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Referral Programs: A Guide for Small Business

Running a business is hard

But with a good referral program it doesn't have to be

As a small business owner you are probably thinking about helping your current customer or trying to figure out how to increase sales. But you've also got to think about increasing leads, and that is where referral programs come in. 

As a business owner myself, I know you just want your customers to be happy with their purchases. But wouldn't they be even happier if they could get something more? One of the best ways to accomplish this is by having good referrals program in place.

In a recent survey of 2,000 business owners by Texas Tech, 83% of the respondents claimed that they have a business that they love so much that they'd recommend it to others, yet 29% do so.

There is a lot of potential and profit in closing that 54% gap, but where do you start? You start by building referral programs. Read on to learn more

Why are referrals programs a thing?

I am willing to bet that you have made referrals to other people and you have had a time in your life when you needed a referral.

This symbiotic relationship leads to a level of understanding. A type of survival mechanism that comes from referral reciprocity. Referrals are also seen as a type of social currency. There are people that crave the social currency of being the go-to person, that connector. 

Most importantly, referrals remove risk. Referrals help us solve a problem. They reduce the amount of work we have to do to find the right solution to our problem, and they come prepackaged with answers to common questions: Will they work? Will they know? Can I trust them?  

That is the best way to think about referrals, as the ultimate way to lend and borrow trust.

Why do referrals programs matter so much?

Easily attract your ideal customer.

Frankly, most of the people that get referred to me are much closer to my ideal customer because my ideal customer is the one referring them. They understand our business and they know who would make a good fit for us. 

Shorten the sales cycle

A strong referral program can significantly shorten the sales cycle. Referred leads were likely sent to you from someone you trust, so you can skip the know, like, and trust stages and jump straight to the try stage. 

Increase your premium pricing

Referrals also allow you to diversify your pricing portfolio and charge a premium for your product or service. Customers that are familiar with your brand and have a positive perception of you are willing to pay more. 

Magnify Lifetime Value

Referral programs increase the lifetime value of your current customers. A real estate agent might receive 12 to 15 new referrals from just three initial leads if he or she creates an exceptional experience for those first three leads. Therefore, your customers' lifetime value can be multiplied to a great extent if you focus on referrals.

Referrals are invaluable to any business. By ignoring customer referrals or not incorporating customer referral program ideas into your marketing strategy, you're missing out on a valuable source of revenue.

7 Types of Referral Programs

How can you start building referral programs that actually work and what do they look like? That is what I am going to share with you in this post;

Get started with referrals for only $17

Every Client Referral Programs

Every business should have everyday referral offers that work for any type of customer.  So what do these referrals look like? How can you make them successful? And what elements should they consist of? 

I like to group client referrals into four main types; direct, implied, tangible and community. For more explanation on these referral types see my post, How to Make Your Business More Referable. Every client referral programs are probably the ones you are most familiar with, a gift certificate, refer-a-friend model, donation matching offers, etc. 

Each of these types of referrals offer something different, but they all need the same elements to be successful.

Client Referral Keys to Success

First, everybody needs to win or feel like they have won. The person giving the referral should not be the only one rewarded. If that referral turns around and does business with you, they should be rewarded too. 

Next, there should always be a strong tie back to your brand. A referral program with a strong connection to your brand should also have a strong connection to your most loyal customers.

The last key is consistency in your approach. You need to be consistently nurturing and developing these programs. Referral programs are not set it and forget and they are not a one time play. These programs need to be scheduled regularly. They should be weekly, monthly and quarterly depending on the program type. 

Client Referral Elements

Create easily shareable content

If you want to increase the likelihood that you will be referred then you must make it easy. Build content for your referral programs that are clear and concise so your customers can easily find what they need. This can be done through special referral program landing pages or posts. You can also offer pre-written emails or social content for your referral clients to seamlessly share with their followings. 

Have a special process for referral leads 

Not all referral leads will be ready to buy right away but they are definitely at a different stage in the sales funnel than your regular leads. They have a far more intimate relationship with your business through direct recommendations and should be treated as such with a special funnel built for them. 

Recognition is important to everyone, especially those who go the extra mile 

Your referral clients should receive a special thank you note. You can also publicly thank them through your newsletter or on social media. These thank-you notes can also include special offers for just your referral clients. 

Appreciation is a wonderful thing; It makes what is excellent in others belong to us as well. - Voltaire

Find Your Referrals Champions

Customers and clients who are already referring business to you are what I call 'Referral Champions'. They are a great customer, they are a returning customer, and they have had a good experience with you. In a lot of ways they are your ideal customers and they know how to connect with someone like themselves. 

