Methods to Implement a Customer Recommendation Program That Drives Sales

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As a business owner, you have to keep coming come up with creative ways to attract new customers. Yet as you know, this type of marketing can be expensive.

It’s much more cost-effective to market for your existing customers than to find brand new ones. Acquiring a brand new customer is six to seven times more expensive than keeping a current customer.

Sure, you might be very profitable today without putting excessive emphasis on acquisition. Nevertheless , that business model isn’t sustainable forever.

You can’t grow at an exponential rate without expanding your own customer base. Sooner or later, you’ll need to run marketing campaigns in order to attract new customers.

That’s why you need to implement customer acquisition strategies that won’t break the bank.

A customer referral system is one of my personal favorite ways to do this. Your campaigns will influence your existing clients to bring in new company.

Take a look at the most significant driving factors of retail income:

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As you can see, retention and order ranked first and second on the listing. Combining both of these as one marketing campaign will be very beneficial for your business.

If you can properly implement a customer recommendation program, you’ll obtain new customers without having to perform much work. What you just have to do is set up the program. The rest will take proper care of itself.

Don’t get me wrong. It’s not as easy as it sounds.

The key here is coming up with the right referral program that will get your current customers thrilled enough to participate.

Whether or not you’re creating your best customer referral program or trying to improve your existing one, information will help you. I’ll inform you everything you need to know about recommendation programs that drive sales.

Prioritize the customer encounter

Before you start worrying about the logistics of your recommendation program, you need to make sure your existing customers are properly taken care of.

After all, this tactic won’t work in case your customers are disappointed. Research shows that 89% of businesses called customer experience being a key factor for client retention and dedication.

Actually customers care read more about the customer service than the quality of whatever they are purchasing.

Study indicates 86% of shoppers are willing to pay much more money for an enhanced customer experience.

This type of services starts at the top of the business and works the way down. Because the owner, you need to set the tone and make sure all your employees know how important customer care is to your success.

Unsatisfied customers are harmful to business. Only 1 out of 26 disappointed customers will grumble. What about the other 25? They’ll leave without saying a term.

According to research, 68% of shoppers say they still left a company because they think the brand didn’t care about them. Don’t let this happen to you. Let your customers know how much you care.

Happy customers are much more valuable. Actually over 80% of customers say they are willing to make referrals.

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Unfortunately, merely a smaller percentage actually do.

That’s why your referral program will need to offer some extra incentives, but we’ll talk about that in greater detail shortly.

Offer referral incentives

If customers are happy, you’ ll get some natural referrals even with out implementing a program.

But for probably the most part, you can’t depend on such referrals only when it comes to driving sales and getting new customers. It’s not scalable.

Give your customers a reason to refer their friends and family. Discounts along with other monetary benefits will be the most actionable.

Put yourself in your customers’ shoes or boots for a minute. Consider some of your favorite brands. Are you going to spend a ton of time trying to take them new customers? If it comes up in a conversation, you may make a recommendation. But I assume you’re most likely not actively going out of your way to do this.

However , I’m willing to bet that if the organization offered you a credit score, discount, or prize for these efforts, it could probably change your approach.

On the other hand, let’s say somebody refers you to a new company. Sure, you may be likely to try them out. But an incentive would definitely boost your motivation to do that.

The best customer recommendation programs offer incentives to both current as well as new customers.

Here’s a good example of this strategy implemented by MeUndies:

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It’s a simple idea.

When one of their clients refers a friend, the newest customer will get twenty percent off their purchase. Once that purchase is made, the original client gets a $20 gift card.

That accumulates fast. The customers understand they’ll get a hundred buck credit if they may convince just 5 people to make a purchase. This provides them a reason to spread the word.

Make sure your incentives are worth it to both parties. The amount needs to be relative to your prices.

With the MeUndies example, most of goods fall within that will $20 range, so it’s a great quantity. But if the reward was only $5, it may not be worth their particular customers’ time.

However , that doesn’t mean $5 won’t work for another business. Check out this recommendation incentive offered by Bird:

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As you know of Bird, they may be a new brand with an innovative spin upon ride sharing. They have got electric scooters positioned all over different cities.

Customers use their mobile app to unlock the scooters. At a rate of just $1 to unlock a scooter and an additional $0. 15 per minute, the $5 prize translates to nearly 30 minutes of free riding time.

Whilst $5 may not be a large incentive for additional referral programs, it really is for this one.

That’s what you need to come up with. Take a look at your products or services, and decide what would be a good offer.

