When you’re trying to choose the next new dinner spot to try, what brand of sneakers you should buy for working out, or what software will best help your business solve a problem, how do you decide?
Chances are, you seek the recommendation of a friend, family member, or colleague.
Referrals – when customers recommend a business to someone else in their network – are one of the most effective forms of marketing because people trust their peers. And by creating a formalized referral program with rewards, you can reliably drive more of these word-of-mouth recommendations.
Referral programs reward customers for recommending your business to their peers, by giving them an incentive like a discount, gift card, or cash once a referred friend makes their first purchase. These programs are a powerful marketing channel, as they turn current customers into advocates and bring in a steady, high-quality stream of new customers.
Ready to amp up your referrals and scale your business? Here’s your ultimate guide to starting a referral program that works, including:
What is a referral program?
A referral program is a word-of-mouth marketing strategy that motivates your existing customers to tell their friends, family and colleagues about your brand, products, or services. Within a referral program, the existing customer usually earns a reward whenever someone they refer makes their first purchase.
To encourage customers to refer their peers, a brand will prominently promote the referral incentives on offer. These incentives could include gift cards, discounts, store credits, free products, or swag. Customers who use the referral program receive referral links to share with their network, so the business can easily track referral sharing and send rewards.
Why start a referral program?
A customer referral program (or refer-a-friend program) helps businesses pinpoint their biggest brand fans, as well as track the exact source of their new customers.
A formalized program also makes it easy for customers to share your brand, thanks to a dedicated referral page and messaging. In short: referral programs turn your happy customers into reliable advocates! And referring customers don’t just share with anyone: they bring in good-fit leads who are more likely to purchase from you.