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Do you feel that your home-based business seems to have hit a plateau? You know, when it seems that everything, including sales and customers, are just the same.
If so, then it's time to gear up for referral programs!
A referral program, if made a part of your marketing and sales campaign, is a low-cost and virtually generalized activity that has one important element to make it work - incentives.
Giving incentives to referrers who successfully refer a new customer to your business creates not only new business, but also new business from new business, generating a multiplier effect.
This is the basic element to the success of network marketing, where recruits are, in a way, referred by the recruiter directly to join in the company.
Frequent users of referral programs are credit card companies. Most of us have received telephone call from credit card company representatives informing us that so and so referred us, and so... are we interested in getting a brand new credit card? Usual referrers are friends, business associates, neighbors and relatives.
How to Develop a Referral Program
The complexity of your referral program relies heavily on how small or big your business is and the budget you have for such a program. Sometimes, you don't even need to make a big cash-out because incentives can be in the form of anything - a gift certificate, a discount on future purchases, a free meal, and others.
So first of all, identify how much you can spend for your referral program. This will heavily dictate the approach you need to take.
Next, you need to create a list of people you need to approach as the 'recruiters'. These can be existing customers or third party firms or individuals.
If you opt for existing customers, a discount on future purchases is often good enough an incentive. However, if you opt for third party firms or individuals, then commissions based on the number of people referred are required.
Lastly, as in ANY marketing strategy, always measure or quantify the success of your efforts. When it comes to referral programs, measure not only how many new customers have been recruited but also if indeed they have made substantial purchases. For instance, paying a commission for 25 new referrals may not be as good as you thought if only a few of these customers actually made a purchase.
In the online world, referrals are often generated via that phenomenon called affiliate marketing. In this scenario, third party individuals or companies sign up to be your affiliates and they do the marketing for your business. You then pay them a commission for each successful referral to your business.
Is There Such a Thing as FREE Referrals?
In addition to the tips above, note that there ARE ways to get free referrals. For this, all you need to ensure is that you operate a great home-based business.
If you do, then you will find out the value of word-of-mouth marketing. Indeed, many of your clients will actually be more than glad to refer you to their family, friends and other business associates if they had a great experience with your firm and value your products or services.
Sometimes, all you need to do is ask your current clients for referrals so don't be shy and do it!
Action Steps to Referral Programs
- Identify your budget.
- Create a list of 'recruiters' and identify if you are taking the personal approach (through family, friends and business associates) or through third party firms and individuals.
- Measure the success of your referral program.
Important Points to Referral Programs
- Referral programs are low-cost ways to increase your client base.
- Referral programs bring in people that are more likely to purchase especially if they have been referred by people they personally know.
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