Generating Opportunities for Schools Engagement

7 Steps to Start an Effective Referral Programme

Original article by by Madeleine LaPlante-Dube for Hubspot –

1. Set Your Goals

Ask yourself: what do you hope to get out of this referral program? Are your goals tied more to growth and revenue? Do you want to add retention to that mix? Are you in an industry that requires an exceptional amount of trust-building? Once you decide what your goals are — and explicitly define them — the next steps should lay themselves out for you:

Discover how (if at all) referrals have been coming to your business.

Involve marketing, sales management, support — anyone who would be responsible for building customer relationships — and assess how they’ve been traditionally dealing with referrals. This will give you an idea of where you already are.

Do a little math.

What’s an existing customer worth? Compared to time spent monitoring and managing onboarding programs, how many referrals do you need to break even? A 10% conversion rate for referrals is, on average, a good starting point (and this, of course, is dependent on your business size and growth goals).

2. List Possible Referral Sources

We’ll call these advocates, and they can be anyone who you’re already connected with in the present, or who you have been connected to in the past. Begin listing them out. This list could include current customers, past customers, leads that may not have closed, industry leaders, your vendors, etc. This will give you solid footing to start out with.

3. Make a Plan to Reach Out

Now, refine. Narrow down the list of advocates and sources to a list of “inner circle” contacts. These are people who know what value your business has and would refer you without any incentive. Finding your inner circle isn’t a process that can be automated — you’ll get more benefit from this if you pull and segment these contacts manually.

Once you have your inner circle segmented out, you now have two things to take into consideration:

Timing is everything.

Identify appropriate times to ask these inner circle advocates to take part in your referral program. Because they are people you’ve worked with before, this is a less strenuous process starting out. When you start working with people who will need an incentive (which we talk about below), it’s important to consider the relationship. For some companies, depending on the service or product, asking for a referral needs to happen late in the relationship. For others, it could be upon the first sale (think apps, digital interface services).

Then, once you’ve asked, wait some more. That might require a waiting period of months, or even a year, to remind them about the referral program again.

Not all referrals are equal.

Be picky with your advocates (even your inner circle ones). Identify people who you think could market your brand the way that it should be marketed. Within that inner circle, who do you have a stellar, standout relationship with? Or do you have an existing customer that came from a referral and worked out? And remember: Watch out for referral fatigue, and make sure you’re not overburdening your contacts.

4. Identify Your Incentives

There are two options for a referral program: an incentive and a non-incentive program. A University of Chicago study found that non-cash incentives are 24% more effective at boosting performance than cash incentives. During this step, you should break your contacts out by levels and decide which ones can receive which offer.

And don’t forget the referrer — make sure they get something out of the deal, too. Take Airbnb for example: when a customer refers a friend, they get $20 credit — and when a customer first signs up, they get a credit towards their first trip over a certain amount.

5. Create Resources to Alert Your Customers

Once you have a referral program, create resources you think would work well, and alert your customers. Then, promote, promote, promote. And consider multiple avenues of promotion beyond the time-limited email campaign to remind your customers of the program’s existence. Those might look like:

  • Newsletters
  • Blogs
  • CTAs & Email Signatures
  • Product updates

Once you have the referral programs outlined, you’ll have an idea of what resources you need for each one. I’ve listed out a few resources you might need below:

  • Emails for each type of contact telling them about your referral program
  • A message explaining what types of customers fit well with your business. You need to paint a picture in their minds of your ideal customer
  • A workflow that leads your contacts through the program and alerts your sales team when to call
  • A landing page that provides a place for your contacts to give you their friend’s information
  • Scripts for your sales and customer support teams to follow when explaining your referral programs
  • A referral kit filled with resources for your contacts to share with their friends: this can include case studies, testimonials, eBooks, videos, anything that gives insight into working with your business

Whatever your medium, make sure it’s consistent, persistent (though not over-the-top) and in line with your program’s revenue, growth, and retention goals.

6. Set Up Tracking

Regardless of the size of your company (though this is especially relevant if your company has a larger customer base) you need to have tracking set in place. This will ensure that you don’t miss one detail — for referred accounts especially. You should be tracking:

Who was referred and who referred them
When they were referred
Whether or not they converted or were sold
How you’re going to nurture and follow up with them, etc.

If you don’t already invest in a CRM (customer relationship management) system, then now is a great time to become familiar! Keeping track of customer relationships is a huge component of customer success — the ability to individualize each account or relationship makes each customer feel like they’re a unique part of your base.

7. Say Thank You

Thank the referrer for helping you out (this is where incentives might work, but also consider messaging that thanks them specifically as well) and thank the referred for joining. Then, get to work — you’ve got happy customers to prove right.