Referral Program: Ideas to Get Started

December 19, 2019
WHERK Blog: Launching a Referral Program

As a society, there are a few things we do more than publicize our likes and dislikes. We love to leave glowing restaurant reviews on Yelp.  Singing the praises of our favorite running shoes to friends at the gym. We vent about a car dealership mishap or rude cashiers at the grocery store on social media. And though we all seem to be talking all of the time, it turns out most of us are actually listening too.

Statistics show that 83% of Americans say that word-of-mouth recommendations from a friend or family member make them more likely to buy something. That statistic is even more pronounced when you look at younger demos like Millennials. They are 115% more influenced by word-of-mouth than traditional advertising. Word-of-mouth marketing can lead to so many conversions. Many small businesses have looked for ways to capitalize on customers’ fervent fan-hood. The most obvious method is through a referral program. With most small business tactics, there’s hardly a one-size-fits-all approach. In hopes of spurring some ideas that might work for your business, we’ve put together a list of a few of our favorite referral programs.

Employee Referral Program

If you’ve been hiring right, your company’s employees should be among your biggest brand advocates.  So, who better to turn to for referrals than them? An employee referral program can make a big impact on both your bottom line and the morale of your employees. There are a couple of different ways to organize an employee referral program.  One way that shows fairness (but still rewards employees) is to hold a monthly raffle drawing.

For instance, each time an employee is responsible for a referral that converts to a sale, they receive an entry into that month’s drawing. An employee with one referral has one chance to win, while an employee with 10 referrals would receive 10 chances to win. As far as the prize, you could offer up an extra day of paid time off or free lunch for the week.  Maybe even a prime parking spot. If you feel that cash or gift cards might be a stronger incentive for your employees to participate, those prizes work too!

You could also keep a monthly chart that tracks referrals by an employee. The person who landed the most at the end of the month will receive the prize.

Points-based Referral Program

A customer-focused program that doles out points in exchange for rewards is a common system that you’re probably familiar with. The mechanics of it are quite simple: Every time you refer someone, the referrer (that’s you) receives an allotment of points. Once you start accruing points, you can stockpile them and “spend” them on whatever the business chooses.

While the basics of the program remain generally unchanged from business to business, where you can really get unique is in the incentives or gifts that customers receive in exchange for points. Some businesses opt to give away logo-clad hats, t-shirts or coffee mugs, while others offer related prizes that they know customers will love.  Another option could be for the customer to redeem points for discounts on services, like $10 off their next haircut or color treatment at the salon.

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“Referrals For Good” Program

Depending on the line of work you’re in, there’s a chance you may not be able to reward your customers with any sort of prize.  Regardless of the value. If that’s the case, or even if you just want to put a different spin on a referral program, you might consider one based on social gifting. You’ve probably heard of brands that take on an approach rooted in philanthropy and may have even been a customer of one before.

TOMS Shoes, which has a mission to donate a pair of shoes to a child in need for every sale of their product, along with Warby Parker, who similarly provides eyeglasses to people in need with every purchase, are two of the most well-known socially conscious companies.

Your margins may not be able to support a “one-for-one” model for every referral received, but what you can do is commit to donating a percentage of a referral’s sales to a local charity. You could also give a flat dollar amount for each referral if you feel that’s going to simultaneously help drive referrals and better benefit the charity of your choice.

Two-sided Referral Program

A two-sided referral program is one that you could institute in nearly every type of campaign—but it can be so effective at driving referrals that we felt it deserved its own section. The “two-sided” piece of this program alludes to the fact that both the person making the referral and the one receiving it get rewarded.

Think back to the points-based program. In that case, both parties might receive 100 points when a referral takes place. Not only does this incentivize an existing customer to refer a friend, but it helps entice that friend to proceed with their first purchase.

The great thing about this strategy is that businesses can even institute tiers to up the ante on prizes. For the first referral, customers might receive 1 point per referral, but that could escalate to 10 points once they reach 10 referrals given. The best way to keep track of customers’ points is with a digital system, like WHERK Home Service Software. Check out the features today!