I want to increase referrals and word of mouth sales. How do I encourage customers to share my service or products with friends and colleagues?
A customer referral program is not limited to products or services. You can also build a referral program for your newsletter, events, and recruiting. Be open to considering a referral program for anything you want to reward your existing audience for sharing.
The details should be unique to your business. It may include different levels depending on whether you choose to include affiliates, ambassadors, or referrals. To create clarity, below are business definitions for these different levels.
Business partners, customers, and influencers can be part of an affiliate program.
Program that involves two or more parties that work in conjunction to provide a certain level of benefit to each other. Affiliate programs are prevalent in internet advertising. The sponsoring website provides rewards to participating websites for directing traffic to their site. This is typically done by including display advertisements on the websites of participants. Performance of the advertisement is monitored and participants are rewarded based on these results.Source: Business Dictionary
Your brand ambassadors may include employees, influencers, or customers.
A representative or promoter of a specified activity.Source: Lexico
“She is a good ambassador for the industry”
You may pay a referral to employees, customers, and partners.
Reward offered to customers who introduce new customers, or to employees who bring in suitable recruits.Source: Business Dictionary
Awareness of Referral Program
Do your users know you have a customer referral program?
Is it part of the customer experience? Your customers are most likely to recommend your service when they are excited about it and when they are achieving the results they desire.
Are you creating multiple moments they want to share?
They won’t necessarily share each moment, but you increase the likelihood of your brand being talked about when you pay attention to these moments.
Moments and touchpoints to consider:
- At the time of purchase and/or delivery
- At a designated milestone or achievement within the customer experience
When and where do you talk about your referral program?
Introducing the program isn’t enough, People have other priorities and need to be reminded.
- Email communication. Is it included in the header or footer?
- Learning. Is it included on the last page of a digital document or physical book?
- Packaging. Is it included in or on the packaging?
- Social Media. Do you talk about it on your platforms?
- Transactions. Is it included on invoices or receipts?
If you have a physical presence, do you have strategic but subtle reminders?
- Point-of-service. Great for pop-up shops and booths.
- Mirrors. Strategic placement for boutiques and salons. You don’t want it to obstruct their reflection. A subtle reminder at eye-level can go a long way.
- Mural or background. You see these used commonly at events or retail spaces. How can you make yours unique?
- Vignette. Ideal for events or pop-up shops.
Don’t clutter your online and physical presence with reminders. Be thoughtful about the placement and where it should naturally occur.
Referral Program Participation
How can you motivate customers to talk about your brand?
You have customers who are motivated by different things. Some customers will talk about your brand because they truly love what it does for them. Some will talk about your brand because of how it makes them feel. Others will talk about your brand because of how it makes them look.
Jay Baer is an expert on word-of-mouth marketing and his infographic below provides additional insight.
How do you make it easy for customers to share your service?
- Plug-ins. Do you have it built into your website? There are plug-ins available which make it easier for your customer to share their excitement.
- Printed. Do you have the appropriate hashtag and social media handle printed on marketing collateral, signage, and packaging? If you have a referral program with business partners, do they have marketing pieces they want to and can easily share with their clients?
- Resources. Do you have a shared folder of social media images and suggested captions users can insert into social platforms? You can have a lot of fun with suggested captions by creating question prompts or fill-in-the-blank sentences to help customers create personalized content.
- Unique URL. If you are tracking referrals to reward your customers for sharing, do you have a personalized link readily available?
Do you make them feel part of your team?
You can send monthly newsletters to those who have opted into your program. The newsletter can share details about upcoming launches, previews of new products, behind-the-scenes details, top-performing products, and tips to increase referral rewards. You can also feature top referees. In addition, when you see a specific CTA or type of media perform better for conversions then share those tips within your referral program.
One business partner recommended I update my CTA button to a webinar instead of immediate purchase. Their research indicated people wanted to learn and build a relationship before buying immediately. This kind of feedback is helpful and creates a mutually beneficial relationship. However, this tip is unique to the research and feedback they’ve gathered on their product, market, and price point.
Building a program that customers are excited to be a part of makes it more likely they will share your products or services.
Your customers, influencers, and business partners are protective of their relationships and audience. Thus they have to believe in your brand in order to share it with their family, friends, and colleagues.
Referral Program Rewards
How do you determine what to pay?
Look at your profit margins. (If you need help with this consult your accountant.) Do you have the financial margin to create a customer referral program? Many times the money paid out in referral programs comes out of the marketing budget.
Some referral programs are flat rates when it is a one-time purchase such as products. Other referral programs are a % of purchase which can be applied both to one-time purchases and recurring purchases (subscriptions).
How are you tracking referrals?
Is it a question on a form and the new customer must fill remember to fill in the field? Or do you have a unique URL for each program participant?
Do you have a referral dashboard?
The dashboard helps your customer keep track of their referrals. When people can see their results and reward they are more inclined to apply increased effort.
Basic details to include:
- Who was referred
- Item purchased
- Purchase date
- Commission amount
- Date to be paid
- Date paid
There will be additional details you will want to track behind the scenes to measure the success of your referral program.
Should you choose to build an affiliate program there are specific guidelines set forth by the FTC which must be followed.
- Disclosures 101 for Social Media Influencers
- Endorsement Guides: What People Are Asking
- Truth in Advertising
A kitchen cabinet company paid an online lifestyle magazine, Styling Home, to create and publish an article entitled, “10 Must-Haves for a Great Kitchen.” The article, which displays a series of images depicting well-designed kitchens, appears in the same layout as other articles on the Styling Home site. Most of the images in the article depict and promote the sponsoring advertiser’s products. Thus, the article is an advertisement. The ad’s format, however, is likely to mislead consumers to believe it is an ordinary Styling Home article and reflects the independent views of the Styling Home writer, and not those of the sponsoring advertiser. Therefore, a clear and prominent disclosure of the article’s commercial nature is necessary.Native Advertising: A Guide for Businesses
Require that influencers disclose if you gave them a free sample, bought their airline tickets so they could visit your new resort or tour your factory, and obviously if you’ve paid them to create content about your brand. Essentially, insist that influencers disclose anything they’ve received from you or any relationship they have with you that is not obvious to the reader.The FTC and Influence Marketing: The crackdown begins
Referral Program Resources
- Affiliate Service: Share a Sale
- Affiliate Service: Tapfiliate
- Book: Talk Triggers by Jay Baer (*Amazon Affiliate link)
- Case Study: Morning Brew‘s referral program
- Example: Cultivate What Matters affiliate program (*I’m an Affiliate)
- Example: Visme affiliate program (*I’m an Affiliate)
Of the referral programs you’ve participated in, what did you like most? Share your questions and comments, below.