Types of Champion Referral Programs

Offer Lunch

Get a handful of your best customers together for a free lunch. The lunches and get-togethers are offered as a thank-you, but the networking that occurs can be mutually beneficial to you, your business, and your referral champions as well. 

Peer-2-peer Teaching

Gathering all of your champion referrers to meet creates an opportunity for them to build a peer-2-peer teaching relationship. This could have further positive impact for everyone involved. 

Exclusive Events & Offers

Create exclusive events or offers just for your high value clients that have continually supported your brand. Track who these people are and target them with something that is more lucrative or enticing than your Every Client Referrals. Highly exclusive offers are more than $10 of your next purchase. These are offers for premium products at cut-rate prices. 

Exclusive Content or Advisory Board

You can create exclusive content or an advisory board of your champion customers. For example, the advisory board could facilitate a quarterly meeting to brainstorm ideas on topics such as expand your target market or unique ways to broaden your customer reach. There could even be incentives involved such as product discounts for ideas that win. 

Keys to Champion Program Success

Have a specific ask

There needs to be a very specific ‘ask’ for champion referral programs. The more specific you can when describing exactly the kind of customer you are seeking, the better your chance of success. 

A client of mine used to take his champion referrals to lunch and show them a list of people he wanted to meet in this client's church or club. This approach was very direct and as a result, the customer had an easy time connecting my client to the names on his list.

Make it easy and reward them

With any champion referral program, you should make your champion referrers' job as simple as possible, and you should definitely acknowledge them and publicly thank them for referring your business.

marketing strategy

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Ecosystem Balancing

Ecosystem balancing is the idea that you should take your existing clients and think of everyone else who serves them and find ways to form relationships with those people in order to add even more value. 

The benefits for B2B companies

If you work with clients that also work with other professionals or have a B2B model, ecosystem balancing is a great option for you, but not only for referrals. Knowing the individuals in your mutual client’s ecosystem can help you understand what they do for your customer and help you to better serve your customer.

Speaking from experience

A past client of mine, who is an author, wanted to expand her brand.  When we were developing her marketing strategy she told us that she employed an executive coach and an accounting professional. So after we built her brand plan, with her permission, I reached out to the executive coach and the accountant and had a quick session with each of them explaining the newly created plan. Afterward, they had a better understanding of our mutual clients business than ever before and were able to better serve her. 

They were both so blown away by this process that those two individuals actually became referral sources. They wanted to introduce me to their clients because they realized their other clients needed that level of innovation and collaboration. 

Understand the client ecosystem

If you work with any clients that also work with management consultants or executive coaches or accounting professionals, or even have advisory board members, think in terms of how you could actually add value to the relationship that they have with your mutual clients by holding strategy sessions or giving presentations. 

By doing this you will have a better understanding of who the other players are in that person's ecosystem, because there is real value in meeting those other professionals. For the right business, the ecosystem balancing approach could be really potent. If you want a deeper understanding, I talk more about ecosystem balancing in my book, The Ultimate Marketing Engine

Internal Referrals

One of the most valuable referral systems you can build comes from within your organization. When given the right information, incentives, and tools, your internal team can be a great referral source.

Teach your team marketing strategy 

Teach them about the core message, explain who your ideal customer is and what makes your business unique. By doing this, they will feel more involved and have a better understanding of the business. Ultimately leading to a better understanding of your ideal customer and improved internal referral generation.

Make it easy for them to share good news about the business

You can do this by developing simple ways for your employees to share business news and offer their feedback or opinions. For example, you could produce easily shareable content for you internal team to re-post on their social media platforms.

Create buzz

Keep things exciting by offering rewards or contests for referrals. This adds an element of fun to the work and can create a positive and productive internal culture for your business.  

Customers and Hiring

Use your referral system for hiring. Some of your best candidate recruitment people are the ones that already work for you and love what they do. Use them as a resource and leverage their insight.  

Your Referral Partner Network

Create a strategic partner network by building a best-in-class team that offers services your customers might need. 

Start by identifying key players and recruiting them for your partner network. You can find them by polling your best clients and seeing who else they work with, who else helps them, and who else solves their problems for them. 

After you have identified six or seven potential strategic partners it is time to begin the conversation. Start by writing, what I call, the perfect introduction in reverse. Which is a process that lets a potential partner tell you exactly how to refer your customers to their business.

Example

The Perfect Introduction, In Reverse

"Hello,


We have customers that we believe could benefit from your services. And we'd love it if you would take a moment and tell us the best way to refer you to our clients. In order to make it easy for you to tell us how to spot your ideal client and refer your services to them we have included a form with this note. We have also included a completed example for your reference.


