You already know that customer referrals are one of the best ways to get new leads (otherwise, why would you be reading this article?), so I’m not going to bore you with the details about their higher conversion rate (30%), retention rate (37%), or lifetime value (16%) when compared to nonreferred customers. I’m simply going to give you some great referral marketing ideas that you may not have thought of before.
However, for any of these ideas to work, you must understand this one axiom: even if you have the best referral marketing campaign on the planet, before anyone can offer you a referral, they have to remember you first.
Before they can refer you, they need to remember you
Sounds pretty basic, right? But think about this for a minute.
You could invest tons of money and effort into developing a referral marketing strategy, but if you haven’t stayed in touch with the people who can give you referrals, how can you expect them to remember your name or your company’s name?
Here’s another point—referrals are a way someone can “pay you back” for whatever you provided to them, but your referral sources have likely already reciprocated:
- You’ve provided your customers with a service or product, but they’ve paid for it.
- You’ve given a vendor your business, but they’ve provided you with what you need.
- You have strategic partners you give referrals to, but they give you referrals in return.
In many cases, the scales are balanced, and the need to reciprocate is no longer present or has diminished over time.
To tip the scales so they are once again in your favor and keep your customers and others in your debt (so to speak), you need to consistently provide them with value. A little later, I’ll show you how you can do this, and in turn become unforgettable, so your referral sources will happily and forever provide you with the referrals your business needs to thrive. For now, let’s look at some of the best ideas for generating word-of-mouth referrals.
1. Social gifting referrals
Social gifting referrals are often presented as refer-a-friend campaigns. The idea is simple on its surface: current customers are encouraged to pass along something of value to a friend. But there are nuances to social gifting that can elevate it to one of your primary sources of new business.
First, ask yourself what your target audience would find valuable. If it’s a discount, make sure it’s large enough to spark interest. When offering money-off coupons or a free item or service, include the original price to illustrate the savings. For example, you could say “Normally $15, it’s yours free just for stopping by” or something similar.
Second, don’t just encourage your customers to give you a referral—give them an actual incentive for doing so. If your customers know they will receive something of value when their referrals take advantage of your offer, they’ll be more likely to make those referrals. Consider rewarding customers whose referrals convert with a benefit that is equal to or greater in value than what the referral receives.
2. Charity donations/fundraisers
A business’s commitment to helping alleviate social and environmental concerns is among the significant factors influencing consumers’ buying decisions. Having strong programs that promote corporate social responsibility influences your audience’s perception of your brand, values, and commitment to the greater good.
For the small business owner, becoming a stakeholder in the welfare of your community helps your audience know, like, and trust you. Offering to donate to a cause your audience cares about each time they refer someone to you is a win-win-win—you get a new customer, the organization benefits from your donation, and the referring party can feel good about directing funds toward a cause they care about.
3. Give-to-get referral campaign
When your customers and the people they refer both get a benefit, your customers are more likely to refer and their referrals are more likely to claim it.
At ReminderMedia, we use this give-to-get strategy to encourage our clients to send referrals our way. We also make it easy for our clients to participate in the program by having share buttons that quickly allow them to post to their Facebook pages or to send the offer in an email.
Dropbox is another example of a company that has enjoyed huge success with this type of referral program. They offered additional cloud storage to each referrer and referee who signed up for their file hosting service. In only 15 months, Dropbox grew from 100,000 to 4 million users, saving the beleaguered company from going belly-up. The phenomenal success gave Dropbox 60% more permanent customers, saved them millions of dollars in traditional ad spend, and, of course, promoted the use of their product to new customers.
4. Mystery gift reward
When might a promise to send an unnamed gift in return for a referral bring in new customers? When you have an exceptionally loyal customer base that loves your products so much that they’d be excited to receive any of them. But be warned—this is not the time to disappoint. Make sure the gift you provide is on par with your customers’ expectations and past experiences with your business.
5. Referral contest
Our fondness for winning makes contests popular among audiences and marketers alike. But while contests can generate a ton of referrals, not all of them are going to be the type of high-quality leads your business wants. To enhance the quality of the referrals you receive, create a referral system where you reward conversions instead of just referrals.
