Referral Programs for Small Businesses: Best Practices and Software

You don’t have to be as big as Dropbox, Uber, or Airbnb to benefit from referral marketing.

A small business can already start reaping great benefits from a referral program as well. In fact, it’s one of the most effective ways to convert leads and increase your customer base.

What exactly do we mean when we say “referral programs for small businesses?” We’re not talking about a punch-card program or printed referral cards for your customers to share with friends. We’re talking about an official way for your customers to spread the word about your business get rewarded for their efforts.

Setting up this type of program can be fairly easy using referral software for small businesses — more on that below.

How successful are referral programs for small businesses?

Referral programs work because people trust recommendations from their friends and family more than any other source of information. Yes, people also look for reviews online, but they’re far more inclined to believe a friend than a review from a complete stranger.

These recommendations can happen without prompting, which makes them hard to control. Why not formalize this word-of-mouth marketing with a referral program that gives your customers an easier way to share and rewards them in the process?

A referral program streamlines the entire process, gives existing customers multiple ways to refer others, and can automatically send out rewards whenever a referral turns into a sale.

A business with strong word of mouth turns happy existing customers into powerful sources of referrals. It’s like adding compound interest to your existing customer acquisition efforts

But when you start a referral program, how can you increase the rate of customers sending referrals to your business? Customer service and experience is key. When you go above and beyond to satisfy your customers, they’ll be more than happy to spread the word about you.

Can referral programs benefit small businesses?

Referral programs can help your small business in many ways. Here are the top four we find to be the most effective:

Builds better customer relationships

Having strong customer relationships for any business is important – but for a small business, it can mean everything. Loyal customers refer their friends because they trust your small business, are valued as individuals (rather than just being a number), and feel like they’re part of your community.

Once customers hear about your referral program, many of them will likely share your business with friends who also enjoy what you have to offer.

Referral programs also help create better relationships because customers who refer friends to you will feel like they’ve played a part in your business success.

Creates loyal customers

Referred customers are 18% more likely to remain your customers. After all, they were referred by someone who already knows them, so the odds of referrals liking and staying loyal to your small business are much higher.

In addition, if you offer the right referral incentives (for example, discounts or store credit), you’re also giving both customers and referrals a reason to keep coming back.

Efficient and cost-effective

A small business needs to use its resources wisely. Referral programs are much easier and more affordable compared to other forms of advertising. Customers who spread the word to friends and family provide advertising money can’t buy!

With a referral program, you’re not spending as much money (and valuable time) on customer acquisition, and you’re not targeting complete strangers with traditional ads. Rather, you’re targeting your existing customers, who’ve already developed a positive relationship with your brand. These loyal customers will promote your business for you at little to no cost.

And since every referral message is sent from a customer – not directly from your brand – referral programs are highly targeted and more trustworthy than a traditional ad.

Create a flywheel of new customers for your business.

Word of mouth travels fast, especially on social media. Since a referral program makes sharing easier, this cycle will go even faster.

When a customer shares your referral program on social media, their friends will instantly become aware of your brand. And if a few of these friends become new customers, there’s a strong possibility they’ll also share the referral program with their own friends. Thus, the cycle will keep going and going. This is referred to as a viral loop, a powerful element that helps boost your referral marketing program.

Referral software for small businesses [Free Tools]

These referral tools for small businesses are a free and easy way to help you start your referral program.

Want a fully automated referral program for your small business business? Run your referral program with us at Referral Rock. Find out how we can build your program with you (and tailor it to your unique needs)

11 examples of referral marketing done right for small businesses

We’ve rounded up 11 successful referral programs for small businesses that serve as awesome examples of the best practices listed above. Read on to see how you can apply them in your own small business referral program.

PA Fitness

About the small business PA Fitness operates fitness centers in Marysville, Washington and Arlington, Washington.

What we love about their referral program:

• Feel-good, friend-oriented CTA: “Working out is always more fun with a buddy!”
• A welcoming image of women working out together.
• Concise referral text emphasizing the “why” behind referring (still friend-oriented): “From the hottest new group exercise classes to one-on-one personal training, the latest fitness equipment, and top-notch facilities – we have you covered. Now, help us cover someone close to you.”
• Below the CTA button, there’s also the text that reads, “Your friends will thank you.”
• There’s no extrinsic incentive here. Instead, the program highlights the intrinsic incentive of helping a friend.
• Easy-to-find long blue CTA button: “Invite my friend”

Tomlinson Bomberger

About the small business: Tomlinson Bomberger offers landscaping, lawn care, and pest control services to the Lancaster, PA area.

