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By: Katarina Kovacevic
Looking to stir up some new business? Crafting a strategic referral system can be an effective way to expand sales and your portfolio. Here are the five basic steps to creating an efficient referral program.
1: Set Goals + Milestones
Like any solid business strategy, you need to start by asking some questions. What is your ultimate goal when it comes to creating a referral system? Are you just looking to grow your client list and revenue? Or, are you considering other milestones like higher customer retention and reputation building? According to FriendBuy.com, 10 percent is a standard conversion rate for referrals.
Taking this into account, along with the number of new customers that you need, how many referral sources do you have to reach out to in order to hit this conversion rate? The final question you need to ask before crafting your referral system is: What’s worked for me in the past? Meaning, where have your past referrals come from? Were they a result of marketing efforts, speaking engagements or traditional word-of-mouth? Build from there.
2: Identify Target Referral Sources + Craft Your Strategy
You know your ideal customer, but do you know your best opportunity for a referral source? You can find a referral advocate in anyone from past or current clients, former coworkers, family members and even professionals who work in complementary trades or industries. Start by listing out all of the possibilities.
Then, decide on what you’re going to offer as your referral incentive. Will it be a discount on a future purchase? An added-value package? A gift card to a local business? Note that every referral doesn’t necessarily need to have the same incentive – you can save the really good stuff for referrals that convert to higher paying jobs or sales. Finally, decide how you’ll reach out to your referral sources and create whatever assets you need to go along with your communications (social media posts, email templates, newsletter, email signatures, website pop-ups, etc.).
3: Make It Easy To Recommend Your Business
We can’t stress this part enough! The easier it is for people to recommend you, the more referrals you’ll receive. For example, if you’re launching an email campaign to your contacts, include a (quick!) step-by-step guide on how they can refer you, along with a one-sheet about your business and even a pricing guide. Share links to your website and social media. Tell them, in one sentence, exactly who your ideal customer is. Craft the email in a way that makes it easy for that person to just forward it on to their network. Companies like Stitch Fix and Glossier offer unique referral links that make it easy for customers to share with their friends and family, landing them a decent savings on their next purchase when that person signs up using the referral link. The options are practically endless, but your referral process also needs to be practically effortless.
4: Keep Track of Your Referrals
There are plenty of Customer Relationship Management (CRM) software options out there – from Zoho to Salesforce and Monday.com – but even a simple Excel spreadsheet will do. I know some business owners who just use a basic Word Document or, yes, even the trusted notebook. The actual system doesn’t matter as much as tracking the right information: 1) The name of the person referred to you and who referred them 2) Date of referral 3) Whether they converted to a customer or a sale 4) Best ways to communicate with and nurture this lead.
5: Follow-Up With A Thank You
Ultimately, success comes down to customer service and a thank you note can go a long way. Thank the person who sent the business your way and also the new client that’s just signed on. Send any corresponding incentives and, if you can, personalize the note. You could even consider giving a public “thanks” on your social media or newsletter, which could incentivize more customers to get in on the referral action.
Have you had success with a referral system? Share your best practices below.
Katarina Kovacevic is the owner of Redefined Communications, a company offering blogging and ghostwriting services for women in leadership, and female-focused and purpose-driven businesses. She’s also the founder and editor of RUBY Media, a digital media company that promotes female camaraderie, supports sisterhood and inspires women to make a difference in the world. You can connect with Katarina on Instagram or LinkedIn, or with RUBY on Instagram, Facebook or Twitter.