Referrals are the lifeblood of many small businesses, especially when they first start out. In the early stages, word-of-mouth marketing can even happen naturally as clients are satisfied with the products or services they purchase from you. But as a business grows, it becomes necessary to implement a thorough referral marketing strategy in order to see consistent traffic and sales from referrals.
Use the following ten referral marketing strategies to build your customer base and optimize sales funnels for long-term client satisfaction.
Just Ask! (Using These Tips & Templates)
It is natural for business owners and marketing teams to feel uncomfortable asking for referrals because it can feel like an added burden on your clients. This instinct is helpful when considering the right timing and message for referral requests. However, businesses easily forget that loyal, satisfied clients are often happy to leverage their network for someone they trust or a brand that has helped them. Sometimes you just need to ask – and likely more than once.
Depending on the industry, your existing customers may not even be aware that you are accepting new clients. Or clients may not realize how much you stand to gain from their advocacy. Referral requests can help to personalize your company and remind clients of the hardworking people behind your brand.
Here are some tips and templates to help you begin.
Start with the Most Loyal Clients
Clients with a high lifetime value, long-standing accounts, or positive testimonials will be the most likely to enthusiastically recommend your company to others. Tailor your referral request around your history with these high-quality clients, whether that means referencing years of partnership with them or thanking them for a recent review.
Here is an email template you can start with when interacting with loyal customers:
Requesting a Referral from a Loyal Client
We are so thankful for your continued loyalty to [name of company], and are glad our [insert name of service] has been a help to you.
Would you be willing to connect us with someone in your network who would also benefit from [type of service]? We would love to meet more like-minded people to see if we could be a valuable partner for them as well.
[call to action]
Thank you for considering!
Ask the Right Person on the Team
Once you identify your happiest and most valuable customers to ask for referrals, make sure you select the right contact on their team for your request. Consider who you have interacted with the most, so you can choose the person who will be able to most accurately and enthusiastically describe your business to their network. Also take into consideration your contact’s level of influence and ability to speak with someone who is likely to have relevant connections within their industry.
Customize the Referral Request
You don’t need a long-standing relationship with a client to personalize your referral request. Setting up email sequences triggered by user actions (such as a purchase) is one way to customize a referral request to align with a client’s stage in the customer journey.
Here is an email template to use when asking a new customer for a referral:
Requesting a Referral from a New Client
Thank you for your recent purchase of [name of product/service]. We appreciate your business!
Recommendations from our happy customers are the #1 way our business grows. If you have friends or family who would benefit from [name of product/service] too, please send them our way!
[call to action]
Time the Referral Requests for Optimal Engagement
One reason businesses are hesitant to ask for referrals is that they fear being perceived by their clients as bothersome or desperate. This concern is largely avoided by timing your referral requests well.
Sending constant emails asking for referrals is a quick way to frustrate your clients who may have otherwise been happy to refer your business when convenient for them. On the other hand, if you wait too long after a purchase to ask for a referral, clients may be too far removed from their experience to feel motivated to promote your brand. Test variations in frequency to discover the perfect balance that will motivate your clients without overwhelming them.
You will also need to test which stages in the buyer journey result in the most positive engagement and the best referrals. Examples of when to send a referral request to a client include: post-purchase, after leaving a positive review, upon reaching a certain account age, after upgrading a subscription, or even after changing jobs. Avoid sending referral requests soon after negative customer experiences, such as a recently closed customer support ticket.
Be sure to take into consideration any knowledge you have about your client’s schedule or personal life. For example, a realtor may need to wait until their client is happily settled into their home before asking them for a referral. Referral requests that coincide with other life events, such as holidays and vacations, are also likely to get lost in the shuffle. For the best results, pick a time when you know your client won’t be buried in other tasks.
Build Regular Referral Opportunities into Your Sales Funnel
Don’t treat referral requests as an after-thought in your sales cycle. Instead, incorporate plenty of natural referral opportunities into the buyer journey. This is helpful when you want to frequently – but respectfully – remind your clients about referrals without overloading them with separate requests.
For example, referral requests can be built into purchase pages, purchase confirmation emails, surveys, newsletters, and even email signatures – all regular company communications that your clients expect to receive anyway.
Disrupt Standard Company Communications for Quick Boosts
While ongoing referral reminders are a great way to incorporate referrals into the life of your business, don’t forget the power of disrupting usual communications to boost referral numbers. If clients are only exposed to the same types of referral requests as they interact with your brand, they may become immune to your request.
Break out of automated sequences by sending highly personalized emails from a company leader to a key client, making personal phone calls, adding pop-ups to key website pages, or creating limited-time incentives. You can also take this opportunity to get creative and incorporate humor or engaging content types (such as video) to connect with your target audience. These tactics interrupt regular communications and draw extra attention to referrals.
Incentivize Clients with Financial Compensation
Businesses often incentivize their clients to bring in referrals by offering monetary compensation. This is a way of respecting clients’ time and effort so that they feel appreciated and motivating them with tangible rewards.
Note that referral marketing differs from affiliate marketing, even though both programs involve financial compensation. Referral marketing ultimately relies on customer loyalty, while affiliate programs involve paid influencers or hired third-party promoters.
