How To Build A Referral Program for Your Small Business From Scratch

September 13, 2016 / Reading: 3 minutes

If you are trying to maintain a high customer retention rate and gain a strong foundation of loyal customers, you must have an effective referral program. Which has been proven time and again to be one of the most effective ways to attract new customers to your business.

The most reliable website traffic comes from word of mouth advertising, so how do you tap into this lucrative source of new business? By planning out referral programs that builds lists of customers and useful information that you can use for future marketing campaigns.

Contest Strategy

A referral program needs to be as inconspicuous as possible. You’re not going to get natural reactions out of people if you just spam-blitz ads, polls, and other more traditional forms of list-building. How do you get people to volunteer their own personal information?

You offer them an opportunity to win something, that’s how. If you already have a healthy following, you could simply start a contest for the most referral sign-ups in a month to win a cash prize for themselves. Other good ideas include social media shares and followers referred to win entries into a raffle drawing.

Seasonal Tie-Ins

Everyone knows that the holidays bring in the most activity for businesses, so tying this increase in activity to your referral program is only natural. Beyond Black Friday and Christmas weeks, you can also try to take advantage of other “seasonal” moments, such as sports events and industry-related hype.

Anywhere there might be high traffic, you should cast your net out and get your audience to refer their friends to purchase your products or services so that they can earn whatever referral bonus that you put out there, i.e. discounts on their next purchase or free prizes.

The Free Trial

The best kind of referrals are the ones that require no special planning or monitoring on your part. You can run them all year long and they are still just as effective regardless. These types of referral programs are best suited with free trials or bonuses that are not tied to any other offers. The act of sharing freebies with friends will always bring in a steady stream of referrals as long as your product or service is worth sharing.

Optimizing Referral Opportunities

No matter what your referral strategy is, it has to be easy to understand and easy to participate. Preferably, it should be as easy as scanning a QR code, sharing an email link, or downloading an app and inputting a small phrase or number. You should use an automated email blast that goes out to your new referrals a week after they are on-board, so that it is still fresh in their minds and you can quickly grow that reach into a very large customer base.

Many businesses fall victim to rehashing the same contests, offers, and campaigns and lose the interest of anyone who has already participated in a past referral program, so it’s important to be creative and analyze trends to keep everyone engaged.