What we love about their referral program:

• Community-minded, feel-good referral messaging: “Our business has grown over the decades from all the great referrals from our clients!”
• Friendship-focused image emphasizing how referring the landscaping business will help friends out.
• Enticing CTA: “Referrals | Want to make an easy $50?”
• Incentives tied to the company: $50 company credit.
• Cumulative credit: Every time a referred friend makes a qualifying purchase, Tomlinson Bomberger rewards the referrer with another $50.
• An easy-to-find CTA button.
• Clear referral terms and conditions to explain how to earn referral rewards.

Dave’s Cooling & Heating

About the small business: Dave’s Cooling & Heating is an HVAC business based in Frederick, MD.

What we love about their referral program:

• Focus on community: “The best way you can reward us for a job well done is to tell a friend… If the person you referred ends up becoming one of our customers, we’ll even give you a gift as a thank you. It’s a win-win-win!”
• Enticing, dual-sided referral reward: Both referrer and friend receive $50 when the friend becomes a new Dave’s customer.
• Easy-to-understand terms explaining the HVAC referral program mechanic in two sentences. Customers know exactly what it takes to earn the reward.

Dragon Gym

About the small business: Dragon Gym is a martial arts and fitness center located in Exton, PA.

What we love about their referral program:

• Feel-good, community-minded messaging: The description for this small business referral program is a personal letter to students from the gym’s president, which emphasizes the importance of word-of-mouth to the gym.
• The sender thanks the students at multiple points, both at the beginning and end of the letter.
• Enticing, tiered referral rewards encourage students to keep referring.
• The reward ties back to the business, with the student receiving “$100 of the next month’s tuition or CASH” whenever someone they refer decides to join the gym after their Quick Start Course.
• Clear description of the program mechanics makes referring simple: “Referring a friend is as easy as 1-2-3!”
• An easy-to-find red CTA button for submitting the form.

No Place Like Home Pet Sitting

About the small business: No Place Like Home Pet Sitting offers pet sitting services to the Lithia, Florida area.

What we love about their referral program:

• Community-minded messaging: “We love our clients and want to thank you for trusting us with your precious pets. There is no greater compliment than when our valued clients refer us to their family, friends, and neighbors. To show our appreciation, we are proud to announce our new referral program.”
• Enticing referral reward that connects to the company: “Whenever you refer someone to No Place Like Home Pet Sitting and they become a new client, you’ll receive 10% of their invoice off your next invoice.”
• This small business referral program offers clear terms and conditions: Clients must be new, and must complete their first service.
• Incentives are cumulative and unlimited, which motivates customers to keep on referring.
• Charitable element: “If you are a 501(c) 3 charity and you refer clients to us after a client completes their first sitting, you’ll receive 20% of their first bill as a thank you and to help in your rescue efforts!”
• Easy social sharing through Facebook’s Share button, which lets customers share the business right from the referral page.

Borst Landscape & Design

About the small business: Borst Landscape & Design offers landscaping design and maintenance services to Allendale, NJ and the surrounding area.

What we love about their referral program:

• Feel-good referral messaging emphasizes how referrals help friends and Borst: “We very much appreciate your business and as our company grows we would like you to be part of our success!!”
• A warm invitation to join the small business referral program: “As a way of thanking our valued customers for referring us to their friends, family, neighbors, and others, we would like to reward you with a credit on your current invoice.”
• Enticing, company-connected incentive: $125 credit towards any future services from Borst.
• Cumulative incentive: “This is not a ‘one time only’ credit, but instead applies for every new client that you refer who signs with us.”
• Concise offer text with clear terms and conditions: “For every new client that signs a contract with Borst Landscape & Design and mentions the name of the client that referred them, we will be issuing you an immediate $125 credit.”

Camp Young Judea Texas

About the small business: Camp Young Judea is a Jewish sleepaway camp based in the Texas hill country. The camp promotes personal growth and a love for the Jewish faith.

What we love about their referral program:

• Camp Young Judea takes the friendship aspect to the next level, as their referral page is packed with plenty of kids having fun at camp.
• They’re focused on, and grateful for, how their community contributes to their success through referrals: “When a prospective parent calls us to learn more about Camp, there’s a very good chance it’s because a camp parent recommended us to them. It’s clear to us that YOU, our camp families, are our best recruiters and biggest cheerleaders!”
• A jumping arrow even shows users where to go to start their referral process. No messing this one up – just scroll and get the info on how to refer a friend to this small business.

American StaffCorp

About the small business: American StaffCorp is a staffing agency based out of Tulsa, Oklahoma. 

What we love about their referral program:

• Unlike many other companies, American StaffCorp places no limits on the number of referrals.
• Offering cash is a great way to create referrals, especially from job-seekers.
• This staffing referral program offers $100-$250 cash payouts, which certainly entices participants to refer others to this company.

Datamax

About the small business: Datamax is an office equipment company with several locations throughout Texas.