The extent of compensation your company offers for referrals will depend on what makes financial and structural sense for your business and may change as the company grows.
Structured Referral Programs
Consider using a customer referral program to incorporate word-of-mouth traffic and regular financial compensation into your business model. This strategy can include regular discounts (as opposed to a limited-time referral incentive), tiered pricing that corresponds to a number of successful referrals, or paying your client a percentage of the deal they helped you to close if it is a significant referral.
Remember that a referral marketing program should offer incentives that align with clients’ needs. The compensation needs to make it worth your clients’ time to go through with referrals, and make it clear you value their efforts. This requires testing different types of reward programs to confirm what resonates with your audience.
Limited-Time Financial Incentives
An established referral program may not make sense for small businesses and start-ups. These companies can build up to a more robust program with limited-time or limited-use offers.
For example, many ecommerce or retail companies use social media to run promotions that encourage brand followers to tag the company page in their personal posts in return for a giveaway entry. This is a low-cost way to motivate your network to promote your brand in return for free products. Limited-use coupons and one-time discounts based on a referred customer’s first purchase are additional ways to provide referral incentives without high costs.
These limited referral rewards don’t just apply to industries that sell physical products. Saas companies or service-led businesses might offer free upgrades or adjusted pricing to current customers who successfully bring in referred clients.
Create Shareable Content That Encourages Organic Brand Advocacy
Word-of-mouth referrals are not limited to structured programs or even direct conversations between your customers and their network. Businesses stand to gain significant brand exposure through online discussions surrounding their brand. One strategy businesses can employ to gain referrals is creating content designed for social sharing.
For this strategy, focus on content that contributes to the conversations happening in your industry and community. This encourages interactions outside of your immediate network. Types of content could include relevant industry newsletters that are easily forwarded or short educational videos shared on social media.
Remember that your clients are trying to build their own networks. It’s a win-win to create content that educates or entertains both your customers and their connections.
Network to Build Genuine Relationships
The emotional and relational nature of referral marketing requires genuine personal connection to build trust. Referral marketing works because people trust their colleagues, friends, or family members’ opinions, and in turn refer others because they form a personal connection to a brand.
Investing in personal relationships is a crucial strategy for finding brand advocates and expanding your network. Not only does it give your clients a better customer experience, but it also opens the door to honest conversations about how your connections can help you.
To network successfully, company leaders need to move beyond conversations centered around sales, instead getting to know the people in their industry and community – whether they become clients or not. This requires taking a genuine interest in others’ well being and adding value to their lives apart from the product or service you sell. Growth marketing strategies take the long view of what it means to succeed as a company, and referral marketing is no exception.
Digital marketing channels like social media have opened a new world of online networking – particularly through professional sites like LinkedIn. But don’t forget that old-school methods like in-person meetings, phone calls, and events are still valuable channels for demonstrating your willingness to give of your time and resources to help others.
Evaluate Earlier Funnel Stages to Identify Gaps in Your Referral Strategy
Referrals require an active marketing strategy and are not just a passive result from satisfied customers. However, a referral marketing strategy will always be difficult to achieve if earlier stages of the customer journey are not optimized for client satisfaction. Every stage of the growth marketing funnel is interdependent, so it is important to remember that referral marketing cannot be implemented in a vacuum.
Pay close attention to each funnel stage and its success alongside your referral strategy. This will help ensure your referral process is not compromised by issues with customer satisfaction or acquisition.
A lack of referrals could be due to a breakdown between customer activation and customer retention. In other words, low client satisfaction or market misalignment is resulting in low retention rates – and few long-term clients who are willing to make referrals.
Need ideas for improving your customer retention rate? Read our guide on retention strategies for your growth marketing plan.
Another funnel stage closely tied to referral marketing is the brand awareness and customer acquisition stage. If conversion rates are low, you might be getting referrals, but the potential customers look into your company without being convinced to take action.
A customer may not be able or willing to refer you to their network when asked, but they can still be a valuable contact in the future. Perhaps a willing customer’s influence is limited due to their current position within their company, or a client is hesitant to go through with a referral because they lack experience with your product or service. These factors make it crucial to keep in touch with clients over long periods of time.
Email marketing tools such as automated sequences are crucial for keeping tabs on current and past clients. Try sending regular newsletters, or scheduling communications that check in on subscribers periodically to see how they are doing and if your product or services are helping them. Use nurture sequences to make sure no one falls through the cracks, and you might end up with more brand advocates than you thought you had.
Use All in One Software to Get the Best ROI from Referral Marketing
For referral marketing to be profitable, companies will need access to quality data and the ability to integrate their marketing efforts under a consistent growth marketing strategy. All in one marketing software gives marketing teams the ability to set up automated sequences, A/B test messaging and timing, create website landing pages, and develop other necessary components of a referral marketing strategy – without having to pay for individual software subscriptions.
All in one marketing software also helps to integrate data across marketing channels for better decision making. Use data to identify happy customers who will be the best candidates for referral requests and to track the results of experiments and initiatives. A holistic data-gathering process helps to ensure you build successful referral programs and referral marketing campaigns that give you best ROI from your efforts.
Kartra’s all in one marketing software integrates your marketing efforts — empowering you to build a compelling referral marketing strategy.