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What if you found out that you held the keys to unlock a massive boost in sales for your small business? Well, you do — and that key is your current customers. Now that you've impressed them with exceptional customer service and a quality product or service, you're happy to see they keep coming back. So, what's next? Tap into this pool of satisfied customers and encourage them to send their friends and family your way.
When a customer sends you a referral, they are doing marketing work for you and have already vouched for your business. This new customer already believes in you — all you have to do is deliver on their expectations.
Need more evidence of the power of referrals? Check out these stats:
- Customers that a friend referred are four times more likely to complete a purchase.
- Referred customers are 18% less likely to churn than customers acquired through other marketing channels.
- 65% of new business for companies comes from referrals.
Referrals have immense potential. They can increase sales and bring in new customers who will continue supporting your business. Those referred may even begin referring themselves, allowing the customer base to grow exponentially!
If you don't have a referral plan, it's time to start one. Keep reading for five referral ideas that any small business owner can implement today.
1. Create a referral campaign
The most obvious approach is simply to ask for referrals. Ideally, you can set up an automated process to always have new referrals coming in.
Your email system is a great way to ask customers for referrals. However, you want to leave customers with a manageable number of asks or bother an unhappy customer with a referral request. Asking the wrong customer — or asking too often — can impact your customer experience and have a negative effect.
We recommend a two-step approach:
- At the bottom of your order confirmation emails, ask your customer to rate their shopping experience. Doing that will allow you to collect transparent customer feedback and create an email list of individuals who give you high ratings.
- Have an ongoing email campaign targeting people who shop with you frequently or have given high ratings on your customer survey. These people will receive a personal request for referrals. When setting up this campaign, could you make sure you limit the emails to going out 1-2 times each year per person? You want to avoid bothering a customer with a referral request whenever they purchase or interact with your company.
If your small business operates mostly offline, this approach can still work at your storefront. Print out small cards that request a referral. Train employees to gauge customers' shopping experience as they pay and leave the store. If they seem happy, the employee can add a referral card into their bag or attach it to their receipt.
2. Offer a two-sided referral incentive
If you really want to incentivize your referral program, consider a two-sided benefit. Launch a referral program that offers an incentive to the new customer and their referral. This approach is excellent for multiple reasons. First, your customer already loves your small business, and they'll be excited to share a discount or reward with their friends and family. Secondly, your customer now has the incentive to continue to share their good experience with others.
Some examples of a two-sided referral incentive are:
- Give a friend a 10% discount, and if they buy something, you get 20% off your next order
- Book two appointments together, and you both get a free upgrade
- Every time a referral makes a purchase, you both get $25 back in store credit
Ultimately, you can structure this promotion in any way you see fit. Make sure to promote this program by mentioning it on your social media sites, in emails, and to customers in your store.
3. Create a referral competition on social media
Consider turning your referral program into a contest on social media. Doing so will help you increase your brand awareness online, engage with more customers, and connect with customers who participate.
The most common version of this approach is the tag, follow, and comment competition. Customers can earn a free entry for a prize every time they tag someone on one of your posts.
Alternatively, you can create a referral page linked to your social media pages. Every time a customer submits a new referral, they get a free entry for a prize, and the referral receives a discount to your store.
No matter how you structure it, try to keep it fun and create an enticing incentive for your customers to share your brand with others.
If you’re looking into launching a social media giveaway, check out our recent article with ten tips for hosting a contest on social media.
4. Partner with another business
You can find a business that you can partner with for referrals. For example, if you're a wine store, you could partner with your local grocer. You can distribute coupons to the other store, giving each other access to a new customer base.
A bakery and a coffee shop could promote discounts for each other. Hair salons can partner with makeup artists. A contractor can partner with a painting company. These are just a few examples of how small businesses can work together to expand their customer pool.
5. Encourage employees to participate
Typically, your employees are one of your most substantial fan bases. They work for you because they believe in your product or service. And in the United States, small businesses employ 59.9 million people — imagine if each one brought in a referral!
You can reward your employees for every referral that makes a purchase, whether through a discount, a free product, or even a small monetary bonus. And your employee's friends and family want to support them, so they will likely give your business a chance. It's a win-win situation for everyone!
Moving forward
A referral system allows you to engage with and reward current customers or employees and creates an army of brand ambassadors. The right referral program can continue to grow your relationship with your customers, increase brand awareness, and encourage positive word-of-mouth.
One of the best referrals you can have is BBB Accreditation. Visit BBB.org/get-accredited to learn more about BBB Accreditation and how it can help your business.
Read more about BBB Accreditation Standards and BBB Standards for Trust.