The Good and the Bad of Referrals
Part 3: Best Practices
For the past few weeks, we've been talking about the ups and downs of referral programs. But if you’re ready to give it a try, let's take a look at some best practices.
Best Practices for Your Referral Program
We’ve covered the pros and cons of this popular strategy, and now it’s time to talk about how to make it work best for you. If you’ve decided it’s a good way to keep the prospects rolling in, here are a few hints to get the most out of it.
Have a Solid Plan
You can’t half-ass this, you’re either doing it or not. And before you start promoting the program, you need to decide what you’re offering, and to whom. Most of the time it’s a fee for the referring party, but that doesn’t have to be the incentive. No matter how you arrange things, there are decisions to be made.
Make It Simple
While we’re on the topic, don’t make your program so complicated that a lawyer needs to explain the terms to your customers. Simplicity makes it more inherently appealing, like a 10% fee for the referring party for 12 months. You don’t have to write a jingle (though I’m not saying you can’t), just make it easy to understand. You might also want to take advantage of referral tracking software to help implement it.
Be Selective
Just because you have the referral program doesn’t mean you have to offer it to everyone. Take a careful look at your referral prospect list and decide which sources are most likely to bring you quality referrals. This is especially important at the beginning when things are still taking shape. A few wins can help ease into a wider rollout. When we were running our referral program, it was open to current and past employees, clients, and other trusted sources. Some folks like working with lead brokers and there are some good ones out there. Just make sure to double-check their terms.
Express Gratitude
This is a small step, but an important one. Your referral partner should not only receive a fee, but you need to extend a personal touch to them so they know how much their trust means to you.
Follow Up
You will want to check in on a regular basis with a referral source to see if they have any more leads they want to send your way, as well as those who were referred to see if they know someone who can benefit from your awesome work.
Promote It
With your fabulous referral program running full steam, you can now decide if you want to open it up to a broader audience and use it as an incentive to help close sales, or if you’d rather be more selective. Make sure to promote it in such a way that shows you as a healthy growing company in need of more customers, not a struggling business desperate for anything. Now that I write that it seems silly. But... I'm gonna leave it.
There you have it -- the good, the bad, and the ugly of referral programs. We’ve seen some shops really shine with these, and if you put some work into it, you should see it pay dividends well into the future.