What we love about their referral program:

• Datamax words its program with fun copy: “Rewards are most definitely in order”
• The small business takes the opportunity to mention the company’s great NPS score.
• Its offers of a $200 Visa gift card is an amazing way to drive referrals.
• Datamax also gives referrers the opportunity to get their rewards in the forms of charitable donations. This helps the company utilize a hybrid referral system involving both tangible and community referrals.

Spa Bar

About the small business: Spa Bar is a company that offers a range of spa-based services and is based out of Orlando, Florida.

What we love about their referral program:

• Visitors are instantly drawn in by an eye-catching image at the top of Spa Bar’s referral page.
• Another great example of effective copywriting: “The greatest compliment we could receive is a referral from one of our valued clients.”
• The page uses short chunks of texts and engaging images to ensure the referral program is easy to understand.
• Spa Bar’s referral program offers dual-sided incentives, with $10 in Spa Bar Bucks credited to the person making the referral and the person being referred.

If you’re a spa business and you’re looking for more referral tips, check out our spa referral program article.

Southwest Office Supply & Interiors

About the small business: Southwest Office Supply & Interiors is an office supply company with locations throughout Oregon and the southwest part of Washington.

What we love about their referral program:

• Southwest Office Supply & Interiors has fun with its program by naming it the “Happy Customer Referral Program.”
• The description of the referral program includes a lot of thankful and appreciative sentiments.
• The business offers several gift options to motivate its customers to refer others.

6 best practices for SMB referral marketing programs

Now that you know how your business can benefit from a referral program, let’s review some of the best practices for how building your own referral program.

✅ Keep it simple.

• Make sure your customers can quickly understand what you want them to do (refer) and what’s in it for them (your incentive).
• Keep your explanation concise, but include all the necessary terms and conditions (What requirements must customers meet to receive the reward? Are rewards cumulative? For more information, read our article that breaks down all the different referral reward incentives.)

✅ Display a clear, enticing call to action (CTA).

• Your call to actions (CTAs) must be easy to find. Always put a headline at the top of your referral landing page. Display it in the biggest font, and consider making it bold or highlighted. Then, follow it with an easy-to- find CTA button.
• The most effective CTAs catch a customer’s eyes, concisely invite customers to refer, and let them know about the incentive.

✅ Offer valuable but cost-effective rewards that relate to your business.

• Consider double-sided rewards (incentives for both referrer and friend) and cumulative rewards (stacking credits that referrals can all use at once). This includes store credits, gift cards, and discounts.
• Offer free (or deeply discounted) products or services, but only after a customer has brought in several successful referrals. If you choose this route, gamifying the experience through a point system can pay dividends because it shows customers how close they are to the exclusive perk.
• Another gamified route is to hold a raffle, where every referral enters a customer to win a larger gift card, amount of store credit, or another big prize from your business.
• Charitable giving can also work as a referral incentive, especially when it involves a donation to a charity in your community. For example, your business might donate a set amount to your local food pantry for each referral.
• As a business, you can also highlight the basic, intrinsic reward of friends helping friends!

✅ Make social sharing easy for customers.

• Why focus on social? Because it’s where your customers naturally share with many friends at once. Integrating social sharing into your referral program means you’ll increase your impact with less time and effort.
• Make it as simple as possible for customers to share your referral program on social media. Do this by adding buttons with pre-filled message template that can be customized by each customer and shared with the click of a button.

✅ Use your position as a small business to your advantage.

• Your business has a unique personality that big-box businesses can’t duplicate. Inject some of this personality into your referral program!
• Emphasize being part of a community in your referral program messaging.
• Use feel-good messaging that focuses on helping friends and your business. (i.e., “Share the love.”)
• Include a few friendship- or community-focused images.

✅ Promote your program where you already communicate with customers.

• Your customers need to know about your program for it to be successful.
• Promote your program wherever you already communicate with customers.
• You might promote it in emails, social posts, QR code flyers in your store, and by directly asking customers.

Find the right referral software for your small business

Referral programs are a proven way to get your customers to spread the word to others – and this promotion comes at a much lower cost than other marketing efforts. Plus, the new customers you gain are more likely to have a high customer lifetime value and bring even more referrals to your business.

But manual referral management can get complicated quickly. It’s hard for a small business owner to keep track of who referred who, and then remember to send rewards to customers when their referral ends up in a sale.

With Referral Rock’s referral software, you don’t have to worry about tracking referrals, referral links, managing rewards, or trying to build a program in-house. Launch a automated customer referral program that makes sense for your business, and integrate seamlessly with your CRM or e-commerce platform.

To see if our referral software is right for you, book a product demo with one of our experts, or check out our flexible plans and pricing for getting started.

And if you’re looking to launch a referral program for small business, remember to:

• Use feel-good messaging that emphasizes the customer experience, community, and helping your business
• Offer incentives that tie back to your business, such as credits and discounts
• Provide excellent customer service to keep the feel-good vibes going across your customer journey

Good luck!