3 Things Every Referral Program Should Have

Good referral program? How about 1 per week, just from me!

I have recently given 5 referrals to a coaching friend of mine – in about the last month or so. I’ll admit, I don’t do that very often. Sure, I will help someone out if they ask, but it’s usually in response to a request – not a regular thing. But recently, a coaching friend of mine put in place a referral program that I think has the 3 steps to success. And I want to share them with you.

Asking For Referrals vs. a Referral Program

Before I get there though, I want to talk about the difference between asking for referrals and having a true referral program. You should be asking for referrals, of course. Every consultant or coach can benefit from referrals. Referrals can be the lifeblood of any company, and are the result of taking care of customers and ensuring that they’re happy and loyal. But a referral program is intended to generate referrals on an ongoing basis. That requires you to put the infrastructure in place to keep that going. The difference between asking for referrals and a referral program is your intent. You intend referrals to be a major portion of your marketing and sales efforts. And so you focus like a laser on them. Here are the three things I notice in a good solid referral program.

1. An Incentive

Despite all the goodwill in the world, everyone will still want to know “what’s in it for me” when you ask for a referral. Of course, you can get some referrals by simply asking. But if you want to be serious about creating a referral program, you have to offer an incentive. Now, that incentive doesn’t have to be monetary. You can, of course, offer other things as an incentive – including just a “shout out” if you have a platform that supports such a thing. But in the end, the best incentives are monetary in nature. Calculating an incentive should be fairly easy. Keep in mind that a referral will skip much of your marketing efforts and therefore you save a great deal of money that way. In addition, once you’ve had a referral program in place for awhile, you may also find that referred customers buy more and stay longer…hopefully. If so, you can take that into consideration when you send a referral. Figures vary, but you may want to carve out 10% – 20% of your revenue for referrals. If you think that’s high, think about how much you spend on sales and marketing. Many online business owners will spend 20% easily on sales and marketing. Some consultants and coaches will spend as high as 50% on it. If you think about it that way, 10% – 20% is a steal for a hot prospect. What’s important about your incentive is not so much its amount, but that you clearly state it upfront. Don’t leave people guessing whether something’s coming on the back end. They may still find you a referral, but they may be more motivated knowing that an incentive is coming.

2. Instructions

You need to explain to people three major things:

Who are you looking for?
What should they say?
How do they provide the referral?

Explain to your customer your perfect lead. You may think the customer already knows this because – well, they’re already a customer of yours. That is a mistake. Customers do not know who you’re looking for. And they certainly cannot infer your leads from their own experience. You’ll need to lay it out. One of the best examples comes from my coaching friend, Paul McManus, who helps busy professionals lose weight. This is what he told me when asking for referrals:

I know my perfect customers have 3 characteristics. They are a 7 or higher in motivation on a scale from 1 to 10. They are “coachable”. And they are willing to be accountable.

Perfect. I knew exactly who to refer. And who not to refer. Hopefully, that saved Paul some hassle. Give your customers the words they should use. If you have a video, send them the link. Paul gave me the video and told me, “have them watch the video. If they like what they hear, then call me.” I didn’t have to sell anything. I just had my friends watch Paul’s video. Write out the e-mail template they should send. Give the bullet points. People don’t have time to craft the perfect referral message. And besides, no one can do it better than you. Finally, your customer should know how to pass a referral to you. And don’t make it difficult. I participate in some referral programs where I have to pre-register a lead in a database, then send a link, then… who knows what else? Guess how many of those referrals I provide. You guessed it, very few. Make it simple. Give them a special URL. Or have them send an e-mail and you do the work manually. Make it easy.

3. A Call-To-Action

You need to ask for referrals. Of course, you may already be used to doing this, but no referral program is complete without a call-to-action. If you’re creative, you can create a time-based campaign and turn it into a competition. But either way, you need to say “go” and set your customers off running towards getting you create referrals. I recommend that every company with a referral program place a link to it on their homepage. Your customers will be the most likely returning visitors there. Make sure they see it. Based on eye movements and where people start, I think the best place for a referral link is in the upper right-hand corner of the page, at the right-hand side of the top menu bar. Your customers will see it first and go there if they have someone in mind.

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