How to Drive Customer Referrals

Published: | By Andreyana Kulina

Your customers may not be perfect, but don’t forget, the Customer is King. Hence their demand for the royal treatment. But, how do you do that? Let's learn.

A recent study suggests that the average referred customer is 16% more profitable and loyal than their non-referred counterparts. 

Also, a growing body of evidence suggests that many consumers depend on referrals before they purchase a product or service.

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Whether you run a large corporation or a small business, you need a solid customer referral program to give you a steady supply of new customers.

And if you already have one that seems redundant, you need to go back to the marketing drawing board and relaunch that customer referral program.

Although referrals can occur naturally, you must develop a referral plan to give your marketing strategy a boost.

What Are Referrals in Marketing?

A referral is when a customer recommends a product or service to others after purchasing and using the product or service.

Experts consider referrals in marketing a kind of promotion because it is an affirmation of a product or service from someone who has used or experienced it.

Referral marketing is powerful because people trust the opinions of their friends and family members.

Many consider the recommendations of people they trust as authentic and do not consider a referral as blatant marketing.

Reasons to Allow Customers to Drive Referrals

Customer referrals are one of the many lead generation strategies used by businesses to:

  • attract prospects, 
  • engage customers, 
  • and boost sales.

Listed and explained below are other advantages referral programs have over other marketing strategies today.

  • Cost-effective marketing: One advantage of a referral marketing strategy is that you spend little or nothing to get the campaign going. Sometimes all you need is to ask your loyal customers to help you recommend others.

  • Easy Strategy: Unlike other marketing strategies, referrals do not need you to hire an expert with special knowledge.

  • Referrals Build Trust: There is a high level of trust in your business by customers gained through referrals.

  • Referral Marketing Strategy is Natural: Many people will not resist customer referrals because it is natural for people to recommend products and services to each other.

  • Referrals Build Long-lasting Relationships: When your customers refer people to your products and services, it creates a community bond and makes them feel they have a stake in the business.

  • Referrals are Gratifying: People are grateful to those who introduce them to excellent products and services. Your customers will find gratification when people thank them for their recommendations.

  • Higher Retention Rate: Statistics show customers gained through referrals have a 37 percent retention rate than those gotten from other means.

Best Ways to Get Customer Referrals

Although referrals are easy and one of the most effective ways of acquiring new customers, you must be careful of how you do it.

For example, one thing to avoid in your referral campaigns is to appear desperate. People will resist if you appear pushy when asking for referrals.

  • Create quality products and services

If you want to develop a long-lasting customer referral system, you must create quality goods and services that your clients love.

Just think about it—will you refer anyone to patronize a product or service that you consider being of inferior quality? Certainly not.

You want to ensure that they go through a rigorous QA test plan or process. Unless, of course, you do not care too much about your reputation.

When you produce and provide quality products and services, and advertise it using high-quality content, your customers will not only return for more, but will recommend them to their friends and family.

To get the most out of customer referrals, do not aim above just producing and offering excellent products and services. Give your customers something more to make them want to share the good news.

Making sure the products and services from your brand are of the best quality supersedes any marketing campaign you can ever think of.

So, focus on satisfying your current customers, and they will be at the forefront of telling other people about your brand.

  • Identify with your customer's values

Trust in your brand is the primary motive your customers want to refer other people to your business.

If your values and those of your customers are the same, it becomes easier for them to commit to recommending others to your brand.

Every business has a mission and values that guide its operations. Customers also have values that agree with the brand they patronize.

A business must ensure it maintains a consistent value system that continuously aligns with those of its customers.

Any deviation from the values already established by you will lead to a re-evaluation of their relationship with you.

  • Offer rewards

In most cases, your loyal customers do not need any reward or incentive to recommend others to your brand.

If, however, you want to increase the number of your customers who will join the referral train, offer some incentives or rewards.

When you reward your customers, they feel valued and will go all out to pay you back through referrals. Research that found that referral rewards can help the customer overcome an initial reluctance to recommend a brand to others has confirmed this view.

  • Don’t neglect existing customers

Sometimes businesses focus on gaining new customers that they neglect and do not pay proper attention to existing clients. While there is nothing wrong with paying attention to new customers, do not disregard the old ones.

If you neglect existing customers, other businesses will step in and grab their attention. Losing an existing customer means your brand has lost an influencer.

To avoid losing your clients through neglect, learn to keep in touch with them by informing them of recent developments in your brand.

Fortunately, there are email marketing software that businesses can use to automate interaction with all of their customers without investing much time. There is also AI writing software that makes writing email campaigns a breeze.

Some research studies show that most customers who stopped patronizing a company said they left because they believed the brand no longer cared about them.

  • Make customer referrals easy

If you want to get the best out of referrals from your existing customers, you must make it easy for them to recommend others to your business.

People are busy and have other things to do with their time rather than telling others about your brand.

There are several ways to simplify referrals for your customers. One easy way to encourage your customers to refer to your brand without breaking a sweat is to provide shareable links to your brand.

In the age of social media, tools like Instagram stories make this easier than ever. Sharing a link or a post now only takes a few taps on a screen and all your followers will get to see your new story.

