The Basics of Online Customer Referral Programs

Wednesday, April 29th, 2009 at 9:40 am

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Referral programs are a very good way gain recognition for your brand and increase your sales conversion rates. A referral program works in the following manner – you reward the people who send you new customers. This, in turn, encourages them to refer you more business. It is as simple as that. What makes these programs the most successful? In a few words.

Humans, by nature, love to get rewarded for their actions. If there is an incentive, it motivates people to take immediate action. So, naturally, when they get rewarded for sending new business to you, they feel happy. This greatly increases your response rate.

The advantages of a customer referral program include:

1.It costs virtually nothing. When friends and clients bring you new business – all you need to do is reward them by giving service credits.

2.It will attract high lifetime value customers. Customers who are referred by your existing clients are more likely to do business with you, as they already know that you are trustworthy and dependable.

3. It builds brand awareness. When a number of your customers talk very highly about your business, it has a very positive effect and your brand’s popularity increases exponentially.

4.This creates a great platform to launch any new products or services you may offer. This is without a doubt the largest advantage of a referral program.

5.It builds a stage to maintain the existing relationship you have with your clients and to build rapport with new cusomters.

To get great results, you should inform your existing clients about your referral programs. You can do this by making a phone call, text message or by sending an email to all your clients. You should continually build a mailing list and send a reminder to your inactive clients. This way, you keep reminding them that you appreciate what they do and would love to reward them for what they do as well.

You should understand an important thing about a customer referral program if you own a business. The incentive you give need not be too extravagant. Most of the time, service credits would be just fine. In fact, in some cases, a donation to a local charity in your customers’ name or even a box of chocolates will show your appreciation for your customers.

The only thing that matters is your intention. So, do not worry about spending too much money on a new incentive program. Set up a referral marketing program today and get the results you want.