How to Start a Referral Program

Want an affordable and powerful solution to grow your business?

Develop a customer referral program.

Starting a referral program generates a steady stream of new customers, boosts repeat business, and provides a substantial and tangible return on investment.

In other words, starting a referral program makes good sense.

But starting a referral program can be a challenge—especially if you’re new to it. First, you need to deliver epic customer service. Next, you need to create a program plan. Then, you need to execute that plan. Do all these things well, and you’ll reel in dozens of new customers and boost your dry-cleaning business to the next level.

The article below tells you how to start a referral program quickly and cost-effectively. The article discusses:

  • What a referral is and why it matters
  • Benefits of an organized referral program
  • How to launch a referral program
  • Proven tips on starting a referral program

Keep in mind that the key to starting a referral program is giving existing customers a reason to refer you to others. Do that effectively and efficiently, and business growth will explode.

What are Referrals and Why Do They Matter

Referrals are recommendations from customers to non-customers. Normally, non-customers have several ways to find you, including consulting websites like Angie’s List or print ads in local newspapers. But the most popular way is asking friends and families. As an owner or a manager, you need to do everything you can to ensure that customers recommend you when asked.

Why do referrals matter?

Referrals are word-of-mouth advertising, and that’s the most trusted form of advice. Word-of-mouth is also among the most effective forms of advertising available. More than 90% of consumers say they trust referrals from their peers, while nearly 75% say word of mouth significantly impacts purchasing decisions.

Customer referral programs tap into the power of word-of-mouth advertising in a big way. And the best part is that these referrals are often free. If you do have to invest in referrals, however, the cost is often low. In short, referrals are a low-cost way to drive big profits. Launching a referral program creates an army of customers happy to spread the word about you and your dry cleaner, pumping up your brand.

How to Start a Referral Program: The Basics

When word-of-mouth referrals make up 20% to 50% of purchasing decisions, it’s easy to see why savvy businesses diligently pursue these types of customers. But creating a customer referral program takes discipline. Below we list seven steps to starting one, as outlined by this HubSpot article:

  1. Set your goals
  2. List possible customer referral sources
  3. Make a plan for reaching out
  4. Identify tour referral incentives
  5. Create resources to alert your customers
  6. Set up tracking capabilities
  7. Say thank you to everyone

HubSpot’s article provides a somewhat comprehensive approach to launching a customer referral program. The article also says that creating one says two things about you—both good:

  1. That you’re confident enough in your services and team to know that a referral program would be a positive investment, and
  2. You know that despite your epic customer service, some customers might need a push to go out of their way for you.

Also, says the article, incentivizing customers to promote you with non-customers is critical. You can use cash incentives to do it, but non-cash incentives work better, says a study by the University of Chicago. Says the study, non-cash incentives are 24% more effective. For best results, says HubSpot’s article, incentivize both the referrer and the referred.

How to Start a Customer Referral Program: 7 Proven Tips

StichFix’s referral program exemplifies an effective referral program. So, does Harry’s Burgers, Grasshopper’s, Dropbox’s, Acorns’, and Evernote’s. These programs excel because they’ve chosen effective incentives for customers and non-customers. Choosing effective incentives supercharges your referral program.

Here are some additional tips to help jump-start your program:

  1. Involve everyone in the effort — If you want to kick off your program forcefully, involve everyone in the effort — employees, salespeople, delivery people. Include anyone that can help build relationships with customers.
  2. Chose advocates carefully — Listing advocates you have or have had a relationship with now or in the past is critical, but do it carefully. Lists like these often include current and past customers, vendors, and leads that may not have panned out. They’ll provide a firm foundation for your program.
  3. Create an “inner circle” of contacts — Not all referrals are equal. So, having listed your best advocates, create a list of prime contacts. These are customers that love you and wouldn’t need incentives to promote you to others. Pull and segment these people for contacting later on.
  4. Make a list of resources — Once you’ve outlined your program, develop a list of resources you’ll need to implement it—emails to tell customers about the program, a landing page for collecting referral’s information, scripts for sales and customer support people, a referral kit with resources to share with your contacts, and so on.
  5. Promote. Promote — Once you’ve kicked off your referral program, promote it anywhere and everywhere—blogs, newsletters, print ads, CTAs, email signatures, press releases, and so on. You want to remind people of your program continually.
  6. Setup tracking — Tracking is crucial. Track the referrer and the referred, who the referred is, the referral date, and did the referral convert, plus how you’ll follow up with him or her. Enlite’s software solution can help with this effort, too.
  7. Thank the referred and referred — Above all, thank everyone that makes the program a success, including the referrer for helping push the program and the referred for using your service. Consider a message that thanks everyone individually.

Creating a customer referral program supercharges your dry cleaner. A well-executed program delivers a steady stream of new customers, boosts repeat business, pumps up loyalty, and provides a substantial and tangible ROI. In short, a customer referral program makes good business sense. Take advantage of this strategy.

But first, you need to create a program. Software tools, like Enlite, Referral Rock, AdvocateHub by Influitive, Referral Candy, and Ambassador, can help. A customer referral program, when done correctly, can pump up both profitability and growth all at a little cost. What’s better than that?

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