Referral Program

A referral program is a program where a company active solicits non-employees to actively refer individuals to purchase from them. In return, the non-employee will receive either cash or other benefit from their referral. Akin to buzz marketing, but a referral program suggests action and benefits.

Everyone knows the power of a quality referral. From kids who debate what is the most cool to adults who want to explain why something gives the greatest value, we often listen up when someone gives us a referral. It says that someone with similar interests and values to ours finds merit in this product or service.

While referral programs can be effective, they do have one major drawback. Some people feel very uncomfortable about sharing the names and phone numbers of their friends and family.

Because of this, you must carefully watch your customers’ reactions when you ask if they'd like to be a part of your referral program.

If they have strong and immediate negative reactions to your request, do not try to overcome their objections. Tell them that you understand their feelings, and then change the subject.

Of course, we also want to feel we made up our own minds. Therefore, gain through referral means there is incentive for the referring person to follow through on the transaction.

While some people believe that asking for a referral should take place face-to-face, email marketing is also a very effective channel for getting referrals. There are a few things to keep in mind when adding a referral program to your email campaigns:

1. Ask for the referral. Don't assume that since your email service provider offers a "forward to a friend" feature that people will use it. It's important to devise wording that encourages subscribers to refer your company to friends. Also make referring easy by not requiring too many steps. For example, include a referral link to a landing page with a short form asking for minimal information.

2. Offer an incentive (ethical bribe) as thanks for an introduction. Customers and followers are more likely to refer your company to friends when there's something in it for them. Make the incentive appropriate for the potential value of the sale. Some companies even have a tiered incentive to reward referrals based on their value. Thank the referrer promptly with a note and the gift.

3. Mention the referral incentive in all marketing channels. Take an integrated approach to the referral program by including the offer in multiple channels, including advertising, public relations, social media, white papers, landing pages, and of course, email marketing. Since new people will be exposed to your company via the referral program, include an email sign-up form on all these channels, including in all marketing emails.

4. Track the source of referrals. It's impossible to thank someone for a referral if the source can't be tracked. Check all links to ensure they are functional and review how people interact with your email. Use all your email real estate. For example, a logo can be linked to a referral landing page and tracked by your email service provider. Integrating email service provider tracking with your company CRM system will allow you to keep tabs on where referrals come from, what happens to them in the pipeline and what their value is.

5. Keep it fresh. Eyes will glaze over if the same wording and incentive is used for months, and the results of the referral program will suffer. Mix it up by including different phrases and keeping incentives current to what the market is demanding. Offering an iPod Touch today isn't as attractive as it was a few years ago, but offering an iPad will get attention. Give people a choice of incentives, such as an iPad or a VISA gift card.

Be a formal and monetized program or an informal suggestion made by another, referrals are often the most successful sales opportunities available.

What's the best referral program you've seen?

Budget: $250 - $1,000 per month