How to Rake in the Referrals with a Home-Run Referral Program

When you consider that referred customers are 18 percent more likely to remain loyal to a company than your average customer, you know it’s time to get serious about your own referral program.

Word-of-mouth marketing carries astonishing weight when compared to alternative methods. The Wharton School of Business conducted a study and found that “people tend to have a stronger attachment to an organization if their friends or acquaintances share a bond to the same establishment.”

So how’s your referral program doing? Here are a few tips to create the perfect program with the highest possible ROI.

First: Get the Timing Right

Figure out when you’re going to pop the question: “Do you know anyone else who can benefit from our services?” This shouldn’t be too difficult to decide on, depending on the product or service you offer.

For example, if you deal in the hospitality industry, such as a massage parlor, immediately after the service or experience makes sense, doesn’t it? After your guest’s massage, they’re feeling at their best (hopefully) and may already be thinking about scheduling their next massage or appointment. Once you’ve given them a chance to wind down, it will be time to settle the bill. This would be the perfect opportunity to let them know about the discounts available for each person they refer to your establishment.

For an organization that delivers a product, you’re going to want to give your customers time to gather some experience with your product before asking for a referral. You can even time it with that customer service follow-up call you were planning to make anyway (hint, hint). Not only will this prevent you from seeming too pushy, but it will also help you to avoid receiving low-quality referrals. If you’ve given your customers a chance to love and appreciate your product, their word-of-mouth referral is going to pay off in a big way.

Second: Reward the Referrer and the Referral

As you’re deciding on the details of your referral program, you need to ask yourself these questions:

  • Would I give up my information for this deal?
  • What’s the catch?

A truly appealing referral program rewards both your current customer and the customer they are referring to you. There should be monetary incentive on both sides, and it’s up to you to decide the most you’re willing to reward.

For example, if the referred customer must sign up for a year of services, but their first month is free, you have 11 months of assured revenue. If the referrer also receives an equivalent credit for making the referral, you are still making a profit with the new sign up and both customers are receiving a great deal.

Just remember, everyone’s going to be looking for the catch. Know what that catch (the terms of the reward) is or whether there is one at all, and make it perfectly clear, whether it’s that the new customer must sign a year contract, or that the offer has an expiration date.

Third: Make it Easy!

Now that you’ve ironed out the timing and terms of your referral program, ask yourself this:

  • Can I explain the rules in five or less steps?

The next step is marketing your program to current and prospective customers. How difficult will it be to explain the terms and parameters of your program in an email, on a marketing flyer, on a PPC ad, in a Facebook post?

What next?

You need to create a program that can be explained in five or less steps, with few to no catches built in, that rewards both your current customer and the friend, colleague, or acquaintance that they’re bringing in and entrusting to your company.

Once you’ve got these three thing down, you should have an enticing offer that delivers a steady stream of revenue straight to your bottom line.

What has been your most successfully referral program?


Masjedi, Yaniv. “5 Tips for a Successful Customer Referral Program.” (July 8, 2014.)

“‘Turning Social Capital into Economic Capital’: Straight Talk About Word-of-mouth Marketing.” (July 8, 2014.)

Skole, Jordan. “The Dos and Don’ts of Customer Referral Programs.” (July 8, 2014.)