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You don’t have to be as big as Dropbox, Uber, or Airbnb to benefit from referral marketing. Your small business can reap great benefits from a referral program as well – it’s an awesome way for you to convert leads and increase your customer base.

What exactly do we mean when we mention referral programs for small businesses? We’re not talking about a punch-card program or print referral cards for your customers to share with friends. Instead, we’re talking about an official way for your customers to spread the word about your business, and possibly get a cool reward for their efforts.

There’s also referral software for small businesses that can make setting up this type of program much easier than normal. We have a helpful list of great types of referral software for small businesses below.

So, why do small business referral programs work, and how can they help your business? Let’s explore this topic.

Why do referral programs for small businesses work?

Referral programs work because people trust word-of-mouth recommendations from their friends and family more than any other source of information. Yes, they look for reviews online as well, but they’re far more inclined to believe a friend’s recommendation than a review from a complete stranger. A referral program simplifies this recommendation process and makes it more official – your customers can share your business with friends at the click of a button.

But when you start a referral program, how can you increase the likelihood that your existing customers will share your business with their friends? Customer service is key. When you go above and beyond to satisfy your customers, they’ll be more than happy to spread the word about you because they want to see you succeed.

Yes, word-of-mouth recommendations like these usually happen without prompting, which often makes them hard to control. So, why not formalize the process with a referral program, where you give customers an easier way to share (and reward them for doing so)?

Busy small coffee shop

How can a referral program help your small business?

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

Referral programs for small businesses build solid relationships.

Having strong customer relationships for any business is important – but for a small business, it can mean everything. Loyal customers who refer their friends do so because they trust your small business, feel valued as individuals rather than being just a number, and feel like they’re part of your community. Once they hear about your referral program, many of these customers will quickly think of a few friends who would also love what you offer, and share your business with them almost immediately. Referral programs help create better relationships because customers who refer friends to you will feel like they’ve played a part in your business’ success.

A small business referral program creates loyal customers.

Referred customers are 18% more likely to remain your customers, and have a higher lifetime value. After all, they trust their friends! And on the other hand, incentives for referring friends, such as discounts, store credits, and free products, give your referring customers a reason to keep coming back.

It’s cost-effective.

Your small business needs to use its resources wisely. Referral programs are easier and cheaper than 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 already have developed a positive relationship with your brand. These loyal customers will promote your business for you at little to no cost. So, you won’t have to shell out nearly as much on the usual ads.

Plus, most referral program messages not only include prewritten text from your company itself, but also have space for the referrer to add their own personalized message. And with every referral message being sent from a customer – not directly from your brand – recipients will find the message more trustworthy than a traditional ad.

It creates a viral loop.

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 via social media, all of their friends instantly become aware of your brand (and trust what their friend shared). 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 via social. Thus, the cycle will keep going on and on. This cycle is referred to as a viral loop, which is a powerful tool to use in your referral program.

workspace with laptop

Referral program best practices for small businesses

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

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 (Ex. What requirements must customers meet to receive the reward? Are rewards cumulative?)

Display a clear, enticing call-to-action.

  • The most effective call-to-actions (CTAs) catch customers’ eyes, concisely invite customers to refer, and quickly share the incentive.
  • Your CTA must be easy to find. Always put it at the top of your referral page. Display it in the biggest font, and consider bolding it. Then, follow it with an easy to find CTA button.

Offer valuable but cost-effective incentives that tie right back to your business.

  • Consider double-sided incentives (incentives for both referrer and friend) and cumulative incentives (stacking credits that referrals can all use at once). This can mean offering store credits/service credits, gift cards, and discounts.
  • Also, consider offering free (or more deeply discounted) products or services, but only after 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 route you could take is to hold a raffle, where every referral enters a customer to win a larger gift card, amount of store credit, or other larger 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.
  • And never underestimate the intrinsic reward of friends helping friends!

Make efficient social sharing easy for customers.

