A trusted referral is the Holy Grail of advertising. Successful marketers call it the key to increasing customer acquisition and retention.
And we think we know why.
Picture this: What would you trust more? An advert on Facebook or genuine advice from a friend? If your answer isn’t the latter, then I’d advise you to reevaluate your social circle.
As humans, we value information from trusted sources more, and this is the principle that anchors referral marketing. Studies show that referral leads convert 30% better, have a 16% higher lifetime value, and a 37% higher retention rate than other leads.
So with all these benefits and more, why is your business not using it? It’s time to get things right with referral marketing. Here is our step-by-step guide on how to create a referral program that drives results.
Step 1: Set Your Goals
Before you put any plan into action, it’s important that you first define your goals. Ask yourself, what do you hope to achieve with this referral program.
Besides the obvious—to attract more customers, what else do you seek to achieve? Perhaps you also want to create brand awareness, or maybe enhance brand advocacy. Setting your goals is paramount because it will help you measure success.
Once you have set your goals, you may want to get a referral agreement template online that will define the purpose of your referral program, lay down the program terms, and describe the nature of the incentives.
Step 2: List Possible Referral Sources
These are the people you consider potential advocates for your brand. They could be anyone you interact with on a day to day basis or have been connected to in the past. Begin listing them. This list could include your customers, suppliers, industry leaders, key influencers, and more.
Step 3: Decide on Your Offer
In the world of referral programs, there is no getting without giving. The trick here is to identify incentives that will work best for your business.
You could offer commision, loyalty points, or even free products to customers who refer other customers. It’s up to you to decide the best incentives to offer depending on your budget and nature of your business.
Step 4: Make a Plan to Reach Out
Once you’ve identified potential referral sources and incentives to offer, the next step is to strategize how to reach out to them. Possible ways to spread the word include:
- Email newsletters
- Product updates
- Landing pages
Whatever medium you choose, make sure to put your message in a way that will make it hard for the other party to resist the offer.
Step 5: Focus on Analytics
You’ll need to track your analytics to see whether your referral program is helping you reach your goals.
For example, using Google Analytics, you’ll be able to tell how people are getting to your landing page and where they are coming from. Once you know which channels are generating more leads, you can focus your efforts and resources there.
Now that you know how to create a referral program that drives results, why not give it a try. Do remember to comment and share.