There are several ways to grow your business. You can place advertisements in the local paper, utilize direct mail and even promote your business using social media. However, sometimes your best marketing tools are your existing customers. These individuals have a relationship with your business and know and trust your work. These customers can refer new customers to your business, but developing a customer referral or loyalty program takes planning.
A good customer referral program does more than drive new customers to your business, it also engages loyal customers to act on your behalf and share a story about how your company helps solve their problem.
Referral marketing takes planning and time. So where do you start? Here are some best practices to help you understand the approach and implement an effective customer referral/loyalty program.
- Tell your customers. Let your customer know that you have a referral/loyalty program in place and ask them to participate. Make the program visible on your website, promote it in your newsletter and via your social media channels. Also consider sending out a special direct mail piece, a statement stuffer or email promoting the program several times a year.
- Select rewards that matter. It’s important to know your audience and select rewards that will matter to them. Not all customers are influenced by the same rewards, so when possible offer a variety of rewards – company gear, gift cards or discounts on future services. You could also partner with another local business and help each other drive new business. A common practice in referral programs is to only give out a reward to the sender of the referral. Most experts recommend rewarding both parties – the existing customer and new customer.
- Make it easy. Don’t ask a loyal customer to write an essay or answer 20 questions to get the reward and refer a friend to your business. If you make the process too complicated, your success may be limited.
- Dedicate resources. To get the most from a referral program you need to dedicate real resources towards it. Set a realistic budget and be prepared to spend more money if the program is successful. Spending $25 for a referral that turns into $500 of business is money well spent.
Advice or suggestions provided in this article are statements of general applicability that may or may not apply to individual businesses, whose circumstances and operations may vary.