My dentist uses this strategy to get referrals, and it works like a charm. Each time I go for a cleaning, I’m offered as many referral cards as I’d like to give to people I know. I sign the cards with my name and give them to people looking for a dentist. Then, when my referrals walk into their appointments, they provide the receptionist with my signed cards. The more cards they receive signed with my name, the greater the number of referrals they credit me with. The patient with the most confirmed new referrals at the end of the contest wins a prize, and the practice sends an email to their mailing list naming the winner (further encouraging more referrals!).
6. Exclusive perks
There is a wide range of perks you can offer your customers in exchange for their referrals, some of which will make more sense for your business than others.
Credit rewards are popular among retail businesses and subscription programs. These rewards encourage repeat business and preserve your profit margins while allowing your referring customers to feel like they’re getting a great deal. An example would be a wine club that offers an extra bottle of a customer’s favorite vintage for each new subscription sent their way.
Upgrades can make customers feel like they’re getting a lot in exchange for very little. To invite referrals, you can offer customers upgraded products or services they already have (and presumably enjoy). Consultants, for example, can add an hour of their time at no cost.
The jackpot of exclusive perks is something your customers can’t get simply by paying for them. Access to new products before they’re launched and invitations to reserved events are two such perks you might consider.
7. Referral marketing landing page
A simple way to gather referrals is to add a form to your existing website or to create a landing page where customers can enter their information and their referrals’ information.
You’ll want to capture their attention by making clear what reward they will receive and how they can claim it. Advertise your program by prominently displaying it on your website and including the link in your email signature and social media bio.
8. Seasonal, event, and timed referral campaigns
If you want to give an immediate boost to your lead generation, these types of referral campaign ideas will get the job done. Seasonal, event, and timed campaigns all tap into customers’ fear of missing out—when there’s a limited opportunity to participate and experience what others enjoy, customers will feel a heightened urge to be a part of the effort.
You can choose a campaign to coincide with the days leading up to a major holiday like Thanksgiving, Christmas, New Year’s, or Independence Day. You could also capitalize on the excitement of a big event. Sports championship games are an obvious choice, but other options include a local event, your business anniversary, the rollout of a new product or service, or a landmark achievement—just about anything can be made “eventful.”
And then there are the straightforward, limited-time campaigns that you count down to a deadline you select.
9. Points referral system
Awarding points for referrals is another simple system that works on two fronts—it encourages new and repeat business—and is easily applied to just about any type of enterprise.
Customers are awarded points for each activity until they earn enough to redeem them for a reward. You can award a set number of points for a new referral and stop there, or you can award bonus points when referrals convert. These bonus points might be just enough to get your customer to do your follow-up for you!
10. Tiered or stackable referral incentives
If you run a business that requires customers to pay a regular fee, then you may want to incentivize even more referrals with a tiered or stackable referral program.
In a tiered program, customers move from one tier to another after providing a set number of referrals. Each tier offers greater discounts or more valuable rewards. Alternatively, you can stack discounts so that for each referral that converts, a customer receives a discount applied to their fee. Provide enough new customers, and they eventually receive your services for free.
11. Exclusive events for loyal customers
The appeal of these events is their exclusivity—not their price tag.
People like to feel special, and an invitation to an event where only a select group of people are given entrance is the easiest way to instill a feeling of singular importance. Provide your loyalty program customers with an extra ticket or two to a company event so they can bring their selected referrals, where they can be introduced to your brand without feeling any expectation to make a purchase.
As I mentioned at the start of this post, before a customer refers you, they need to remember you. This is an especially important consideration when there are significant periods between transactions. You need a way to nurture relationships, easily stay in touch, and stay top of mind across months or even years so that when the opportunity to make a referral presents itself, your customers immediately think of you.
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Referrals are a cost-effective way to generate new leads, and the ideas presented here for incentivizing your customers to provide you with leads are proven winners. Focus on your target audience and what would motivate then to refer people they know, and don’t be afraid to combine some of these ideas.
But a successful referral program requires that your customers continue to know, like, trust, and remember you long after the transaction—and that means staying in touch and providing value over the long haul. Regardless of whether you choose one of our solutions, you must find a way to nurture your client relationships so you remain top of mind.