  • Make it as simple as possible for customers to share your referral program on social media.
  • Why focus on social? That’s where your customers naturally share with many friends at once. Integrating social sharing into your referral program means you’ll increase your impact!

Use your position as a small business to your advantage.

  • Your small business has a unique personality that big-box businesses can’t duplicate. Why not inject your personality into your referral program?
  • Emphasize being part of a community in your referral program messaging.
  • Consider using feel-good messaging that focuses on helping friends and your business. (i.e., “Share the love.”)
  • This messaging can include friendship- or community-focused images.

Examples of small business referral programs

We’ve rounded up six 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

referral programs for small businesses

Who They Are:

PA Fitness operates fitness centers in Marysville, Washington and Arlington, Washington.

What We Love:

  • Feel-good, friend-oriented CTA: “Working out is always more fun with a buddy!”
  • Friendship-focused image of women working out together.
  • Concise referral text that emphasizes 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. However, there’s still an intrinsic incentive of helping a friend. PA Fitness does the intrinsic incentive so well that there isn’t a need for an extrinsic reward.
  • Easy-to-find long blue CTA button (“Invite my friend”).

Tomlinson Bomberger

small business referral program

Who They Are:

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

What We Love:

  • Community-minded, feel-good referral messaging: “Our business has grown over the decades from all the great referrals from our clients!”
  • Friendship-focused image emphasizes how referring will help friends out.
  • Enticing CTA: “Referrals | Want to make an easy $50?”
  • Company-connected incentive: $50 company credit.
  • Cumulative credit: every time a referred friend makes a qualifying purchase, Tomlinson Bomberger rewards the referrer with another $50.
  • Easy-to-find CTA button.
  • Clear referral terms and conditions that state exactly what a “qualifying purchase” is.

Dave’s Cooling & Heating

referral program

Who They Are:

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

What We Love:

  • 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 that explain the program mechanic in two sentences. Customers know exactly what it takes to earn the reward – and since these terms are in the red box, they’re easy to find.
  • Eye-catching colors draw the customer in. We love the megaphone, too!

Dragon Gym

referral program example

Who They Are:

Dragon Gym is a martial arts and fitness center located in Exton, PA.

What We Love:

  • 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 start of the letter: “At Dragon Gym we’ve always gotten most of our new students from referral and word of mouth. We can’t thank you enough for that, but here’s what we can do. When you tell someone about Dragon Gym and recommend them to be one of our students it’s one of the greatest compliments you can give.”
    • Also notice how Sikdar thanks the students at multiple points: both at the beginning and end of the letter.
  • Highly enticing, tiered referral rewards encourage students to keep on referring and are tied right back to the business:
    • The student receives “$100 of the next month’s tuition or CASH” whenever someone they refer decides to join the gym “after their Quick Start Course.”
    • Best of all, successfully referring five people in one year, who all become new members, means that the referring student gets a whole free year of membership!
  • Clear description of the program mechanics makes referring simple: “Referring a friend is as easy as 1-2-3!”
    • “1. Complete the form below. 2. Your friend comes in for the trial class and tries out our Quick Start Program. 3. They like the program and decide to enroll as a member at Dragon Gym!”
  • Easy-to-find red CTA button for submitting the form.

No Place Like Home Pet Sitting

small business

Who They Are:

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

What We Love:

  • 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, company-connected referral reward: “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).
  • Cumulative, unlimited incentive 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: easily accessible Facebook “Share” button lets customers share the business right from the referral page.

Borst Landscape & Design

business referral program

Who They Are:

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

What We Love:

  • Feel-good referral messaging emphasizes how referrals help friends and Borst:
    • “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.”
    •  “We very much appreciate your business and as our company grows we would like you to be part of our success!!”
  • 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.”
  • Clear referral terms and conditions (referrals must be new clients and sign a contract).

Amuze

Amuze's referral system

Who They Are: Amuze is a clothing company that sells deeply discounted items from many popular brands.

