Using a Client Referral Program to Grow Your Business

You know that word of mouth marketing works … most freelancers and small businesses can dramatically grow their client base, simply through casual referrals.

Taking it one step further, structured client referral programs are an excellent way to maximize something you probably already do to some extent in your business — provide excellent service and encourage your existing clients to pass your name onto their colleagues. Here is a look at some of the benefits of client referral programs and some questions you need to consider before you set one up.

What a Client Referral Program Can Do

Aside from helping to get the word out about your services, a client referral program can provide a number of other benefits.

  • Structured referral programs that provide guidelines and examples can make it easy for clients to recommend you.
  • A referral program can provide an incentive that justifies your client’s time and effort spent referring you.
  • A good referral program can give you a quick path to more ideal clients.
  • Referrals, and the thank you’s that should follow, can help you retain your key clients.
  • Ongoing recommendations and introductions can help you grow your business network.

What You Need to Consider

Research and planning is a good starting point for setting up a client referral program. Along with considering your goals for your program and a format that will work well with your specific clients and services, here are some questions to consider:

  • What constitutes a referral? You may decide that any recommendation warrants some type of reward. Or, you may only consider new, contracted work as completed referrals.
  • What will you offer as incentives or rewards? While you don’t want your referrals to be entirely incentive-focused, offering something of value to clients who recommend you can make it worth their time to speak your praises. You can incentivize with discounts, free products or services, or even something non-business related that your clients would appreciate.
  • How will you track referrals? Tracking who, what and when is key when it comes to referrals that earn rewards.
  • Will you have special, time-based promotions to encourage referrals? There are many ways to engage clients in your referral program, so you’ll want to consider what kind of actions you will take to get the momentum going.
  • What will you do if a client makes a referral that isn’t a good fit for you? Not all referrals are good referrals, and you may receive a referral to a non-ideal client. It’s a good idea to have a plan in advance for handling this type of situation.

As you get your referral program started, it may also be a good idea to start the referral circle from your side by offering referrals and introductions on your clients’ behalf. Assuming your recommendations are genuine, this can be a great way to set the stage for a relationship of reciprocal referrals.

Your Turn

There are many ways to set up client referral programs that can help you find prospects, and essentially, new clients. Do you have a client referral program? How is it structured?

Image credit: Avolore

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  • JR

    My business is based 100% on referrals, and I’m always quick to thank those who send their friends and colleagues my way. I don’t offer a referral program, though, and I don’t participate in anyone else’s.

    When I refer someone to a provider, I want there to be no question in that person’s mind that my referral is sincere. My recommendation can’t be bought, and I want nothing to do with any program that suggests it can. Likewise, I don’t bribe people for referrals, and I’m not interested in giving the impression that I do, or that my clients are the sort of people who can be bribed.

    I briefly did business with a person who referred all of her clients to a webhost with a particularly well-earned negative reputation. I was being paid to offer advice on things of that nature, so I told her about the company’s reputation and the reasons they’d gained it. Her exact words were “Oh, I know all about it, but I get $70 for every referral.” I didn’t do business with her for long after that.

    I believe strongly in thanking those who refer business. Written thank yous, a (surprise) discount, or a well-chosen gift are excellent ways to thank those who send referrals. (I often send flowers, confectioneries, an item from the person’s Amazon wishlist, or something appropriate to a hobby or other interest I’m aware of.) It should, however, be a genuine and *unexpected* expression of thanks, not an opportunity to pick up an extra buck or two by conning the mugs.

    • http://www.tim-inglis.com.au Timbothecat

      I love that idea of sending something from the person’s Amazon wish list, very nice touch JR. How would you go about getting that information though?

  • http://www.templatesrule.com ryanqm

    How can a referral program help us in promoting our templates business?

  • http://www.tim-inglis.com.au Timbothecat

    If you’ve ever been involved in network marketing they go almost the other direction. Network marketer’s ask for referrals from people they have signed up or sold to -something like, “do you have any friends or anyone you might know who is in the market for xyz”.

    My point is that there are always different ways of achieving the same goals or outcomes. The danger in this instance is that you can be seen to become pushy or desperate when approaching these referrals, so you need to have a relaxed approach if using this technique.

    I also think this technique could fit well with what JR was talking about. For example, Bill gives you a list of names and you end up selling to Jane who is on that list. The next thing that happens is that Bill get’s a card with a Village Cinema’s gift voucher -or any other gift that is suitable- from you thanking him for his business AND his referral. In most cases, Bill’s natural response will be to tell anyone he knows who is in the market for your product that you a) are very good at what you do and b) that you really look after your clients/customers.

  • http://www.fatlossbasics.com Michael Drops

    I am looking to market a new website and thought that it would be a great idea to use a referral program. Is it good to give an incentive to both parties? Or is it better to give an incentive to only one of the parties?

    I am kind of torn. I think the person referring their friend would be more likely to refer their friend if they receive some type of a bonus, but on the other hand the referred would be more likely to buy the product if they receive a discount.

    What are your thoughts?