Business

How Can Referrals Help Your Retail Business?

Your current customers could be a great source of new business.
Photo Credit: ATA

Author: Cassie Scott

If you rely on word-of-mouth advertising, you probably know referrals are a direct route to revenues. The problem? Not everyone feels compelled to talk about your business.

According to Hubspot Inc., after a positive experience, 83 percent of customers would be happy to provide a referral. But because salespeople aren’t asking, only 29 percent of customers end up giving a referral.

Turn those statistics into consumers and create a good referral program. Since 92 percent of buyers trust referrals from people they know, a referral program can improve sales revenues, create more satisfied customers, and generate a high return on investment from your marketing strategy.

Use these referral programs to get your customers talking.

Direct Referrals with Incentives

Consider offering a discount coupon to your current customer when they refer a friend. That way you’ll benefit once from the new customer, and once from your current buyer’s purchase. Free range time is also an inexpensive option. Photo Credit: Shane Indrebo.

A direct referral is when an existing customer refers a friend.

In the article, “5 Quick Tips to Building a Customer Referral Program,” author Nina Stepanov recommends you reward your advocates for promoting your brand. This approach motivates your customers to talk about your business because they get something in return, and so do you: a new, paying customer.

Make sure you choose an incentive that is valuable to your purchaser, or they might not participate. Consider offering a discount coupon to your current customer when they refer a friend. That way you’ll benefit once from the new customer, and once from your current buyer’s purchase. Free range time is also an inexpensive option.

Referral Contests

Tap into your customer’s competitive side and make the business of referring friends a contest.

For one month encourage your customers to refer as many friends as possible. At the end of the month, the three customers who bring in the most referrals win a mystery prize. People like to win. They also love free stuff, so competitions are powerful motivation.

Tony Mariotti, chief operations officer at Friendbuy, suggests you use your email list to kick-start the contest. Send each customer a unique code to share with their friends. When their friends present the code to you, give them a code to join the contest and generate even more business for you. Keep track of these codes to determine the winners.

Referral contests help attract lots of new customers in a short amount of time, at little cost to you.

Goal-Based Referral Reward

The goal-based strategy gives you control over your return on investment at the expense of your participating customers. Photo Credit: ATA.

Reward your customer for bringing in a set number of referrals. For example, for every five friends your customer refers, they’ll receive a 25 percent off coupon or a waived league registration fee.

The goal-based strategy gives you control over your return on investment at the expense of your participating customers. Play with the numbers to find a reward that works for you and is exciting for your consumer.

Bring a Friend

If your shop offers classes or has a league, the bring-a-friend referral program is worthwhile to you and your clients. If your customer signs up for a class and they bring a friend, give each of them 10 percent off registration.

This tactic makes your current customer happy and creates a new customer who can get the same discount at the following class or league if they bring a friend. This program builds quickly through the buddy system, helping you double your customer base.

Spread the Word

Make your customers feel valued and you’ll be well on your way to greeting more customers through the help of referrals. Photo Credit: Shane Indrebo.

Establish your referral program and tell your current customers to help generate new ones.

“If you educate consumers about referral programs and display for them the value of sharing your product or service with their friends you’ll increase the amount of referral conversions your brand sees,” said Brandon Gains, vice president of marketing at Referral SaaSquatch.

Remember, all referrals start with excellent customer service. Make your customers feel valued and you’ll be well on your way to greeting more customers through the help of referrals.

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