Would you buy a mattress online? Probably not, unless someone you trust highly recommends it. According to statistics, word-of-mouth referrals increase a customer’s likelihood of buying four-fold.
Leesa Sleep learned this lesson well. They generated enough referrals to build a $45 million business in less than a year — with no brick-and-mortar presence. If they can sell mattresses sight-unseen, just think of what your business can do by proactively encouraging everyone to spread the word.
Here are 5 ways to do just that.
1. Form partnerships inside and outside of your business
Satisfied customers are vital for referral programs, but they’re not your only source. You can form referral partnerships with just about anyone who touches your business, including customers, vendors and, of course, your employees and contractors.
Uber has mastered this concept by offering referral rewards to drivers. All drivers receive points for certain tasks that sign up new drivers, as well as riders. Riders can receive referral rewards as well, of course, and everything is easy thanks to app dashboards on everyone’s phones. This is definitely a win-win program.
Finally, don’t forget about other businesses. Anyone from your suppliers to a local coffee shop deals with people who can become your customers. Strike a deal with them to make some mutual referrals when appropriate.
2. Generate online reviews from happy customers
Nearly 90 percent of all online shoppers base their buying decisions on posted product reviews or testimonials. Unfortunately, customers don’t always think about making positive online comments… unless you ask them to put it in writing.
Of course, physical products benefit from reviews that are posted on all sites that sell the goods. It’s easy to compare multiple brands of yard equipment based on reviews at big box store sites. If you sell services, however, you are likely to count solely on your own testimonial page. But, customers review your products on other sites as well, so don’t forget the power of review websites and social media.
And, if you have the resources to go big, consider creating video testimonials from your most ecstatic customers. The sky’s the limit on the web.
RELATED CONTENT: How to Increase Authentic Business Reviews on Facebook
3. Offer referral incentives
Wireless providers are notorious for discounts and other incentives they offer for customer referrals. Usually, referred new customers get incentives, too. This type of deal is what most people consider to be referral incentives, but they don’t have to stop there.
Can you and a local health club offer mutual customer discounts? You offer their customers a free initial meeting with one of your firm’s knowledgeable financial advisors, while your customers can get fit at a discount. Even charitable donations incentivize referrals; millennials might bring in more customers if their referral will help them support an important cause.
RELATED CONTENT: 5 proven ways to get more Referrals
4. Use social media wisely
Active engagement in social media is essential for most businesses. Your timely responses to tweets can directly and indirectly generate more customer referrals. But, there’s major power in the genuine relationships that you can develop through LinkedIn connections or Facebook friends.
These sites are all about building relationships you can use to request referrals, just as you would ask friends and family members. Share personal stories and humanize case studies. A few stories about how you helped customers in a jam illustrate you are truly a friend in need — and can drive referrals from readers who know others that face emergency situations.
RELATED CONTENT: The Small Business Owner's Guide to Social Media
5. Make referrals virtually automatic, whenever possible
Referral programs should be a labor of love, rather than laborious, so try to build them into your business process and make it easy for customers to invite new customers. Dropbox’s simple referral program helped it grow a whopping 3900 percent! Granted, people learn about the service when someone wants to share files with them, but the actual referral program requires additional customer action. The program is well-designed (and the rewards are worthwhile), so that customers and prospects are happy to jump through a few extra hoops.
You can also automate partnerships with an affiliate program, like the one that is offered by my Future File® business. Even gargantuan companies like Amazon use such systems to develop partners that drive more traffic to their sites, but you don’t need to be huge to automate.
Referrals are a great way to build a business, but even the world’s most generous referral offerings can’t generate miraculous sales unless great companies, products and services are behind them. Make sure that your company does everything right for customers, so that your customers don’t hesitate in making the recommendation.
About Carol Roth
Carol Roth is the creator of the Future File ® legacy planning system, “recovering” investment banker, billion-dollar dealmaker, investor, entrepreneur, national media personality and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett-produced technology competition show, America’s Greatest Makers and TV host and contributor, including host of Microsoft’s Office Small Business Academy. She is also an advisor to companies ranging from startups to major multi-national corporations and has an action figure made in her own likeness.
Bank of America, N.A. engages with Carol Roth to provide informational materials for your discussion or review purposes only. Carol Roth is a registered trademark, used pursuant to license. The third parties within articles are used under license from Carol Roth. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.