Regards," 

After you have built the relationship, establish how you can continue to work together to build up each other's referral business.

Some examples are; create content together, create special offers for each other's clients, create co-marketing opportunities, interview each other, host webinars for each other's audiences, hold events together, etc. 

I built a great deal of my following by going to organizations that I knew had small business owners as part of their universe and offering to do educational webinars for their audience or offering free eBooks that could be co-branded. These deals helped me gain exposure to new referrals and helped them win with their audience. 

Below are some examples of partner network ideas 

Notice how they all are unique to the industries involved, provide value to clients, and both businesses involved win.

  • A partnership between wedding caterers and florists. This could include a third party, a wedding planner, and they all offer each other's services to their clients that are getting married.
  • Service technicians and painting contractors. Upon completion of services the technician can offer 10% off of the painting contractor services, increasing exposure for both parties. 
  • This one is creative; a financial planner and massage business. Once a year around tax season the financial planner can bring in a masseuse for a 15-minute shoulder massage while the customers are waiting to speak to their accountant. The masseuse could hand out their business cards and give samples of their services. In the mean time the accountant is getting more business because all of their clients will be talking about their unique practice.


Start Your Very Own Expert Club

Create a program for your ideal customer by starting an expert marketing club. You can host a monthly breakfast or webinar for your audience and bring in additional experts to speak.

Best Practices

There's an example in my latest book, The Ultimate Marketing Engine, where I worked with a real estate agent who moved to a new town. She was having trouble establishing her business so we brainstormed how she could start reaching out to the local community.  

The result; she started her own networking club for business owners where she talked about social media and marketing because she was also experienced in that field. In these meetings she didn’t sell her business as a realtor at all, but guess who the members thought of when it was time to buy or sell a home? She built her entire massive real estate business by hosting these monthly networking clubs.  

Another great example is Derek and Melanie Coburn in Washington DC. They have an organization called Cadre. Derek was a financial planner who wanted a better way to network. He brought a group of folks together and they started curating content for their businesses. This small group turned into a 300-person networking organization. Eventually he sold his financial planning business and now he and his wife run the networking organization full-time.


Referral Mastermind

Lastly, you can create a mastermind group for referrals. This option is very beneficial to B2B industries. If you're a coach, consultant, or marketer it is a no brainer. The referral mastermind approach is similar to the partner network approach, but you work directly with your own clients instead. 

How to get started

Start by setting up monthly training for your clients around a specific topic. You can charge money, but my gut feeling is that it would generate so many referrals for you that it would be worth it if you made it complimentary. 

Once you build a reliable audience for these smaller training sessions you can start to offer them the mastermind concept. You wouldn’t even need to teach anything necessarily, just facilitate everyone coming together to learn from each other.  

Offer even more value

If you wanted to add another layer to your referral mastermind you could offer to run one for your client in exchange for referrals. In this system you would bring their clients together to help them make their business more successful, but it would benefit both parties in the long run.

Example monthly meeting agenda

Through the mastermind process you are naturally sharing referrals with each other. And that is where the magic really happens. When you start working together and build up each other's businesses, leading back to that everybody wins mentality. 

Now it’s time to implement some of these referral program ideas and best practices to generate your best customers yet. Don’t wait, get started today!

make business more referable

How to Make Your Business More Referable

“How can I make my business more referable?” I get asked this question all the time but the question people should be asking is “who do people refer?” Having the answer to that question will better prepare you to take advantage of this powerful marketing tactic.

Having been in this business for decades, I’ve come to the conclusion that people make referral decisions the same way they make purchasing decisions. They decide something is the right price and fits their needs (which is the logical part), and then, they determine they will have more life, impress their friends, boost their confidence, and so on (the emotional part).

Here’s the thing – emotion typically comes first.

In order to increase your odds of getting referred, you need to tap into this emotion/logic formula. People have to believe you can help them and that you will deliver what is promised (logic), but, they must also feel good about helping you, trust that their referral will be treated well, and genuinely like the experience they have with your business (emotion.) The businesses that get the most referrals solve their customer’s problems while also providing a fun or unique experience.

If you are not getting referrals naturally, take a deep look at the previously mentioned formula and how it applies to your customers.

Now, let’s say you run a more serious business, like a law practice, that doesn’t typically have anything fun about it. In this situation, I’d think of ways that your business can make a genuine emotional connection with your clients and make that one of core elements of your business.

I have a lot of opinions on this topic, so below are a few tips I’d recommend implementing to boost the odds of your business getting referrals.

