Referral programs: Value or Nah?
Referring programs allow small business owners to grow their pipeline with the help of existing customers. There are lots of referral program options, and depending on the outcomes you’re hoping for, one may suit your business model better than another.
There are different types of referral programs, some of which are affiliate programs or rewards programs. You might use one over the other because of customer needs, what you can provide, or only what your business is selling. The point is, referral programs can be a valuable part of growing a client base. Some of the most common types of referral programs are:
- Affiliate programs: Affiliate referral programs are when an affiliate is a singular person or business that is paid a commission for helping promote you or your product. The branch might not even know the client or customer; instead, their sole purpose is to assist you in getting a commission. Many businesses hire affiliates as promoters, though they are not as trustworthy as other types of referral programs in the long term. Many millennial Instagram marketers call themselves influencers, but in reality, they’re using affiliate programs.
Unfortunately, the downside of this type of program is that if the customer doesn’t trust the affiliate or influencer; they don’t believe you or your business. Doing thorough research on the influencers and organizations you choose to represent your brand can help alleviate turning off groups of the market based on the messaging of the affiliate.
- Referral programs that use professional networks: There are referral programs out there that new professional systems as a means of expanding a business. The way these programs work is that the professional network acts as the marketer for your product. They handle all the technology, security, and logistics involved in referring you and your product to all potential customers and clients. As a business owner, you would hire them as a service, and they can work very well both in the short-term and the long-term.
There are many different types of professional networks out there for all different kinds of professions. Most likely, there is a small group of reliable, professional networking services to you have your referral program. You could find these on social platforms like Facebook or Linkedin, on Reddit in subgroups, or through a friend online or in person. Working with well-run groups and networking services can be an excellent investment if you are a small, growing business.
- Rewards programs: Another widespread type of referral program used by small businesses is rewards programs. Rewards programs are a type of referral program that uses incentivizes existing customers to attract new ones. The reward that the customer obtains for referring someone might either be a product commission or some monetary credit. These types of programs are prevalent, and you might find even use them at your local grocery store or department store.
Rewards programs are beneficial for many different reasons. One of them is that there is usually not a very high reward cost to the business owner. Barring when many people use the program at once and overwhelm your budget, with a rewards program funnel, you can make much more money from new customers then what you give away as rewards. You can also use these types of rewards programs in the setting for a special event. For example, a current customer could refer someone to the event, and if they both are present, they will enter into some giveaway of a particular object.
One of the challenges you’ll find is launching your rewards program is making it accessible to many different groups of people to be involved. It also needs to be easy to implement, with attractive incentives, and be able to scale without customers losing their rewards. Some of the things to keep in mind while setting up a referral program are:
- Accessibility: You need to make the program easy to sign up for, easy to use, and something that people want. If it takes a long, drawn-out process to sign up for a rewards program, nobody will do it. So please keep it simple, clean, and straight to the point.
- Incentive: For all referral programs, there is some incentive to be a part of it. Whether it is money, or store credit, or a gift bag – as a business owner, you need to think about what your customers want that you can provide at a minimal cost to yourself. Think about creating partnerships with other businesses to up the ante on your rewards, or swap promotions materials to get eyes on your products.
- Scale: An excellent referral program works on a pretty significant level because it reaches the maximum number of people possible. The more people who refer you, the more new customers you get, and the more your business grows. So work big to get the most bang for your buck.
- Using resources: If it so happens that you don’t have the time to put together a new referral program for your business, or you’re looking for support in a viral launch, you can hire Fiore Consulting to do it for you. Sure, there are lots of consulting firms that will offer to be your all-in-one shop, but Fiore Consulting has experience standing up rewards programs and can advise you based on what we’ve learned.
In the end, it all comes down to viral marketing. You need to figure out the best angle to encourage people to use the time and effort to refer you to a friend or coworker. Marketing your business as easy to use, and having high-quality products might require you to take a little more time to come up with a solid strategy, but it is worth the effort.
Most of all, remember that you get out of your business what you put in. So if you put more time and effort into a referral program, you will get more customers. But if you do haphazardly and on a whim, the results will not be stellar. So buckle down, turn your Toggl on, and budget next year’s money on an excellent referral program that can have your business work for you. It may pay off more than you expect.
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