Three Keys To Creating A Customer Referral Program That Works

Three Keys To Creating A Customer Referral Program That Works

April 15th, 2016

Republished from Infusionsoft blogger Matt Egan, April 4, 2016.

There is one question that I ask almost every customer: “Where does the majority of your business come from?” The answer is consistently: “From word of mouth and referrals.” Of course it is, that is the easiest way to get business, sitting back and doing nothing except being a rock star at what you do and letting your results speak for itself. What’s great about this is that it doesn’t require doing any difficult marketing, SEO, pay per click, or re-vamping the website. All you need to do is sit back and hope your customers tell their friends about you and sit back and watch the referrals come in. Right?

So my next question to prospects would be: “OK, so what are you doing to actively stoke the flames to the fire and get more referrals and more repeat business?” The answer is typically: “Nothing.” I’m always shocked by this, however it does lead to a great discussion on how to improve effectiveness in this area. If you want to hit your target of more customer referrals and upsells, you need to A.I.M.


1. Ask

The first and most obvious step is to ask. Most business owners ask some of their customers for referrals once or maybe twice. They don’t want to make it awkward after winning the business. There is power in asking. When you ask, you speak energy into existence because it requires action. I remember when I bought a home here in Arizona three years ago, I worked with a great real estate agent who was awesome. I couldn’t tell you his name, because I never heard from him again, but boy was he great at the time. Here’s the problem: Soon after we bought a home, I convinced my parents to move to Arizona so they started looking for a home. They asked if I knew any good real estate agents and I said yes, I do have a guy… what’s his name again? What was his number? I told my parents I would dig it up and get back to them. I never did. They found another real estate agent and bought a beautiful big home. Fast forward a few months and my brother decided to come to Arizona for physical therapy school and wanted to look at homes. He asked me if I knew a good real estate agent. Same story, I couldn’t remember my guy and meant to pass along his info but couldn’t find it and it wasn’t top of mind. So my brother got his own agent that he worked with and bought a home. The moral of the story is that if my real estate agent had followed up with me and asked for referrals occasionally, I would have given them. He would have sold two more homes. It never hurts to ask.

2. Incentivize

What is your cost of acquiring a new customer through traditional methods? Do you pay sales reps to make calls and run appointments?  Do you pay for SEO and website optimization that drives traffic and leads? Do you advertise or sponsor events to get leads?  When you add all of that up and apply it to your actual cost of acquiring a new customer you might be shocked just how much you spend to get revenue. So why on earth wouldn’t you give a small incentive for customers to prompt more referrals? It costs you much less for customer referrals than all other lead sources, so don’t be stingy—be intentional.

I’ve seen a lot of things work really well over the years:

  1. $25 gift card for closed deals
  2. Each referral gets a ticket for a drawing to win an iPad
  3. Contents for whoever refers the most in a given month wins $1,000
  4. Refer a friend and receive 10 percent off your monthly membership
  5. Tickets to sporting events
  6. Saying thank you for a referral that closes with a gift basket

And the list goes on and on. Get creative, have fun with it. Reward them. It’s a very small price to pay overall compared to the other things you do to acquire new business. The problem with most referral incentive programs is that nobody knows about it. This is where marketing automation comes in very handy to follow up with customers automatically and make them aware of your incentive program whenever possible.

3. Make it easy

A couple months ago I consulted with an HVAC business that was trying to figure out how to get more referrals. He would ask for referrals, he had a way to incentivize customers, but when I looked at how a customer would submit a referral, it was a mess. They had to fill out a web form that was as tedious as the day is long. Then, the majority of the time it went into a black hole and he never saw the referral anyway. We worked with him to create an automated funnel for capturing customer referrals that were based on customer surveys that went out after the sale. There was a question in there that stated “Would you be willing to refer others?” If they answered yes to that question in the survey, an automated email would go out two weeks later to let them know about the customer referral program. Then, a few days later an email would go out that asked them for anyone they could think of that they might refer. All the customer had to do, was click on a link on the email, fill out a very brief form of first name, e-mail, and phone number, and BAM! Problem solved. The referrals came pouring in from that time forward.

Another great idea that I have seen from savvy business owners is making the referral process easy by putting up a link at the top of your website that says: “Refer a Friend.” That link will direct to a landing page where they can enter the quick info for their friend. Marketing automation can then send an email to the customer thanking them for their referral and ensuring that there is an easy place for your customers to go whenever they have someone to refer. This is also great because you may have prospects who aren’t a good fit for what you do, but they have someone in mind who they could refer over to you. This gives them an easy way to do that.

Getting customer referrals is easy when you are good at what you do. Creating a great customer referral funnel is not as difficult as it might seem. No matter how good or bad you think it’s going with your customer referrals, it’s never too late to fix it—just remember to A.I.M. at your target.