What We Love:

  • This example uses a simple design without lots of text, keeping things easy to understand.
  • The wording of this offer – “make your friends love you.”
  • This programs offers a personalized sharing page for its customers.

American StaffCorp

cash referral program

Who They Are: American StaffCorp is a staffing agency based out of Tulsa, Oklahoma. 

What We Love:

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

Datamax

gift card referral example

Who They Are: Datamax is an office equipment company with several locations throughout Texas.

What We Love:

  • How Datamax words its program – “rewards are most definitely in order”
  • Utilizes its referral program as a way to mention the company’s great NPS score.
  • Offering a $200 Visa gift card is an amazing way to drive referrals.
  • Datamax also gives referrers the opportunity to take 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

spa bar's program

Who They Are: Spa Bar is a company that offers a range of spa-based services and is based out of Orlando, Florida.

What We Love:

  • Right away, visitors see 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.”
  • This page uses short amounts of texts and images to ensure this program’s steps are easy to understand.
  • Spa Bar’s referral program benefits both the person making the referral and the person being referred.

Southwest Office Supply & Interiors

referral example with options

Who They Are: Southwest Office Supply & Interiors is an office supply company with locations throughout Oregon and the southwest part of Washington.

What We Love:

  • Southwest Office Supply & Interiors has fun with its program by naming it the “Happy Customer Referral Program.”
  • While reading about this company’s program, it includes lots of thankful and appreciative sentiments.
  • Another example of a company offering several gift options to those referring others to this business.

Finding the right referral software for small businesses

Even when done digitally, manual referral management can end up getting complicated. It’s hard to keep track of who referred who when you go it alone. Take away the hassle by automating your program – using referral software is easier than you think, regardless of your business size. Here are three great types of referral software for small businesses.

Referral Rock

referral software for small business

If you want an easy way to manage referrals, check out Referral Rock. This referral software allows your small business to have complete control over its referral program. Referral Rock’s visual editor allows you to create amazing referral programs. The simplicity of this editor means you don’t need to be a technical expert to get amazing results. This visual editor can also import HTML and CSS, which is great for those with technical expertise.

Referral Rock integrates with many popular types of business software, helping to provide a seamless experience for your brand’s advocates. By partnering with Referral Rock, you’ll have plenty of ways for advocates to refer your company to others. Referral Rock offers advocate sharing through email, text, social media, and other types of unique links and codes.

Referral Rock even offers a free trial, meaning you have nothing to risk by seeing everything this software has to offer.

Referral SaaSquatch

As its name implies, this company offers referral software for small businesses that are in the SaaS (software as a service) industry. If your business is primarily digital, it might be worth checking out this referral software.

However, it’s important to note that Referral SaaSquatch offers a limited amount of integrations with other popular programs. Also, this type of referral marketing software is quite expensive when compared to other companies in this list.

Hello Referrals

You might also be interested in checking out Hello Referrals. This web-based referral software for small businesses offers a clean interface that should be easy for most people to use.

While this company’s referral software doesn’t offer as many options as others, it might be an effective solution for a company that’s looking to get started with referral marketing.

Key takeaways

Small business referral programs are an awesome way to get your customers to spread the word about your business, at a much lower cost than other marketing efforts. Your customers will feel like a valuable part of your business’ success, so your relationship with them will grow stronger. Plus, you’ll gain new customers who are more likely to keep coming back to your business. After all, people trust their friends and family more than any commercial, indirect advertising messages.

Be sure to offer incentives that tie back to your business, like credits, discounts, or gift cards. Use feel-good messaging that emphasizes friendship, community, and helping your business. And consider using referral software for small businesses to make managing your referral program even easier.

Interested in starting a referral program?

Jessica Huhn

Posted by Jessica Huhn

Jessica Huhn is a content writer and strategist at Referral Rock. When she is not writing, there is a good chance that Jessica is singing, arranging songs, sharing and enjoying content on social media, or hanging out with her mini Goldendoodle. She believes that it's always important to cultivate gentle strength.