How to win more customers through referral from your partners

Without any doubt, Customers have the most powerful voice in business. Their opinions, reviews and recommendations hold immense influence in buying decisions of others.

Now, the main question arises:
how can you take advantage of this influential voice and use it to win more customers?

What are customer referrals and why are they important?

A customer referral is just a satisfied customer recommending your product or service to someone they know, like a friend, family member or colleague. This recommendation can happen organically or through a structured customer referral program you establish.

The key thing is that a customer referral leverages the power of word-of-mouth (WOM) marketing. People are much more likely to trust the recommendations of someone they know and respect, compared to traditional advertising or affiliate marketing, where they might be more skeptical of the brand and not have a personal relationship with the person doing the referring. That’s why customer referrals are one of the best ways to acquire new, loyal customers.

Reasons why startups need to take customer referrals more seriously compared to more traditional marketing methods is because “it’s a lower cost per acquisition to drive new customers through referrals.” He shares, “It’s also easier to reach a global audience with referrals or resellers than hiring a direct sales team in a different country.”

What you should know about building a successful referral program

Before building a customer referral program, you must “Get your house in order”. This means ensuring everyone is on the same page, assigning staff to run the program, determining your KPIs (revenue, lead, conversion rates, cost per click, etc.), and deciding on a go-to-market strategy. Once you’ve settled on that, there are three things to remember: the program’s transparency, ease of use and enticing incentives to offer. Let’s look at each one of these components in detail.

Transparency

Don’t leave your potential partners confused about anything. Clearly outline your program's terms and conditions, eligibility criteria, commissions and how you’ll track referrals. This transparency builds trust and encourages more active participation in the referral program.

Ease of use

Ensure your program is easy to understand and participate in to keep referrers engaged. Nobody likes a program that’s difficult to navigate. Use simple referral links and codes that customers can share with a single click. Also, consider using a PRM to streamline the referral process for both you and your partners. 

Enticing incentives

People join referral programs for the commissions, so you have to offer incentives to attract them. This could be anything from cash and discounts to free products or exclusive experiences. Tailor your commissions to what truly motivates and excites your customers. In Eldridge’s words, “Getting your incentive package in order is important…the good vendors are open to spending and they are open to being flexible with how they reward their partners, agencies, consultants or affiliates.”

How to design and optimize a successful referral program

Here are some tips on designing a program that resonates with customers and other prospective partners and motivates them to become referral partners.

• Know your audience: What motivates your customers? Conduct surveys and have conversations with current customers to understand what kind of commissions would truly excite them.
• Personalize the experience: Instead of generic, impersonal commissions, try a tiered system where commissions increase with the number of successful referrals. That way, you’re personalizing the experience for each partner based on their referral efforts. 
• Segment your audience: If you have different customer segments, ensure your program is dynamic. This means to structure your program (commissions, messaging, enablement materials) to appeal to each group’s needs and preferences.
• Make it shareable: Integrate social media sharing options into your program. Make it easy for your customers to share your referral program with others on their preferred social media channels. The more effortless it is for them to spread the word, the more likely they are to participate and become earning partners.