5 Ways to Win Customer Referrals
Published: Nov 16, 2016
Let’s get straight to the point. There’s a ton of advice out there focusing on your consumers and highlighting how everything you do needs to pander to their desires.
How improving customer service fosters long-term loyalty and improving customer relationships is the goal we should all aspire to.
But we both know the truth. That underneath all the talk of treating customers well and gaining positive social proof, the main goal is to increase revenue.
There’s still a peculiar stigma attached to talking about cold hard cash. Even for those, like you, who are running a business. But come on, nice thoughts and positive social proof aren’t going to keep the lights on.
Everything you do as a business is to keep the cash flowing in and customers heading your way.
There are myriad ways you can achieve this, but as we recently covered, one of the most effective methods is to focus on your most profitable segment; current customers.
They have the highest levels of customer loyalty and, as a result, are likely to spend more and purchase numerous times. They are, in short, a potential goldmine.
However, focusing solely on your current customers is a recipe for consumer neglect and cash-flow stagnation. After a while, you’re going to hit a revenue plateau with them and when that happens, there’s only one way for you to continue to grow your brand.
Find more customers.
But hold on. The decision was made to focus on your current customers because finding new customers can be time-consuming and costly.
So, what can a smart brand do to attract new business at minimum cost?
Ask your most lucrative, engaged and loyal segment for a little help. Use current customers and their love for your brand to help win cheap and easy customer referrals.
Why customer referrals?
More traffic is not the answer to all your woes.
Increasing your PPC spend, running new Facebook ads and focusing on your SEO are great at getting eyes on your products, but they’re the opening battle of a long and arduous war.
These brand new prospects barely register on the customer loyalty scale. They don’t know you from Adam, they don’t owe you anything and they’re definitely not going to hand over their card details without good reason.
But a good customer referral not only brings new traffic to your door, it brings engaged, interested traffic:
- 74% of consumers identify word-of-mouth as a key influencer (source)
- Word-of-mouth marketing has been shown to improve marketing effectiveness by up to 54% (source)
- 84% of consumers reported always or sometimes taking action based on personal recommendations (source)
Your current customers aren’t just your most profitable segment, they’re also the most useful bargaining chip you have and are key to helping you win customer referrals.
But they won’t do it if not prompted, so here are a few pointers on eliciting those super valuable referrals.
Start with a solid plan
Referrals can and do happen naturally. But just as with anything else in marketing, a helpful push in the right direction is going to do wonders.
You need to figure out what it is you can do for your customers to elicit a referral from them.
Before you start thinking about interesting incentives or compelling campaigns make sure you’re hitting the below key achievements:
- Offer a great service – Even with a great referral incentive no one is going to refer a friend if your service or product is lacking.
- Understand the kind of referral you’re after. Are you looking for a quick introduction? Perhaps you want a current customer to refer a potential customer to a purchase page? Or maybe you’re looking for a simple social media shout out. Whatever it is, you first need to understand what you’re asking of your customers in order to offer a reasonable reason to do so.
- Understand the right timing of asking for a referral. Different referrals will need to be requested at different times. You want to make sure you’re asking for a referral at the most optimal time.
- Don’t flog a dead horse. If, after a few requests, you’re getting nothing back from your customer, cut your losses. If you don’t, you risk annoying them. Not only will you forfeit a future referral opportunity, but you could lose a paying consumer.
Once you’ve pulled together a plan of what you want to achieve and when precisely to approach customers, it’s time to get into the actual implementation of your campaign.
Make it easy for users
People are getting busier. The quicker and easier you can make referral actions, the more likely they are to be completed.
Numerous brands manage to increase their conversion rates by reducing the amount of information consumers need to enter into online forms.
Your users don’t want to have to jump through numerous hoops for you. They’ve got their own things they need to be doing so focus on how you can make the path to action as simple as possible.
If you’re looking to win customer referrals, then make it so customers can invite friends in as few steps as possible.
For example: If you’re looking for a social media referral, pre-plan messages and link them to social sharing buttons. Your user presses the button and your pre-planned message is shared with the world.
Here’s how Airstory is doing it for those who sign up to the wait list. Their site visitors click the correct button for their preferred network and the message is already written for them.
The same tactic should be employed if you want users to share an email with friends. Write out what it should say, all your customer then has to do is click the referral button and select their friend.
Make it easy, and more people will do what you need them to.
Nothing get’s people to take the action you want them to like offering a reward.
What you offer doesn’t have to be amazing. You don’t even need to make it an immediate monetary incentive.
In fact, lots of smart brands ensure their referral incentive actually solicits a repeat purchase thus increasing overall sales.
Greats Sneakers do this very well. If a customer notifies a friend about the brand, they both get 20% off their next order. Greats Sneakers lose 20% off their next sale, but that’s a next sale that likely wouldn’t have happened without the referral.
Initiate a referral program
One referral is good. Two are better.
Rather than asking only once for a referral, encourage those who love your brand to sign up for a referral program. Doing so gives you multiple opportunities to solicit referrals.
Of course, you may have to incentivise the process. Popular approaches include increasing the value of the incentive for numerous referrals or simply adding a threshold that has to be hit before an incentive is achieved.
Blush Hair Salon offers a flat referral fee for each person referred along with a larger reward for the top referrers at the end of the year.
Whereas RhinoShield will offer a 15% discount, but only after you’ve successfully referred three friends.
Setting up an evergreen referral platform will also help you take advantage of large seasonal interest. You can implement new campaigns at key times of year such as Black Friday or in the run up to Christmas.
Follow it up
There’s nothing as deflating as helping someone out only to get nothing in return. Sure, you’re offering your prospects a cash off incentive or something in the way of a reward, but sometimes, all people really want is a simple thank-you.
Thank-you’s should always be included whether or not you’re incentivising your referrals. It’s a simple thing which can go a long way into fostering customer loyalty, making them feel valued and improving customer retention.
We’re not saying you need to do anything crazy for a thanks. A simple email will more than suffice.
Keeping your customers happy will not only keep them coming back for more, but will also help gain more referrals further down the line.
Referrals are a great way to build your brand
Focusing on current customers is an easy way to increase revenue. It’s faster, effective and proven to increase sales.
However, you should never stop attracting new business. Thankfully, those same current customers who are willing to spend more cash could also be willing to forward new customers to your brand.
All you have to do is ask in the right way and you’ll not only delight those who are currently fans of your brand, you can also attract and convert tomorrow’s most loyal and profitable customer base.