4 Steps to Getting More Customer Referrals

As a business owner dedicated to helping small businesses grow and thrive, I’ve often talked about the importance of referrals to the long-term health of a business. However, many entrepreneurs are surprised to learn that even if you’ve got happy customers, they likely aren’t singing your praises. In fact, one study found while 83 percent of customers say they’re willing to provide referrals after a positive experience, only 29 percent actually do.

You may be asking yourself, “What can I do to ensure my happy customers are telling their family and friends?” Establishing a robust customer referral program that provides a seamless process for customers to easily share their experience is the key. When that referral program is built directly into the sales cycle, you significantly increase the likelihood your customers will recommend your business to others. Let’s examine four steps to setting up a successful customer referral program.

Ask the Right People, the Right Way, at the Right Time

Asking for a referral feels a lot like asking someone on a date, so it’s no wonder why small-business owners are often hesitant to ask customers to refer their business. It doesn’t need to be intimidating—or complicated—but it does require that you know who you should ask. Sending a short, straightforward survey the week following a purchase or service and asking customers to rate their experience can help identify your happiest customers. Utilize a simple scale of 0 to 10 to rate their experience, with 10 being the most likely to recommend your business. Once you have identified the right customers, you need to ask them the right way for a referral. This is a common mistake I see entrepreneurs make and it can lead to a prospect forgetting about your business—or worse, buying from someone else. Remember, your customers want to feel valued, so focusing on how they can help your business isn’t going to be well received. Instead, make sure your message asks how you can help them (and their friends) address the challenges they face through your product or service.

Follow Up in a Timely Manner

Even if you believe your offering is top notch and you’re delivering world-class customer service, you may find through the survey process that there are issues. It’s vital that you respond to survey results—especially if the results are less than optimal. For a customer rating of 9 or 10, a thank-you email that asks the customer to provide a referral is adequate. Customers that score a 7 or 8 are often referred to as passive customers because while they like a product or service, they aren’t likely to refer anyone to your business. Continuing to nurture the customer relationship with an email series that offers more assistance and educational resources related to your business could open the door to a future referral request. Automation can help by enabling you to schedule timely communications to these customers. Any customer scoring below 6 should be contacted to determine how you can improve their experience. It may feel uncomfortable, but reaching out directly to these customers and genuinely listening to their feedback can enable you to improve your processes and may even turn a dissatisfied customer into a brand advocate.

Incentivize to Motivate Participation

What works for one business doesn’t always work for another, so it’s important that you understand what motivates your customers to give a referral. For some it may be a discount program, for others free services, but most common is the dual-sided reward structure, which offers a reward to both the customer and the friend or family member they refer. An added benefit of this reward structure is that referred customers are more likely to then refer their own contacts, leading to even more business over time. Regardless of the reward you choose, make sure participation in the program is easy. Using a unique link that customers can quickly send out to friends or family that directs them to your website can be highly effective. Consider offering referral codes that are easy to remember and allow customers to collect their rewards immediately.

Market Your Referral Program

Just like any product or service, your customers need to understand how the referral program benefits them. Creating a referral program page allows you to clearly explain to customers how the program works and the benefits of joining. Prominently feature the referral program page on your company website and in your main navigation menu so customers can quickly find it. Promote the referral program in your customer communications, highlighting how easy the program is to participate in. Include testimonials from customers who have directly benefited from the reward incentives to help increase the likelihood of participation. And it’s important that like all facets of marketing you evaluate your success through pre-established metrics. This can be extremely helpful if you aren’t gaining traction with your program. You may need to increase the reward or change the messaging to drive greater customer engagement.

There is little as valuable to a business as a third-party endorsement because there is an inherent trust factor when someone personally recommends a business that can increase conversion. The benefits of a robust referral to a business include “better” prospects because they have heard about your offering from someone they trust. Since they are already somewhat familiar with your product or service, the sale cycle is often shorter. You can create a successful referral program by giving it the same attention as your other marketing channels. With a little effort, you can build a base of loyal customers.

Clate Mask is the founder and CEO of Keap (formally Infusionsoft), a maker of sales and marketing automation software for small businesses. He also is co-author of Conquer the Chaos: How to Grow a Successful Small Business Without Going Crazy.