7 Steps To a Successful Referral Program
Referrals can help you shorten your sales cycle, increase your customer lifetime value, lower churn rates and increase marketing share. But only 13% of brands have a referral program for non-selling partners to generate leads. Plus, only 9% of brands incent and reward influencers (e.g., thought leaders, influencers and subject matter experts).
I’ve seen it first-hand: organizations that excel in referrals experience year-over-year sales increases. So why don’t brands ask for referrals more often?
Most organizations realize the importance of using their networks (partners, customers and employees) to grow their business, but don’t know where or how to successfully start a referral program.
ITA Group has been running successful referral programs for more than 20 years, and I’m proud of the programs we’ve created. Below is some of my advice on how to get started or how to optimize your current program (plus, proof of our referral program prowess).
1. Identify & Understand Your Audience
A successful referral program relies on a deep knowledge of your audience. Understand their reasons for joining, the best way to entice them to join and what would make them refer peers, clients, friends, staff or co-workers. How well you know your audience impacts every component of your referral program.
- Identify your target audience.
- Define what you want them to do.
- Determine how much information you need for the referral.
People crave personalized experiences. The more relevant and tailored your referral program, the better your audience’s experience. And the higher likelihood of increasing your sales (check out the research for yourself).
- Define what a referral is worth to you.
- Ask yourself if it’s a worthwhile incentive compared to the effort of the person.
- Map the incentive to the activity.
- Decide if you’ll vary pay outs (based on submission, engagement, sales, etc.).
- Set a budget.
Related: Not sure what to budget? Use our channel incentive calculator to create a customized funding scenario.)
3. Promote Your Program
Strategic changes and purpose-driven communications pave the way for a new referral program. You’ll want to promote the referral program not only at launch, but also periodically throughout its lifespan. It’s important to remind your audience, especially when targeting audiences that are seasonal, prone to high turnover or known for shifting priorities.
Demand also can dictate referral activity. Consider enabling the audience with tools to talk about your brand and, like any good influencer program, test the social tactic by giving them something to offer recipients who need your services.
- Tell your referral audience about the program.
- Prepare a response when your audience asks, “What’s in it for me?”
- Repeat yourself.
- Keep an eye on turnover.
- Account for different levels of management (access to reps/person or not, if they can earn or donate, etc.).
4. Enable Participants With Technology
Referral program platforms offer tools for streamlining referrals, follow-ups and reporting. The easier the process, the more inclined partners will be to repeat the process. A good platform allows participants to see exactly what’s happening with the referral programs and even enable field teams with personalized dashboards.
With real-time data at your fingertips, you can make data-driven decisions for ongoing program improvement, know who to talk to and when, and see where things aren’t quite what they should be (e.g., low referrals, questionably high referrals and slow follow ups).
- Make it easy for users.
- Show progress toward goals.
- Show possible earnings.
- Connect the platform to your internal workings to speed along process.
Striving to be the best? Studies show the quicker you respond to an interested party or lead, the more likely they are to convert. Calling within 5 hours is 40% more effective than calling after 24 hours.
Related: Learn how role-relevant goals and data visualization help sales professionals monitor their progress and achieve their yearly benchmark.
5. Manage Your Workflow
Like any lead generation effort, what you do after acquiring information is more important than just collecting the referred individual’s name. When designed with a focus on the audience and desired outcomes, workflows are key to a perfect referral program. Figure out who needs to get these, how quickly, what it takes to follow up and if you want/need to send data back to the original referrer.
Often in a formal referral program, closed-loop reporting supports rewarding a closed deal after the initial referral payout. Mapping the process early and integrating appropriate technology or staffing will help:
- Anticipate problems.
- Increase revenue.
- Decrease/avoid unnecessary time delays.
- Improve communication between program administrators and participants.
- Evaluate how your program connects to your system.
- Determine who tracks referrals, routing and lead assignments.
- Report outcomes. Decide if your original referrers need status updates.
6. Monitor the Program
Keep track of audience referral progress, close rates, engagement cliffs, earning redemptions and overall budget health. Know who is sending referrals to your business, how many, when, if they close and if they spent their earnings. Tracking spent earnings might seem frivolous, but it’s usually a good indicator that participants are seeing value in their relationship with you. Are they taking advantage of the connection and the award for their effort?
- Set your KPIs (and continuously monitor against them).
- Check on common factors like:
- Referral rate
- Response time
- Close rate
- Source of referrals
- Incentive changes
- Redemption rates
- Thank the referrer for helping and the referred for joining the fold.
7. Assess & Adjust Your Program
Test your program regularly to see what’s going well and where you can improve. Try sending feedback surveys to see what participants think about your program and apply the feedback moving forward. Experts can help forecast the right recognition approach based on modeling historic data. You can also get creative rewarding referrers who push for “one more.”
- Continually optimize incentives.
- Communicate effectively.
- Use enough data when forecasting.
- Add/change audiences as needed.
- Ask the customers and referrers how they feel about the program.
It’s Time to Build a Referral Program That Works
Referrals offer a lot of opportunities. If you haven’t taken active efforts to encourage customer referrals, or if your brand hasn’t incorporated referral program ideas into the marketing strategy, you’re missing out on a precious source of potential revenue. You can always run an informal referral program, but a system that follows the seven steps shared makes a referral program easier to manage and more efficient, delivering a higher ROI.
Learn how ITA Group helped a top telecom brand increase revenue and grow market share through referrals from employees, customers and independent channel partners.