How-to Increase Your Customer Referrals | Digital Marketing Guide


Referral marketing is a key way for your business to improve its lead generation and grow your business. The beauty of customer referrals is that they come from the customer, which is often a friend or family member who has used your service or product. This is a hugely powerful strategy as not only do you get more leads to your business, but your customers get to experience your product as recommended by their friends and reap any rewards or discounts that come with that. Research has shown that referrals and recommendations are in fact the most powerful form of advertisement.

Don’t believe us? Let’s look at some statistics to back it up.

A whopping 92% of people say that they would trust a referral from their friend or family member, which is roughly 7 times the amount that says they trust traditional advertising. 54% of consumers also state that word of mouth impacts how and what they buy – making it the leading psychological factor. Finally, a referred customer is four times more likely to refer someone they know if they’ve had a positive experience with a service or product.

As mentioned, customer referrals have the highest return on investment out of all forms of marketing strategy. The simple customer referral can be more successful than email marketing, inbound and paid media advertising and is an essential tool for growing your business if utilised correctly. They are so powerful because they require little to no financial investment and can bring in quality leads to your business.

Sounds perfect? Well, it’s not without its considerations and there are some key points to understand before you implement your customer referrals programme. Before we go any further, let’s look at what a customer referral is and how it can impact your business.

What Is A Customer Referral?

Let’s start with the basics; what is a customer referral? A customer referral is simply a process whereby a consumer tells someone they know about something great that they’ve recently purchased or trialled. This could be a product or service that they feel is worth sharing with their family or friends after having a great experience themself. Brand loyalists are most likely to do this as they are passionate about your brand and product and truly buy into your business. This is known as brand advocacy and can be extremely successful in growing your brand and increasing revenue.

Group Of Young Friends Shopping In Mall Together

But how do you get your customers to do this? Well, the first and most important part is to make a product that people want to share. This sounds obvious but it’s worth mentioning that no one is going to refer their contacts to a product or service that isn’t good – so make sure you have a truly high-quality product that’s worth shouting about.

Word-of-mouth is a free way of growing your business, but it’s difficult to solely rely on and sometimes your customers might need a little push. To help boost your referrals, you can simply ask for them, although choosing the right time to do so and the best customers to ask is key to being successful. You could also start a customer referral programme and offer an incentive to your customers for referring people they know.

What Is A Customer Referral Programme?

A customer referrals programme is a simple marketing strategy that relies on customers to recommend your product or service to people they know. There is usually some kind of incentive to the referer, such as a discount or free use of the service for a period of time. Customer referrals are powerful because they leverage customers who have had a positive experience with your business. By offering these customers some kind of added benefit, you are converting them into a promoter of your brand and product.

The key factor behind the success of a referral programme is trust. Other forms of advertising rely on the relationship that you have to build with your customers. This can take a long time to acquire and usually costs a lot of money through extensive advertising strategies. With a customer referral, the trust is already there but just in a different form. The relationship between the two parties is organic, and the trust has built up over the length of the relationship. Simply put, if someone close to you recommends something, you are far more likely to engage with it yourself.

How A Customer Referrals Programme Can Benefit Businesses

As mentioned, a customer referral programme can be one of the most effective ways of generating leads for your business – but let’s dive a little deeper. Leads are great, but quality leads are even better. Your customers will have an idea of what your business is and the type of people it is aimed at – after all, they themselves are a customer! They will then only typically refer you to friends and family that they think will enjoy your product or service, which in turn results in more quality leads for you.

Young hipster male and female working laptop together in cafe

Another key benefit of customer referrals is that the growth is exponential. As more people get referred and become customers, they themselves will begin to refer people to become customers, and the cycle continues. Apart from promoting your referral scheme, you are able to grow your brand and increase your leads rapidly without doing much.

Ultimately though it’s about generating new business, and customer referrals are hugely successful at doing so. Despite the fact that a customer referrals programme comes at a financial cost to your business, the leads generated will over time increase dramatically and you will be able to see the real impact of your strategy.

How To Build Your Referrals Programme

Now that we know what customer referrals are and how a customer referral programme can benefit your business, let’s look at how you can start implementing this. Before you do anything else though it’s important that you set out clear goals as to what you want from your customer referral programme. Do you want to retain more customers? Or maybe you want to increase your revenue? Once you have a clearly defined objective, you can use this information to inform the rest of your programme.

Choosing Your Rewards And Criteria

The reward in your customer referral programme is the key to ensuring your customers get you the very best quality leads in their network. Not everyone needs a little something extra, but since your customers are working hard it’s only fitting that they receive something for their efforts. Giving something back will act as an incentive for your customers to recommend your business, so it needs to be suitable.

Many subscription services will offer a free monthly subscription for referring, whilst others may offer a gift card or even cash. For businesses that sell a physical product, referrers may get accessories or money off their next purchase. Some companies may even offer a tiered rewards system that encourages your customers to refer more of their friends and family.

Choosing Your Delivery System

Choosing the right delivery system for your customer referrals programme is crucial and should be directly informed by who your average customer is and what your product or service is. By understanding this, you can understand how your customers will interact with your referral programme and which channels they are most comfortable using.

excited young male relax on couch triumph read good news in email

Social media is a hugely powerful method of sharing customer referrals. Facebook is particularly successful as most people have large networks of close family and friends that can be reached. The average user has 245 friends and around 15% of users have over 500. One simple share can potentially reach hundreds of people in a visual, easy-to-understand way.

Mobile messengers are another great way for customers to interact with their referrals. Over half of all internet traffic is now on a mobile device and nearly 80% of smartphone users have made a purchase using their mobile. It is however worth bearing in mind that this fluctuates from industry to industry and demographic. When a referee gets their referral, they are already using the device that they are likely to buy on, making the conversion process much easier and more efficient.

Email is another great channel for your customer referral programme, especially if your customer base is 40 and above. Customers below this age will prefer social networks and mobile messengers, so it’s important to understand your demographic before you choose your channel.

Tracking And Monitoring Success

Referral tracking is a great way for monitoring the success of your customer referral programme. Without keeping track of the key metrics behind your customer referral programme, you risk having no knowledge as to whether it’s been worth doing. Close monitoring allows you to monitor things like user participation and customer satisfaction, and gives a clear indication if any customers are committing referral fraud.

A referral rate is a key metric to observe as it gives you crucial information as to the overall success of your customer referral programme. It lets you know how many people are actually referring your product or service and which channels work best. Different sharing platforms may work better or worse for your targeted customer base so having the right information lets you focus your efforts in the right place.

Tracking referrals help you in being able to fully optimise your conversion rate. Track data like how long it takes for a referee to interact with your business, or how many customers stay longer than their free trial or reduced rate period. This helps you fine-tune your customer referrals programme to make it more efficient and engaging to your customers.

You can also start to get a clear idea of your customer satisfaction rate by tracking your customer referrals. If your referral rates are low, this likely means that your customers aren’t completely satisfied with what you’re offering. Similarly, if your referral rates are high, your product is clearly something that your customers are willing to share with their friends and family.

Loop Digital – Specialists In Driving Customer Advocacy

Your customer referrals programme is just one of the many strategies that you can use to generate more leads for your business. We specialise in generating totally bespoke digital marketing strategies that can help to grow your business and enhance its brand awareness.

Whether it’s email marketing or marketing automation, we can help your business get to where it needs to be. For more information on what we can do to help, visit our digital marketing services page or contact a member of our team today.