You’re at work and suddenly, you have a craving for Mexican food. You want to find a good restaurant for tonight. The first thing you might do is ask your coworkers if they have any suggestions for you. It’s inevitable, people trust their friends often more then online reviews. If referrals work for restaurants, they will definitely work for your company too. This is why, in order to generate more revenue, your organization should create a referral program.
People trust their friends
Of course referrals happen naturally, by word of mouth, but you can boost it with an appropriate strategy. It’s simple, you basically use your loyal customers to attract new ones.
Launch a referral program and encourage your customers to recommend your service to their friends, family, neighbours and work colleagues. This can be very rewarding, because most people tend to trust recommendations made by people they know. If you really want to make this strategy effective, you should offer an incentive (we will talk about this further in the article).
“Referrals are at least 10x more likely to generate new customers than any other form of sales or marketing communication” (Fitsmallbusiness)
The costs of a referral program
Building a loyal customer base and attracting new clients at the same time, can be expensive. Advertising can be costly in terms of time and money. You have to create content, print it and distribute it. On the other side, the referral program only requires people talking about your organization.
You are probably asking why they would do that. First, because they love your organization and want to share their experience. If you want to take it one step further, you could offer an incentive. If you want to go this way, you first should determine who will receive the incentive. Is it the referrer, the referred or both? Then, you can determine what the incentive will be. Here are some possible ideas:
- A gift certificate for your activities
- A discount for new clients
- Branded items such as hats, t-shirts, and bags
Be clear with the terms and conditions (eligibility, amount of the discount, duration, etc.) for your program so your costumers won’t have any surprises and neither will you.
If referrals are of interest to you, you can find more tips in the article: How to Get Referrals: Set Up a Killer Referral Program in 5 Easy Steps.
Interested in more tips on how to generate more revenue? We’ve got a FREE ebook chock full of them!