Word of mouth referrals are an incredibly valuable and powerful marketing tool. So powerful, in fact, that they generate up to 26% more customers than the next best contributor. According to Verizon and Small Business Trends’ 2014 survey, small business owners rated referrals as the number one way they acquire new customers. Word of mouth beat out search engines, social media, email… every other marketing tactic.
So referrals are an effective way to find and attract new customers to your business, but they’re also time and cost efficient. It doesn’t take a lot of investment — money or effort-wise — to set up a referral engine that continuously churns new leads into your sales funnel. And once you have a system in place, it’s hands-off from there.
Sold on the ‘why’? Let’s dig into the ‘how’ of setting up an effective and low maintenance referral generator.
Word of Mouth Referrals Begin with a Solid Experience
A solid referral program builds on the foundation of your business, product, and customer experience. If you don’t deliver an amazing product or service that’s easy for the customer to use, then your program won’t be as effective.
When you deliver a miraculous experience for your customers, you set the stage for a positive referral. Consider the kinds of experiences you yourself would share: Experiences that are radically easy and delightfully satisfactory are the ones people talk about. When you’ve truly wowed someone, they’re already in a mindset where they want to share their experience. That’s when you can capitalize on both their satisfaction and your ability to deliver on the hype.
Incentivize Word of Mouth Referrals
When you deliver a sensational experience and product, people will talk about your business. But if your product or service doesn’t come up in everyday conversation, the opportunity for a word-of-mouth referral may not arise. That’s why incentivizing customers who bring in referral business gives them a little nudge to gab about your business.
In order for word of mouth to actually become new business, you not only have to get customers talking. You also have to convince the people they’re chatting with to give you a chance. That’s why the most effective incentives are two-sided — both the referrer and the referee should get some kind of benefit from the transaction. This helps get the referrer talking, but it also helps the person on the other end of the conversation to convert.
Incentives don’t have to be huge. Offering something as simple as 15% off the referrer’s next project and $15 off the referee’s first one will do the trick. Money or a percentage off a future service allows you to provide even more value while guaranteeing that both parties will come back to you.
Automate the Process for Word of Mouth Referrals
Done right, word-of-mouth referrals can become an engine that cranks out new customers well after you’ve set it up. It’s one thing to promise advocates 15% off their next project — it’s another to have a system in place to make it continuously happen.
The first thing you want to automate is how you let customers know about the referral program. If you collect customer email addresses (and you should!), this can be as simple as creating a triggered email campaign that sends a certain amount of time after a customer uses your service and has a positive experience. Let them know about the referral program and the value they can get from participating. Then help them through the process.
Next, automate the actual tracking and applying of offers associated with the referral program. There are plenty of tools you can use that handle all of this — meaning you can forget about it. Try options like:
Keep the Machine Running
Now that your referral engine is up and running, there are a few steps you can take to keep the machine well-oiled and cranking out new customers.
Write handwritten thank you notes after you wrap up work with a client, or if they send a referral your way.
Send a regular newsletter out to your subscribers to help stay top of mind.
Don’t be afraid to ask for referrals when you serve up a particularly wonderful experience or someone writes a positive review online.
Hold contests and giveaways for the most lucrative referrers to help spur new referrals and a little competitive spirit.
Tap Into the Power of Referrals
There’s no denying how powerful and effective word of mouth is as a marketing tactic. A solid and well-maintained referral engine will keep churning away in the background, bringing you fresh customers and repeat business while you focus on the day-to-day of creating amazing customer experiences. Give it a shot!