5 Tips On Setting Up A Referral Program for Your Business
This is a guest post by Ashley Griffith.
When we started The Gnarly Whale, we didn’t have a solid marketing plan set up. Sales would fluctuate from nothing to more than we could handle on a regular basis. A random review, or a mention on a bigger site, or even a smaller celebrity getting their hands on our products was usually the cause. And while we loved the high sales volume when it happened, it wasn’t the perfect way to run a business. It wasn’t intentional which made it impossible to anticipate our sales or the supplies needed. And we’d go from feeling ho-hum about our business to pulling our hair out because we couldn’t keep up.
We knew something had to change. We knew we needed a strategic marketing plan that kept steady sales and prevented us from the rollercoaster of a ride we’d been on. Unfortunately for us, anything expensive wasn’t an option yet as we were still a relatively new small business. Our only option was to figure out an inexpensive yet beneficial marketing plan, if one of those even existed.
About this same time, I saw a pattern with our customer notes. Customers would say “so and so referred me” or “my sister sent me this product and I love it so much I wanted to get more.” It didn’t take much for us to realize that our customers were by far our best, and most under-utilized, marketing team. They were already doing the job we needed to do without any incentive other than a love for our products. I couldn’t help but wonder what they would do if they had an incentive.
So began the idea for a referral program.
Today I wanted to share with you five tips on creating a referral program for your business today because it is by far one of the most valuable tools that we have for our business.
Not only is it inexpensive, easy to set-up and manage, and a great way to track your sales – it’s the perfect way to reward your customers that are promoting you.
After having it for even a few short months, I don’t think I could ever justify not having one (in some shape or form) for our business. And if you need an idea for how mine is setup, you can view it here.
1. Promote the heck out of it. There is no point in creating a referral program, linking to it on the sidebar of your blog, and waiting for the people to come rolling in.
If you want people to be promoting your brand or your products, you have to let them know why they should AND what’s in it for them. Shout it from your social media rooftops, write a blog post about it, tell your friends and family about it, mention it to customers you speak with, and include a note about it in all of your outgoing packages.
Make sure that there is absolutely no reason that anyone looking at your shop, using your products, or even knows you’re a business owner wouldn’t know about the program. Just remember: the more you put into this, the more you will receive from it. Because the more people that know about it, the more people you can reach.
2. Keep your information organized. There’s a lot of tracking that goes on with this program. The initial information, the setup of referral codes, the sales that come in with the referral codes, and the reward thresholds.
If you don’t have a way to keep track of this information, it can be incredibly daunting. We setup the program using a contact form plugin through WordPress on our blog.
The customer fills out the information and it’s submitted to us via email. Then, we plug all of the information into an Excel spreadsheet and send the customer their referral code. In the spreadsheet, there’s cells for tracking all of their information and the purchases that they bring in. This way, we have everything we need in one document whenever anything needs to be updated.
3. Make sure it’s worthwhile for everyone. This means you, your customer, AND the potential customers that they are hopefully referring.
You need to ensure that you aren’t going to lose a ton of money through the program, that the customer has a solid incentive to promote your brand, and that the person they are referring has incentive to use their code. We set specific thresholds for certain products and specific order amounts that would qualify as a referral order to ensure that we wouldn’t lose too much money.
We set our free product tiers that went from least expensive to the most expensive so that the customer would be encouraged to refer more people. Lastly, we decided to offer a free item to anyone that used a referral code to encourage the people that are referred to us to actually tell us that someone sent them over. It’s a win-win-win situation for everyone by covering all three groups.
4. Set standards and don’t budge on them. This one can be a hard one for people that aren’t accustomed to saying no and/or want to do everything that they can to please their customers.
Despite how hard it may be . . . it will save you many future headaches if you set the rules in the beginning and stick to them. Set order minimums, set rules on orders (such as a referral code has to be included in the notes), require your customers to keep you up-to-date on personal information changes, etc.
Put some of the responsibility on them to follow the rules. Your job is to provide them with the opportunity to promote your products with this – not micro-manage them. Even if they ask you to bend the rules – just this one time – you need to stick with whatever you set up in the beginning.
It may sound harsh, but it’s the only way that you’ll keep a successful program running. Because one time can turn into two times, then five times, and then their best friend wants the same exceptions. Trust your gut with whatever you decide in the beginning and make it clear that there aren’t any exceptions.
5. Plan to follow through or don’t do it at all. This one may sound like common sense, but it’s truly important when you’re working so closely with your customers.
Someone that signs up for a referral program most likely has people they want to share things with. Good deals, promotions, awesome products – you name it, they have friends and family they are waiting to share with. That’s the good part of it.
The tough part of it is that these people are equally as likely to share their bad experiences with those friends and family. And if they have a bad experience with your referral program, you can bet that they will share that with them, which completely defeats the purpose of it and has negative impact on your brand. So if you set-up the program, know you have the means to provide the customers with rewards for their help and know that you’ll do it in a timely manner. Know that you can keep their information organized and know that you’ll be able to easily provide information to people about the program whenever they ask it.
* Bonus! Although not required, give ideas to your customers on ways to promote your brand/products! Offer them images, promotional codes that they and/or their friends and family they refer can use, product selling suggestions, etc. Most of us are not born salespeople so the more ideas you give them, the more likely they are to help spread the word!
Have you set up a referral program for your business?
What are your tips for managing a successful one?
Ashley Griffith is blogger turned business owner.
She co-owns The Gnarly Whale – an all vegan, minimal-ingredient eco-friendly bath and body shop – and spend her days experimenting with new ingredients, new scent combinations, and new product ideas. When she’s not working, you can find her blogging over at After Nine To Five, dreaming of the ocean, and enjoying the great outdoors.