5 Steps to an Effective Referral Marketing Program

wednesday drive Apr 03, 2018

Psychologist Robert Cialdini introduced social proof theory to describe how individuals imitate behaviors when confronted with an unfamiliar situation. As humans, the opinions and actions of others heavily influence the way we live our lives - from the friends we choose to the products and services we use.

A referral marketing program is the cornerstone element any business needs to grow its client base and capitalize on the principles of social proof theory. In a Nielsen Company global survey, 83% of respondents concurred that they would make a buying decision based on the recommendations of trusted parties such as friends, family, and acquaintances.

But, building an effective referral marketing program requires more than displaying client testimonials on your website and landing pages. You must put a standardized process in place for incentivizing and rewarding your most loyal of clients to reap the real benefits of referral marketing.

To establish and implement a program for increasing your clientele through referrals, follow the following 5 steps:

  1. Determine your ideal client

You’ll want to take stock of current client base and target those who are not only loyal to your company, but that are also satisfied and profitable (meaning they book frequently or utilize a variety of your services).

  1. Design a seamless sign-up experience

Whether a prospect is booking a ride with your company or a client is signing up for your referral program, the registration process should be quick and easy. The more steps involved and the more disjointed the workflow, the less likely it is that your program will be successful. Your referral marketing should include:

  • Clearly defined rules
  • Valuable benefits
  • Simple sign-up steps
  • Non-restrictive criteria for program eligibility
  • Rapid recognition of reward
  1. Balance client value with business cost

Think of your referral program as a gift exchange. Your clients are giving you a truly generous gift. They’re providing an opportunity for you to WOW another rider and gain another client without any effort on your end. No cold calling at all. So, show a bit of Southern hospitality and return the favor. Deliver a gift or several of real and perceived value to your loyal clients.

The goal here is to create equilibrium between value to the client and cost to your business. You may not be financially capable of doling out cash rewards, and that’s okay. For example, Dropbox (a file hosting service) offers extra online storage space in exchange for referrals. Tesla ties their referral to broader brand initiatives - giving out additional entries into promotional competitions for joining its referral program.

Ask yourself a couple, quick questions to pinpoint the most valuable hook for your referral marketing program:

  • What motivates your clients? More time, more money, more status?
  • Which incentives are you capable of delivering to clients?

Create a point system for every new referral. Once a client reaches a certain point threshold, give them a discount on your services.

Partner with a local retail business or restaurant and position your referral program as an access point to local deals.

  1. Create a marketing plan

Once you have a formal referral program in place, you can market it like crazy!

  • Create a call-to-action banner linking to an information page about the referral program.
  • Send an email to your current client list about the referral offer and include a link to the referral program in the footer of every email you deliver.
  • When you communicate through clients via ride receipts or update text messages, include information about and access to your referral program in the material.
  • Share the announcement about your program on all social platforms where your company is active.
  • Most importantly, ensure that your CSRs are mentioning the program on every single phone call with new, current, and past clients.
  1. Continue adding value to referral program members

Even after you’ve secured a referral program member, you should produce a reward trajectory to encourage increased word-of-mouth results. Figure out at which points in the communication process with clients you can engage them to take action. From an individual’s referral registration to his or her’s first successful referral sign-up, there are 5 core touchpoints for business owners to add more value to their brand experience:

  1. Referral sign-up
  2. First referral submission
  3. Display of a positive experience (online or otherwise)
  4. Lack of referral submission (ever or in a specified amount of time)
  5. Referral sign-up as a result of a referral

Segment out your client list to include a set of referral program clients only and continue sending personalized, relevant information and exclusive deals to them.