What’s more, getting your followers to share your post can increase your reach exponentially.

Of course, this strategy depends on how many followers your business has so it’s worth investing a little time to get more followers. This can help you increase your referrals significantly.

  • Use referral marketing tools

One way to make customer referrals easy is to create a program with a referral tool. 

You can use referral marketing tools to encourage loyal customers to refer others to a business or brand. Business owners use referral tools to locate the best influencers that will recommend their brand.

You can also use referral marketing tools to automate your marketing process and reward your loyal customers.

Top 8 Referral Marketing Tools

There are many tools out there that can help you set up a customer referral program to encourage your customers to recommend your brand.

Below are some referral marketing tools to consider.

1. ReferralMagic

As a referral tracking software, ReferralMagic helps businesses track all new referrers and the customers that referred them.

With ReferralMagic, you can monitor when newly referred customers visit your business and know when they become paying customers. ReferralMagic has features like:

  • Customer reward management
  • Referral campaign statistics
  • Easy integration
  • Multiple referral campaigns

2. Refersion

The Refersion referral tool is used to invite customers to become part of your marketing campaign and receive rewards. Refersion has the following features:

  • Tracking every referral link
  • Conversion triggers
  • Tracking across multiple platforms
  • Auto coupon code creation

3. InviteReferrals 

This is a referral tool for businesses to track successful conversions and manage their customer referral programs through social sharing.

Some of the key features of InviteReferrals include:

  • Loyalty programs
  • Reward distribution
  • Customer support
  • Multiple referral options
  • Lead generation
  • Referral campaign management

4. Viral Loops 

Viral Loops is a cloud-based referral marketing platform. Users can track the performance of their customer referral campaigns.

Some features of the Viral Loops referral tool include: 

  • Mailing list development
  • Finding new customers
  • New sales channels creation
  • Finding adopters of your brand

5. Maître 

The Maitre customer referral tool helps developers easily embed a referral mechanism into their mobile and web apps. The creators of the app have improved the tool to accommodate other features.

The Maître app has the following features:

  • Rewarding customers with coupons
  • Rewarding customers with tickets
  • Building a waiting list for your app

6. Voucherify 

This is another referral tool that helps users grow their customer loyalty, acquire new customers, and increase revenue. Voucherify offers both a paid and free version.

Voucherify has features like:

  • Launch of a referral program
  • Landing pages creation
  • Creation and tracking of customized coupons.

7. ShareSomeFriends

This is a referral app used by business owners to reward customers that refer friends and family members to their products and services.

With ShareSomeFriends, you can:

  • Create a unique business account for your customers
  • Track your referral programs
  • Reward loyal customers

8. Ambassify 

Ambassify helps businesses identify their loyal customers and encourages them to refer other people. You can program the Ambassify app to detect only satisfied customers willing to spread good information about your brand.

Some features of the Ambassify app include:


Types of Customer Referral Rewards

Even after giving your best to make your customers happy, some will not recommend other people without incentives. 

When an incentive or social recognition is offered to consumers, 50% of them are more likely to participate in a referral program and recommend a product.

According to a new study, a combination of free accounts and offering financial incentives to your customers is most effective in encouraging them to recommend your brand.

For customers not inclined to recommend their family and friends to your brand, a referral incentive may change their minds.

So, what are some incentives or rewards businesses can offer their customers in a referral program?

Deciding on the right incentives or rewards for your customers depends on several factors like:

    • Your line of business
    • The type of customers you have
    • Your budget

Below are some of the most popular referral rewards available:

  • Money rewards

Money is a great motivator any day. Who doesn’t like money? Your customers will appreciate a little cash reward each time they make a referral.

  • Discounts

Discounts are deductions of a percentage of the actual cost of products and services occasionally offered to customers. Discounts are great incentives for businesses with customers that make repeat purchases.

  • Loyalty points

Loyalty points are referral rewards where customers accumulate points by patronizing or recommending your brand to others. Customers can redeem their loyalty points by converting the points into rewards. 

  • Charity donations

Something more than money or points motivates some customers. For example, some prefer brands that will make donations to charity organizations of their choice.

  • Upgrades

An Upgrade is an incentive or reward system popular with airline businesses. Customers can earn upgrades and enjoy better services and products based on their loyalty to the brand.

  • Gift cards

Gift cards are branded prepaid cards or other payment mechanisms which can purchase the goods and services of third parties. One unique feature of gift cards is that it gives customers latitude for how, where, and when to use them.

Final Words

It is no longer open to debate that customer referral is one of the best ways to gain new customers and improve sales.

But many referral programs and strategies do not yield positive results because of poor implementation.

To fully benefit from referrals, you must engage your loyal customers to recommend your brand to others.

Customers will come and go. And that is why you need to grow your customer pool to stand a chance of surviving. Taking advantage of your current customers is the best way to speed up your marketing flywheel.

Author Bio:

Andreyana Kulina is a Digital Marketing Specialist at Brosix, specializing in Content marketing and outreach strategies. Besides her passion for digital marketing, she likes hiking and mountain-biking.



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