Tips to make your business more referable

Create a referral engine

No, this is not a shameless plug for my book. Creating a referral engine is absolutely essential if you want to bring in consistent referrals for your business. The key to getting more referrals from your existing clients is to create and focus on a referral process that you operate on a consistent basis. Once the process is in place, it will be easier for your customers to refer your business.

I usually suggest that every business build multiple referral programs and offers in each of the following four types.

Direct referrals

With a direct referral program, you simply state to your existing clients an offer for the act of creating a referral that turns into a client. “Refer a friend to our marketing firm and we’ll give you a free website review” is an example of how to use this approach. It’s motivating and describes what the business does.

Implied referrals

This type of referral is terribly underutilized. In an implied referral program you want to do things that make it very obvious you are doing work for someone, without necessarily asking for a referral. This sets up a situation where a friend or neighbor might simply ask you to refer the person running an implied referral program.

Tangible referrals

With a tangible referral, you put something in the hands of your customer that has real value and that they can give to a referral source. The thing we like about this tactic is that you can run it three or four times a year as a low cost, low exposure way to keep referrals top of mind.

Community referrals

There are so many community organizations that need and deserve your support. When you partner with a non-profit player and support their mission, events, and needs you can also offer promotional support by running the occasional promotion that benefits your partner. “When you buy this week or sign a contract this week, 10% of the proceeds go to benefit our community partner” is an example of how this would work.

You can build one program and then simply keep adding to it until you have referrals coming from numerous sources while promoting how referable your business is.

Show your personality and rock the customer experience

People don’t generally remember businesses, they remember other people. Having a personality is essential for getting referrals. When you can develop personal connections with your business, you give them a reason to remember and recommend you to others. Make their experience with your business one that they will never forget.

Target your influential customers and related businesses

Seek referrals first from your most influential customers. Note, these people may not actually be your best customers, but they are the people whose opinions carry the most weight with others.

I’m a huge advocate for building up a strategic partner network for your business, and it’s important to use these partners to boost your referrals. These businesses should provide complementary services to your own.

Build relationships

Building off the importance of strategic partnerships, it’s imperative that you focus on your relationships in an effort to boost referrals. This takes time, but it’s a must because many of your most influential customers won’t provide referrals until you gain their trust.

Offer incentives

Incentives can be tricky. For example, I wouldn’t recommend money offerings alone for referrals as they are poor motivators. Don’t be afraid to test offers to find out what works best. Sometimes trial and error gets you to the best solutions.

I personally believe is far better to work on making your business more likable before you offer any kind of incentive for referrals, but incentives are good to keep in the back of your mind when needed.

Make it easy for people to refer you

Make the ask. What do you have to lose? When you go in for the ask, be sure to do it at the right moment, and that moment is when your customer is likely to be happiest of all, and that is the moment right after they buy something. Use a post-purchase survey online or encourage your customer to write a review. The more you can do to get someone to recommend your business right after purchase, the more referrals you can generate.

Be sure to create tools, education, and follow-up systems as well to rock the referral marketing world.

What makes things catch on?

In Jonah Berger’s book, Contagious: Why Things Catch On, he explains there are six essential factors that make things catch on. These include:

  • Social currency: We share things that make us look good or help us compare favorably to others.
  • Triggers: Ideas that are easy to remember spread. Viral ideas attach themselves to top-of-the-mind stories, occurrences or environments.
  • Emotion: Emotions move us in irrational ways. This means that when we care, we share.
  • Public: People tend to follow others, but only when they can see what those others are doing.
  • Practical: Humans love giving out advice and tips, but especially if they offer practical value.
  • Stories: People do not just share information, they tell stories.

Take a look at the factors above and see how you may be able to apply them to your business (you don’t need to address all of them to be effective, but strive for at least a few.

Wha have you implemented in your business to increase referrals?

If you liked this post, check out our Small Business Guide to Referrals.

9 How To Be Easier To Talk To

Phone boothOne thing I know about these fast times we live in – people want information and engagement when they want and how them want it. The best way to turn this to your advantage is to employ tools that make it as easy as possible for prospects and customers to contact, engage, discuss, provide feedback, get help, collaborate and otherwise talk to you, while still having a life.

Job 1 is to make certain that you have your basic contact information, including maps and directions, right there on every page. Secure contact forms are a great way to make sure messages get through and I’ve also added EmailCenterPro email management software to make sure those emails get answered by the right person in the right way.

Instant Message – providing IM and chat room widgets allow visitors to get an answers and chat with other visitors
Meebo
Bold Chat

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