What Are Referral Schemes?
Today we are going to take a look at how effective referral schemes can help your business grow sales and expand your brand. But first, for those of you unfamiliar with what they are, let's take a look.
A referral program is a system implemented within a business that incentivises current customers to refer your products/services to their family and friends. Essentially a paid word-of-mouth campaign.
The whole point of a referral program is to reach more people. It is also highly popular as those who are referring you are promoting your products. They are speaking highly of their experience as a customer with your business. This is why it's also great for brand awareness.
You can find out more about building your brand awareness in this post.
Referral schemes have also been rated as one of the most effective tactics at all stages of a sales funnel. And there is a fundamental reason behind this which we have already touched upon.
The people being referred to you will already have a pre-established trust in your brand. They know the person who is referring them and thus are more likely to trust your brand and therefore buy from you.
How a referral program works
It doesn't take long or any money to implement a referral program within your business. Essentially you are wanting your current customer base to become ambassadors for your brand.
A typical incentive you might see in a referral scheme may be that if one of your current customers refers a friend it may work in the following way:-
Your current customer gets £10 off their next order + the person they refer gets £5 off their first order.
This way you are ensuring that both customers feel valued, both the new customers and the customer who has referred them. It also means that they are getting value for money and may even incentivise the new customer to refer their friends to get more money off their shopping.
Steps to creating a referral schemes
To implement a referral program within your business, you first need to follow these steps:
- Choose a flagship product or service. Usually one of your most popular or hero products. The reputation of your customers and your business is on the line, so you will want to choose a product and a price that justifies them referring to the product. A great campaign with a poor product won't produce results and can be harmful.
- Get to know your customer base. Start to build a profile of what your customer base looks like. Why should they opt for your product over one of your competitors? How are they able to find you? Knowing the answers to these questions helps you to educate your current customer base on how to generate referrals and helps them to understand the top-selling points.
- Choose your incentive. We have given an example of an incentive already. Some companies however may just incentivise the referrer. However, it is more commonplace to also give a discount to the new customer. The incentive doesn't always have to be monetary. For example, free products or subscriptions can be given out or even a discount on future purchases.
Make the process easy
When it comes to when people refer you, you want to make the process nice and easy. A referral scheme doesn't always need constant attention. If implemented right, it can run itself.
Just ensure for example that you have a landing page complete with a CTA and a link where current customers can go to and find the link to provide to their friends.
It may also be worth considering collating your online reviews. This will help to bolster the pre-established trust that the customer who has referred them has instilled in them.
When they come to your website you want to continue enforcing that positive and solid reputation that your business has gained so far with this customer.
There are review websites such as Feefo and Trustpilot that can help you to collate your reviews in one place and then present these on your website.
Most importantly you need to choose the right referral schemes for your business. Not one scheme will work for all businesses.
It's all about understanding your customer base and demographic and getting the tactics right. However, once this is done referral marketing can be a fantastic way to increase sales within your business and grow your brand.
In summary
Referral marketing is a great way to grow your brand awareness. If you're a growing business or a start-up it's a great way not only to grow your sales but also to establish your reputation and position within your respective industry and to start to build a community amongst your customers and increase trust and awareness in your business and it's product/services.