Referral Program: turn your customers into brand ambassadors

Who hasn't asked a friend for a recommendation? Whether it's about a travel destination, a place to eat, or a brand, word-of-mouth remains one of the best ways to promote something. And many companies know it.

This is why, to leverage the value of word-of-mouth, many companies use referral programs, a very powerful tool that you might be missing out on. In today's article, we tell you what it is and how to design your own strategy.

What is a referral program

Let's start with the basics. A referral is a prospect who has reached your company thanks to existing customers and users who have promoted your brand among their acquaintances. Therefore, a referral program is a word-of-mouth marketing strategy that encourages your customers to recommend your brand, products, or services to other people. For it to work, this type of program offers rewards in return to both parties: the referrer and the referred.

This dynamic allows capitalizing on the existing trust and relationships among buyers, with the ultimate purpose of attracting new leads in a very cost-effective way. Among the benefits that a referral program can offer your company, the following stand out:

• Strengthening the loyalty of existing customers.
• Retaining existing customers.
• Reducing customer acquisition costs.
• Achieving a higher number of qualified prospects.
• Increasing sales and, therefore, revenue.

Steps to create a referral program

Knowing its advantages, you will now want to start implementing a referral program in your company. You are lucky because it’s a quite easy and fast strategy to carry out. Here we tell you how you can create your own referral program so you stop missing out on the growth opportunities it offers:

1. Offer a good customer experience. This isn’t a step in the strategy itself, but it’s something you must do if you want to start a referral program. This system is based on satisfied customers, so for it to work, it's important to ensure you offer good customer service.
2. Set clear goals. We already know that the main objective of creating a referral program is to increase word-of-mouth marketing. But you also have to think about what you want to achieve with it; ask yourself if you aim for greater brand trust and reputation, generating more revenue, growing your customer base, or achieving better customer retention. This will help guide your strategy better. At this point, we recommend that you establish your goals following the SMART rule.
3. Know your customers well. It’s important to know your customers well. To do this, analyze their current needs, preferences, and behaviors to find out which ones are most likely to be brand ambassadors. This way you can better adapt the program.
4. Offer rewards. A referral program with no rewards to offer is nothing. You have to design incentives that are attractive enough to motivate your customers to participate. For example, exclusive discounts, special gifts, credits or points, etc.
5. Simplify the process. This is a very important point, since a great plan will be useless if the referral process is tedious. This will only result in no one completing it. You must make the process intuitive and accessible, something that can be done in a matter of seconds. In short, it’s essential to facilitate the process of referring to other people.
6. Promote your plan on the right channels. You already have everything planned, now you have to make it known. Research which channels are most suitable for disseminating your referral program. Among the most common are social media, email, or your own website.
7. Create a follow-up plan. Your program is now launched. Just like with any strategy, it's important to follow up. Analyze how many referrals turn into clients, how much you are investing, what return it generates, etc.

To sum up, a referral program is much more than a simple reward system; it’s a strategy that capitalizes on the trust of your existing customers to drive sustainable and profitable growth. What are you waiting for? Start turning your most satisfied customers into your brand ambassadors.