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Starting a business requires passion, but building that business into a successful and profitable enterprise involves strategy.
An increasing number of businesses are now focusing on customer experience to boost sales and earn profits. Happy customers are more likely to come back and also refer your business to friends and family. Leads that come in through referrals have a 30% higher conversion rate than leads from any other channel.
So don't be shy to ask your customers to recommend you. Asking your customers to share their feedback and referrals also contributes to providing an excellent customer experience. It shows your customers that you value their opinion.
If you're unsure of how to approach your customers for referrals, we have some tips for you. But first, let’s look at how recommendations can help your business.
Why it’s Important to Get Customers to Recommend Your Business
A customer recommendation is a voluntary suggestion or referral that customers make to their relatives and friends about their experiences with a business. This is usually done through word-of-mouth.
While traditional advertising and marketing methods may cost you thousands or even millions each year, customer recommendations are a more effective way to spread awareness about your brand- and they’re free!
There is a significantly higher chance of people becoming paying customers if they heard about your business from somebody they know than if they saw an ad for your company. These new customers are also 37% more likely to stay with your business for the long run as it was recommended to them by someone they trust.
Some other benefits of customer recommendations include:
- Growth in sales and revenue
- Increased sense of trust in your business
- Boosted customer engagement with your brand
- More website traffic
- Improved conversion rates and customer lifetime value
- Free advertising
- Lower customer acquisition cost
As long as you’re providing excellent customer service and experiences, recommendations are one of the best forms of marketing. But how can you incentivize your customers to take a few minutes out of their busy days to share your business with others?
Incentive Programs
Getting a recommendation from your customer isn’t always easy, but sometimes all you have to do is ask! Usually, customers want to recommend businesses that they trust and visit repeatedly, they just aren't asked, or it isn't made easy enough for them.
When asking for a recommendation isn’t enough, it doesn’t hurt to add some encouragement to show your customers you appreciate the gesture.
Incentive programs are a great way to motivate your customers to recommend your business to the people around them.
The purpose of referral incentive programs is to attract new customers to your business by encouraging your existing customers to advocate for your services. Typically, you reward customers in cash or in-kind when they refer your services to someone who signs up with the company.
Your customers do the work of reaching out to your target audience and get compensated for their efforts while you get new paying customers.
Sounds like a win-win, doesn’t it?
Here Are Some Ideas for Incentive Programs
Discounts
You can offer your customers a discount on their next purchase for each time they promote your business to someone.
Top Tip: Ensure that the process of recommending is quick and easy so that customers feel like the discount is worth the effort.
For example, you could send out a discount code to customers for referring your business through their social media accounts. Quick and easy.
Contests and giveaways
You can hold contests, such as a slogan-writing competition, where customers share their suggested slogans for your business online. You can then gift a voucher for your products or services to the five best slogans.
This sort of activity will make participants feel more involved with your business and help give them a sense of community. Not only will it help with brand awareness, but it will increase your social media engagement which will lead to more views, comments and shares. It will also help with social media activities that you do down the road.
Similarly, for giveaways, you could ask your social media followers to tag people on their favorite posts on your page and gift a hamper to a randomly selected winner.
Reward systems
With this system, you reward points for every new customer brought in. When these points add up to a certain amount, customers can cash them in towards their next purchase or for a complimentary product. This way, they are likely to try and refer multiple people to collect points and redeem them. The reward system also encourages existing customers to keep returning to your business.
Promotional merchandise
Who doesn't love free things? Throwing in a freebie with their purchase or sending a gift to loyal customers helps build goodwill and value, and customers would be more inclined to recommend your brand. It can be as simple as offering some pens with your logo on it, or even creating custom mugs and t-shirts!
Store credit
Each time a customer brings in a new paying customer, you could reward them with store credit. This way, not only do you have a new customer, but you also encourage existing customers to return and make more purchases.
How to Pick the Right Incentive Program for Your Business
The list of incentive programs you can adopt is endless, but you must choose the ones best suited for your business and customers. To help you get started, here are three simple steps to determine the right program:
1. Decide who gets the reward
- The referrer: It's a good idea to acknowledge your customer for referring your business as this leaves them feeling valued and motivates them to do it more. It's very common in most incentive programs to reward the customer when someone they referred signs up for your services. This method is excellent for growing your small business.
- The new customer: This is highly effective in turning prospective customers into paying customers as the reward serves as the little nudge they need to sign up with your business. An example of an offer would be “every new customer gets an extra 1 hour of cleaning for free.”
- Double rewarding: This type of incentive leads to the highest number of successful recommendations and sign-ups. It acknowledges both the referrer for making an effort to promote your business and the new customer for trusting you and trying out your products. For example you could offer “50% off your next service for you and your recommended friend.” This model works for all companies, provided you have the resources to offer double rewards.
2. Choose the type of referral reward to offer
There are several types of rewards your company can offer customers:
- Cash rewards are always appreciated
- Gift cards are a great way to reward the customer and encourage them to return
- Credit and discounts on future purchases also motivate customers to do more business with you
- Gifts or freebies are fun and exciting incentives
- Donations are a great way to give back to the community while getting your referral
3. Use points 1 and 2 to create a unique incentive program for your business
In order to run an effective incentives program, it’s important to keep your customers in mind through every step of the planning. Being creative and personalizing the rewards to suit your target audience’s preferences sets you apart from your competition. It also appeals to prospective customers who appreciate your efforts and want to be at the receiving end of these rewards.
Although running an incentive program would be an added expense, we know that the return on investment would be worth it. The price you pay for incentives or for a recommendation software is very small in comparison to the revenue you will generate from referrals.
How to Invite Customers to Join the Program
Once you have your program set up, it’s time to get your customers on board. You can inform your customers about the new incentives you’re offering through:
- Email marketing
- Social media share buttons (with bonus incentives!)
- Referral program features and extensions on your website homepage
- Promotional follow-up messages or emails post purchase
How to Measure the Success of the Program
While online reviews and word-of-mouth marketing are often hard to track, a structured incentive program is easy to keep a check on and works well to motivate your customers to share their experience with your business.
You can easily measure the success of your incentives program by:
- Tracking the number of active customers sharing recommendations and invites to their network
- Checking how many referral page clicks you receive per day. If the number is a lot less than the number of invites sent out, consider modifying the program to make it simpler and more accessible
- Calculate your churn rate, which demonstrates the rate at which customers stop using your services. This tells you whether your referred customers are being retained or you need to take some added measures
We realize it can be intimidating to approach your customers for a recommendation. However, if your customers are happy with your services and well-incentivized, they’re likely to want to tell others about your business voluntarily. And their honest, positive, and often personal recommendations are sure to quickly garner lots of trust and visibility for your brand.
There is no one perfect incentive program you should follow. Rather you should focus on creating a unique and customized system that appeals to your audience while setting you apart from your competition. Take your time to figure out what works and what doesn’t, and don’t hesitate to ask your customers for feedback along the way!
NiceJob helps you send out personal recommendation invites to your customers, letting them quickly share their experience with their network. We also have a recommendation widget to keep track of all the recommendations you receive.
What’s more? NiceJob make it easy to share your recommendation link on your social media page and your company’s email signature, so it’s easily accessible to new and existing customers alike.
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