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Referral Systems - How to get referrals?

Updated: Sep 19, 2023

What is a referral program?

It is a word of mouth marketing tactic that incentives customers to refer your services to a friend. The purpose is to attract new leads to a business. Often leads that come through referrals are primed and ready to go because a friend has referred them.

Why does a business need a referral program?

Customer referrals make around 50% of purchasing decisions. Thus the need to have a referral program is vital for the success of a business. If a customer is happy with a product/service they will naturally tell their friends. So having a system that encourages that will make it easier for everyone.

Value of referral = lifetime value of customer + the cost of customer acquisition

If you are thinking about implementing a referral system, you will want to ask yourself a few questions:

  • How do you currently get referrals?

  • What areas could be leveraged?

  • What is the average customer value?

  • How many referrals would you need to break even on your spend?

Referral Ideas

1. Social media contests/giveaways

Run a competition offering a great prize or deal. Get your audience to tag/share/like in order to go in the draw. Check out many great examples for competition ideas on social media. Just make sure your competition complies with the terms and conditions of the social media platform you are using.

2. Offer your customer and their friend a discount for referral

Provide an incentive for your customers to refer a friend. Give them a discount for sending the referral and the friend also gets a discount. Helping them initiate that first purchase could lead to a lifelong customer.

3. Product or service upgrades

This is an excellent strategy to increase referrals and potentially upsell your clients to higher tier products and services. Offer your client a free month of a higher value product for referring a friend.

The friend is likely to become a customer and the current customer is able to experience the upgraded product or service for free, potentially leading them to upgrade after the free trial. Dropbox is a great example. They offer their clients more storage space for each referral. Other options can include offering an extra hour of a service you provide or a free add-on.

4. Ask for referrals at different times

The best time to ask for a referral might depend on your customers. For some it might be right after the purchase, for others it is after they have used it. Test to see what time is best for your customers. That way you are likely to get a number of referrals.

5. Referral partnership with complementary businesses

Provide a complementary business with a referral code that they can send to their audience. The business you choose to partner with on this should have a similar

6. Testimonials

Testimonials and reviews are a first step towards getting your customers to refer you. If they are already willing to publicly review your business, they are likely to refer you as well. Ensure everyone who has provided a testimonial or positive review is aware of your referral program.

7. Packaging and unboxing experience worth sharing

Create an experience for your customers that is worth sharing. Some businesses have caught on with this trend by packaging their products in elegant boxes and making an experience out of unboxing the item. It's like unwrapping a gift to yourself. Prompt customers to share the experience with their friends.

8. Free gift if they refer a friend

Offer your customer a free gift with their next purchase if they refer a friend. This also encourages a repeat purchase from the referrer.

9. Store credit or subscription credit

A cash giveaway is a great incentive for customers to refer your business. Give $50 to a friend and receive $50 yourself. Obviously it doesn't cost you $20 to give $20 because it's off the retail price of your product. Just be sure to check your margins to make sure you aren't short changing yourself.

However you decide to set up your referral system, you want to make it as easy as possible for your customers to refer you. Referral software can help you set up the system with ease and allows your customers to track referrals and rewards.

You will also want to make sure that your customers know about your referral program. Send out regular emails, social posts and have banners on your website. Make it part of your sales process.

For more ideas to grow your business check out our Business Success Map. A free resource (no email address required) that is designed to help business owners work on the right things at the right time.

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