What better advocate for your business than a client who’s had a great service with you? Get them involved through referral marketing.

This article will be delving into what referral marketing is and how to set up a programme to track your progress.

What is referral marketing?

Referral marketing is a way to expand your reach through your customer base by incentivising them to spread the word about your brand.

Different types of referral marketing

You’ve got a few different avenues to choose from when it comes to referral marketing.

Direct referrals

Direct referrals have a lower cost per acquisition and can be a quicker way to grow your database. If a customer is happy with your service, it’s a fine time to ask them about a referral. You can ask in-person, over email or print it on their receipt. Put an incentive behind it as this will encourage more people to refer a friend.

Social media referrals

Incentivise customers to share your product/service on social media with a post or a video. For websites, use a tracked link so you can tell who found your website through your customer. If you want your customer’s followers to buy a product, use a unique code or link so that you can see where any new sign-ups or downloads came from. You can create a unique link through Google – more instructions are here.

Email referrals

Emails are great for referrals because they’re direct without being too intrusive. Getting the most out of your subject line is crucial here. Make it clear that it’s a referral programme you’re talking and what incentives there are, if any.

A note on tiered referrals

You could even create a tiered rewards system, with greater rewards for those that refer more people. Razor brand Harry’s did this. The referral programme rewarded customers with instant prizes for reaching a certain number of referrals. A tiered programme is better managed on a referral marketing software platform, which we’ll go into a bit later.

You may have seen influencers using unique codes to encourage others to use a product or service. Yes, there is some overlap here. Find out more about engaging with micro-influencers by reading Partnering with micro-influencers – a cost-effective growth engine for small brands.

How to build a tracked referral programme

Establish what you want to get out of the programme. Referral programmes are typically for measurable outcomes such as increasing sales, leads or social media following. It can also provide value that is not measurable, such as wider brand awareness and strengthened reputation.

Gain a better understanding of your audience. Marketing analytics should give you some idea of what would motivate them in a referral scheme. Of course, targeting repeat customers makes sense as they’re the most loyal to your brand. They’d be the most interested in discounts or sampling new products, for instance.

Choose the right incentives

This could include, but is not limited to: discounts; vouchers; points; free products; samples; and product/service upgrades. Some companies even offer an incentive for both the referrer and the person being referred. Dropbox boosted its user base by 3,900% by offering referrers and the people they referred 500MB of additional free storage space.

Examples for small businesses:

• Each referral gives the referrer money off that they can build up to get an item for free
• Existing customers could receive a number of points for every successful sign-up, which can be redeemed later on, encouraging them to make more referrals. These points could translate into discounts or prizes

Decide on how you’re going to manage the scheme

This could be done with a referral marketing tool which will manage referral invitations, create unique codes/links and even track conversions.

There’s no need to use a platform, especially is you’re not expecting many referrals. You could just contact customers directly and track any referrals manually on spreadsheet. If you have email marketing software, make the most of features like forms and landing pages to keep track of referrals, too.

Shape your messaging

Make life as easy as possible for referrers by having a simple process. It should be clear what the referrer needs to do.

Market your referral programme

Again, how you do this comes down to your customers. If you run a gift shop, for example, you could advertise it in-store and on your website. Here are some suggestions.

• Advertise it in-store if you have a bricks and mortar presence
• Talk about it in an email with your existing customers
• Promote it on social media

Look after your own first

Referral marketing is a brilliant way to reach new customers, but make sure your existing customers are being looked after and are still having a positive experience with you.

Harvey Dhillon, founder and CEO of accountancy, Zmartly, said:

“For our first six years, every client came to us through referrals. We did no marketing at all. Only once we could afford an external digital marketing team did we open other channels, and today referrals are about 30% of our new clients. Our conversion rate on referrals is extremely high, because a referred client arrives already trusting us.

He said that referrals come from moments where you bring about a genuinely positive change for someone. “One client came to us after their previous accountant had them pay £18,000 in VAT when it should have been £6,000, and we saved them £12,000 straight away.

“We have a referral scheme, but we have never advertised it. Clients refer because they are happy, not for a reward, and we thank them afterwards with a small goodwill gesture. My advice is to look after the clients you have before you spend money finding new ones.”