When a company has a good referral program , sales increaseOn November 30, 2021 by blog-admin
When a company has a good referral program , sales increase . The business impact of word-of-mouth recommendation has historical support, increasing with the referral plan .
In fact, according to a study by the Boston Consulting Group , consumers trust word of mouth 2 to 10 times more than paid media.
On the other hand, a global investigation revealed that for 87% of customers the recommendations of family and friends are the determining factor when making a purchase decision.
Also, according to the Wharton School of Business , the lifetime value of a referred customer is 25% higher than that of any other consumer.
While it is true that a referral strategy that works begins with an excellent customer experience , having an optimal referral system goes beyond consumer satisfaction.
If you are interested in knowing everything about the referral program, what it is, how it works and what are the advantages of having it in your organization; this text is for you. Join us!
Referral program: meaning and importance
Referral program: what it is and how it works
A referred customer is one who has come to your business motivated by the recommendation of a friend or family member. These are valuable leads, who approach the brand with a dose of confidence transmitted by another client.
However, the mere existence of referred customers is not tangible evidence that the brand has a referral program or that it works. It can be the result of spontaneity.
A referral program is a strategy designed to attract new customers. It is based on satisfied customers recommending your product or service to people they trust .
The concept of a referral program is directly linked to that of a brand ambassador . It is about establishing an emotional connection so deep that it mobilizes the client towards the promotion of your brand.
According to a report , customers who establish an emotional relationship with a brand have a 306% higher life value and will recommend the company at a rate of 71%, instead of the average rate of 45%.
Next, we show you three essential premises for building a referral program that works. If they are met in your brand, it is time to implement the referral strategy.
1. You offer a memorable experience
The first requirement to develop a referral system is to offer an excellent service . Customer experience is essential, as it is unlikely that someone will recommend bad service.
In fact, if the service is bad, the opposite is likely to be the case. According to a study , 13% of customers will tell 15 or more people about a negative experience with a brand.
2. You encourage the current customer to recommend your product or service
The second requirement for a referral program is to make sure your current customer wants to recommend your services. Most of the time you will need to give it a little “nudge”.
It is clear that it is not about mistreating the customer, but about motivating him to speak well and a lot about your brand. If you already talk about this topic with your clients and do not leave it alone to spontaneity, you are on the right path.
3. You have identified the moment of maximum customer satisfaction
The reference must be requested at the right time. Not all moments of truth with the client are ideal for this. Ideally, seize the climax of the enchantment with service, never before.
It is not just about what you offer as a reward, but -above all- about how the user feels at the moment they receive the proposal. Picking the wrong time can make you lose customers and not win them.
Why do you need a referral program in your organization?
There are many benefits that a good referral plan brings to your company. Some of the most important are:
- It allows you to increase your client portfolio with an excellent cost-benefit. As you know, prospecting is not cheap. Imagine having a group of motivated people doing that job for you for minimal cost. Sounds great, right?
- By being recommended by clients who know your service deeply, it provides you with qualified leads according to the profile of your buyer persona .
- Increase sales . According to a study , referred customers generate more sales in the first 2 years of life than customers that arise through other sources of leads, and they are also more loyal and stay longer as customers than the rest.
- A referral program optimizes time management in your organization. The referred customer shortens the cycle and reaches the purchase decision in a more agile way.
- Increase the loyalty of brand ambassadors. As customers recommend your company and receive rewards and positive feedback, their experience is enriched and their loyalty is consolidated .
How to implement a referral strategy that works?
7 steps to build a referral program in your company
- Build your buyer persona : Building your ideal persona is relevant to the general functioning of your brand and, in the same way, it is essential to build your referral program.
- Set a quantitative goal for your referral program : Setting a goal is critical. How many referrals do you aspire to have? In what period?
- Investigate the sources and channels that bring organic referrals to your company : Some people spontaneously refer customers to your organization. It is very important that you identify who these customers are and what channels they use.
- Define an initial list of already loyal contacts : The loyal customer is one who is located in the final stage of the sales funnel . Take advantage of this record – which you can get by implementing a sales CRM – and make a list of your potential brand ambassadors.
- Choose the incentives that will boost your referral system : This is a crucial decision. To take it you must collect as much information as possible about your product and your customers. While for some the discounts work, for others the expansion of services is more attractive.
- Define notification resources : To fulfill its mission, a referral program needs promotion. For this you can use newsletters, content creation strategies, updates, among others. In the case of e-commerce, an example of successful promotion is Amazon’s referral program.
- Periodically measure the impact of your referral program : Together with the initial definition of the goals, the metrics and performance evaluation instruments that you are going to use to validate the operation of your referral program should be established.
Remember that to be referred, the first requirement is to offer an exceptional customer experience. And, with the help of the right technology, this conquest is at your fingertips.
From large companies to startups, powerful and innovative customer experiences should be available to all companies, regardless of size, industry or purpose.
At Zendesk, we believe that every great customer relationship grows out of conversation. So we’ve created a software company that develops solutions to improve customer relationships.
Based on service and a deep understanding of the customer mindset, Zendesk gives you the resources you need to create easy, cohesive, and frictionless experiences before and after the sale.
You can use Zendesk for sales in the design and execution of your referral program. With it, you can design and manage a pipeline that is tailored to your business so that reps prioritize customers and leads.
It is a solution that offers you smart lists that help you segment and filter leads and deals in real time, so that you can stay organized and detect opportunities.
Its implementation allows you:
- Email notifications: Receive push notifications and alerts in real time when a potential customer reads or clicks your email, so you can communicate at the right time.
- Activity reports : Get access to out-of-the-box reports that analyze key metrics like email count and results so you can get the most out of sales techniques and email conversations.
- Increase conversions : Build target lead lists, identify the right professionals for each account, and easily prospect across channels.
- Lead : Create lists of target leads in Sell based on industry, company size, role, and more. Once your list is ready, automate contact with Sell’s built-in communication tools.