You don’t wish to offer something way too high that’s going to eliminate you money, but it also can’t be therefore low that it does not motivate customers.

Find that fairly sweet spot in between, and set your incentives on that amount.

Concentrate on a fast ROI

Much like with any other marketing campaign, you want to make sure your referral program makes sense from the financial standpoint.

If you’re spending money without getting a value for your dollar, you obviously won’t be profitable. However the great thing about recommendation programs is that unlike traditional acquisition campaigns, they cost much less.

This connects to my prior point about uncovering an incentive that will motivate sales without depriving you of your revenue.

Whenever you’re unsure methods to do things, it’s often a good idea to follow the business lead of those who succeeded before you. Take a look at Uber .

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That’ s one of their initial referral promotions. It was a standard “give $20, get 20 dollars concept. ”

Let’s do some simple math here. If the current consumer and new client each get 20 dollars, the cost per obtain is $40 based on this campaign.

I know what you’re thinking: $40 per acquisition sounds high. You might not believe your business can afford something like this.

But if you do pursuit ahead of time, you’ll be able to get a quick ROI once you know your margins.

In a short time of time, Uber turned into an international giant. Client referrals were the particular driving force behind their expansion strategy. I came across a recent research that analyzed how they were able to accomplish this:

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Maintain these numbers in your mind. If Uber kept 25% of what the average customer invested in a month, that would mean they would break even in less than two months if their acquisition costs were $40.

Once that $40 is repaid, the rest is profits.

The $20 for $20 offer is no longer available in every city or area.

Once they were able to control a large portion of the market talk about and prove their particular concept, they reduced the incentive. However , the new customers were already hooked.

You can utilize the same approach to your own referral program. Start with high bonuses to spread the word fast, but make sure you get a return on your investment.

After that, you are able to make adjustments that translate to higher profits for your business.

Fixed yourself up for growth

Think about how you were able to get your existing clients to refer their friends.

You leveraged their particular customer loyalty plus offered an incentive. Now, you have to apply that concept to these new customers.

Don’t waste any time. This is your chance to secure them for the long haul too. Sure, they produced a purchase because of a recommendation.

We know 92% of consumers believe in a recommendation if it comes from someone they know. Your new clients already have a positive impression of your brand.

Now you have to convince them to remain. Once they make that will first purchase because of the incentive you offered, what’ s following?

Occurs email marketing strategy to create an actionable drip marketing campaign, and encourage these customers to buy again in the future.

Make sure they understand they can take advantage of the referral program. This should be much easier to suit your needs because referred customers are more willing and likely to refer more new clients .

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Furthermore, the profit margins from referred clients are roughly 25% higher than from non-referred customers.

Your customer recommendation program can create exponential growth. Think about how successful it would be easiest if each brand new customer referred only one new customer.

And then imagine all of those new customers furthermore referred a friend. Are you able to see how quickly this may turn into a sales-driving formulation for your company?

Monitor quality control

This whole concept began with prioritizing the client experience. Don’t wreck that.

For example , let’s state a customer refers a friend, but due to some glitch in your system, they don’t obtain their incentive. That is a big problem to suit your needs.

Now they went from the happy customer, who wants to refer their friends, to a dissatisfied client, who thinks you are trying to take advantage of them. Instead of getting an additional customer, you may have dropped one.

It’s important you thoroughly check all the technology associated with your own referrals. How will you deliver the incentives?

Text. Email. Social media. Promo code. Make sure each submission method works.

Here’s another thing to consider. You have to look out for customers who might be trying to rip a person off. Just like with anything else, there will always be people looking to make use of the system.

You spent the time plus crunched the quantities to come up with the perfect incentives for your customer referral program. In order for you to definitely profit, those margins can’t be tampered with.

Customers might create multiple accounts and refer themselves to get the incentive on both balances.

In such a circumstance, you’ll end up taking a loss without getting a new customer. Make sure you have some safety nets in place to catch and/or prevent this type of happening.


Your business requirements new customers.

With high average acquisition costs, you have to focus on cost-effective advertising campaigns. Leveraging your present customers is the best method to do this.

First, you need to focus on providing excellent customer service. Next, you’ll have to generate an incentive that encourages the current customer plus prospective customer to produce a purchase.

Set yourself up for exponential growth along with a quick return on your investment.

Keep an eye on the standard. You need to make sure your plan works from a technical perspective and that nobody takes advantage of any loopholes.

If you implement this strategy, you’ll see an increase in sales from both current as well as new customers.

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