Benefits of Referral Marketing to a Small Business Owner.

Benefits of Referral Marketing to a Small Business Owner.

Two-thirds of Americans are more likely to buy a product after seeing a referral from a friend on email or social media. Some 82 percent of Americans actively seek out recommendations from their networks when preparing to make new purchases. For a small business, statistics like these show that there are big benefits to referral marketing if yours is the name that comes to mind when your customers are asked for recommendations. Find out how to set your small business up for long-term success and reap the rewards of referral marketing.

What are the benefits of referral marketing?

Referral marketing offers many benefits beyond an increase in phone calls. Look for word-of-mouth marketing to:

  • Increase incoming leads. When clients are recommending you, you'll notice an uptick in phone calls, emails and website visits. While not every lead will convert, you have stronger odds of selling to a referred customer than to a cold caller, because this person is already predisposed to trust you. After all, you've done good work for someone they know and trust.
  • Increased business/brand recognition. Word-of-mouth referrals are free marketing, because they introduce your company to people who may not have known you. If you're a newcomer or a smaller competitor in your market, you'll enjoy expanding your customer base without paying for advertising.
  • Stronger brand loyalty. Your customers who refer you know, like and trust you. When they need your services again, they'll call you. This is why follow-up is so critical when starting a referral marketing program. If you know that a customer referred you to a new lead, go out of the way to thank that customer and cement that connection.
  • Positive online reputation. Referral marketing can also generate good reviews on consumer review sites, such as Angie's List or Yelp. Customers who refer you to friends and family may also rate you on these sites, sharing their positive opinion with a larger audience. This boosts your reputation online and may result in more traffic from consumers who search for service providers from consumer review sites.
  • Reduce your expenses. Referral marketing can curb your marketing expenses by getting the word out about your brand. What's more, the leads that are referred to you are most likely to become customers, which reduces the costs of converting every customer.

How to increase Referral Marketing

Now that you understand all the benefits of referral marketing, how can you tap into it? More importantly, how can you ask your existing customer base to refer you without coming off as too salesy? Many small business owners worry about irritating their existing customer base with pushy requests for referrals.

To find success with referral marketing, learn what to do (as well as what not to do). Then come up with a referral program that incentivizes your brand fans and your personal network to refer your business. Strong programs work well because they get you the results you want while also delighting your referral partners. Finally, find some way to track referrals, so the right people receive the credit for business they drive your way.

Renewable Referrals offers a proven strategy that's flexible enough for any industry. Get actionable insights and a step-by-step plan to build your referral strategy, implement it with confidence, and grow your business.

As part of your referral program, you'll need to develop an incentive to induce referrals from customers. You might offer a discount on services or a premium freebie for a new lead. You might offer an exclusive perk, such as an early-bird offer on a new product or an end-of-season party just for your referrers. Let your customer base and your industry determine the right incentive for you. For instance, an early-bird preview party with complimentary wine could be on brand if you're a small clothing retailer, but it would seem strange for an attorney. By providing incentives, you get to thank your customers for recommending you and you increase loyalty.

When you have the referral program in place, you can then encourage your network to deliver referrals. You might ask customers, after a sale, to share your referral program on social media or link to it from your business newsletter. At this point, you'll see the work pay off as customers sign up to refer business to you.

It takes a lot of time to set up a quality referral program; however, once in place, the program will give back every day with only minor maintenance from you. Stop coming up with excuses as to why you can't succeed with word-of-mouth marketing and set yourself up for success by learning the right tips.