moved to the backburner, so the more you can automate your outreach or your reminders, the higher your odds will be of running a successful referral campaign.
Step #4: Make It Easy for Your Customers
Whichever method (or methods) you choose for reaching your customers, make it easy for them to take part in your referral program.
If you send emails, be sure to include direct links that take them to an information page, or your Google Review page (you can find this when you login to Google My Business, under the “Info” section).
If you choose to reach out via direct mail, include either easy-to-type links or QR codes for a specific webpage with more information, or even a text code that a customer can easily access.
Do your best to make the information easy to find — don’t expect your customers to search for it (even if they are your biggest fans). The easier you make the referral process, the more likely you are to see results.
Step #5: Thank Your Referrers
A ‘thank you’ goes a long way!
Set up a system for regularly thanking the people who follow through with a review or direct referral for your business.
Remember to use the avenues that make the most sense for each client or customer -- if you generally communicate via phone, set aside time for a 5-minute call. If you use mostly mail communication, a hand-written note is a great option.
You can also return the gratitude by giving them a referral or testimonial, depending on their industry or your relationship. Consider endorsing their skills or giving a recommendation on LinkedIn if appropriate, or acknowledging their project with a special page on your website.
Step #6: Track Your Progress
In order to measure the success of your referral marketing program, you’ll want to make sure you have tracking systems in place. Whether you use a spreadsheet or CRM (Customer Relationship Management) program, you’ll want to know:
Who is giving referrals, and how many
Who contacted you via referral
Which avenues were used for the referral (phone, LinkedIn, email, in-person)
How many referrals converted into clients or customers (your conversion rate)
You may also want to measure the lifespan of a referred customer (how long they stay with your business), and their lifetime value (how much they spend during their relationship with you).
Remember, the people who have given referrals in the past, and those who came to you via a referral, are most likely to give them again in the future. Keep them in mind when you’re ready to re-launch a new campaign down the road.
Ready to start your own referral campaign?
If you’re ready to launch a referral campaign with marketing materials that speak to your customers’ unique needs and values, we’d love to speak with you! Our Harvest Media team has experience developing printed mailers, beautifully-designed emails and more — use them to thank your customers, welcome them to your business, or invite them to join your family of referrers.
Download Our Step-by-step Guide
Give Your Business a Competitive Edge
“How to Differentiate Your Business” is a free guide and workbook, packed with helpful tips to boost customer loyalty and attract right-fit customers + clients.
Sarah is Director of Marketing at Harvest Media. She loves working with business owners and key decision makers who have a vision for the future and want to take their marketing strategy and business growth to the next level.
Tracking your ROI on social media can be tricky. Unlike its traditional paid advertising counterpart, it’s not entirely straightforward. Determining the value of your efforts takes analytics, measurement, and maybe even a little creativity. … read more