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TADA Marketing & Customer Retention Blog

4 min read

Tips on Starting a Referral Program for Your Business

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Businesses often try to find the most profitable and effective marketing strategy or programs, such as advertisements, promotions, and many more. However, one strategy is proven to be the most effective: a referral program. Referral programs are also very simple and much more affordable than other marketing programs. Let us learn what a referral program is and how to start one in your business!

Understanding referral programs

A referral program is a program where businesses capture and incentivize customers into making referrals, or promoting a business’s products or services. Customers can be incentivized by giving them rewards every time they successfully promote your business. If you are confident with the quality of your business’ products and services, you are ready to start a referral program as your marketing strategy.

The effectiveness of referral programs as a marketing strategy

After understanding what a referral program is, you might still be wondering if it truly is an effective marketing strategy. To answer this, it helps to picture yourself as a customer. When wanting to buy a product, do you tend to trust the recommendation of a mega-celebrity in an ad, or your closest family and friends?

We’ll take a guess and say you answer the latter! Nielsen found that 84% of customers trust the recommendation of family members, friends, and colleagues seven times more than ads. Moreover, customers who come to a business as a result of referrals or recommendations have a customer lifetime value 16% more than regular customers.

These figures prove the effectiveness of referral programs as your marketing strategy. But, businesses might still be unsure how to start. Let us take a look at some tips on starting a successful referral program!

Tips for a successful referral program

  1. Go digital

    In today’s technological era, it will be much easier to start a referral program digitally. You save yourself the hassle of manually recording every data because it will be stored in a powerful database.
    Now, you’ll be able to know exactly when a customer successfully recommends your business and the referred customer makes a purchase or even joins your referral program. With the whole process automated, you can also easily evaluate the success of your program.
  2. Choose relevant rewards

    While customers do love rewards, the question is which type of rewards they love most. If your referral program offers unattractive ones, customers will not be motivated to start referring your business. Before launching your referral program, try to capture your customer behavior such as: What do they like? How’s their purchase habit? By knowing these things, you can determine the most relevant and attractive rewards for them.
  3. Make the referral process easy

    Next, your referral program needs a seamless system so that the referral process can be as easy as possible. If it’s too complex and time-consuming, your customers and their referred friends will not bother to waste their time.
    You can do this by generating a specific link for every customer to share with their friends. Once clicked, the customer and their friend will earn rewards. This process is quick, convenient, and can be understood easily by your customers.
  4. Promote your referral program

    If everything about your referral program is set, all you have to do is promote it as much as possible. Make sure your customers know about your brand new program so they will want to gain the benefits!
    Educate your store staff to introduce and explain all about the referral program to your customers. You can also place a printed material to promote your referral program in crowded points of contact, such as the cashier table. Don’t forget to include a QR code so customers can easily sign up.
    Aside from your physical stores, you can also spread the word about your referral program on social media. Do so regularly so more people will know. You can also place it on your website banner or tell your customers through email or SMS.

Are you ready to start a successful referral program for your business? If you still have no idea how to start, look no further because we are happy to help.

TADA can help you know who your customers are and how they behave so you can have the most suitable referral program for them. We have been trusted by more than 400 global and local brands as a loyalty and retention solution. Contact us and start your journey with us today!

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Nida Amalia
By Nida Amalia

SEO and Content Marketing Specialist who loves art, music, and movie.

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