Sharing the love: client referral schemes for your small business

Why do you need a client referral scheme for your small business?

Let’s kick off with a quick multiple choice.

Your bathroom tap is dripping, persistently and annoyingly. Despite your best attempts to fix it by hitting it aggressively with a wrench, it is still dripping. Who’d have thought? Do you:

a)      Text your friendly neighbour to ask for the number of their plumber, as she had mentioned he was great.

b)      Just do a). Why would you randomly Google for a plumber or dip into the stagnant mire of Facebook when you have a bone fide recommendation?

Okay, so not really multiple choice. We all want to pick a service provider or product that has been recommended. And as business owners, we want as many people recommending us as possible, for the very obvious reason that if other people are doing the selling for us, and it comes with a genuine endorsement, that is THE definition of an EASY sale, which contrary to popular belief, does exist.

The quickest, easiest sales in the Allotment always comes with business owners who have walked through the gates after being recommended to do so. Before I speak to them, they are primed to like what they hear and ready to buy.

All of which leads us to one place: a client referral scheme.

Referral schemes are just a simple framework where you can harness the power of all your happy clients and customers and rightfully acknowledge those who take the time and effort to recommend you.

Clients fall generally into these referral categories:

1.      Top of the Pops Passer-Onners: these are the top tier referrers, who consistently and without prompting recommend your business. These are the golden unicorns who should have statues made of them, or at the very least, have their horns buffed and manes brushed on a regular basis.

2.      Sporadic Sharers: these are the majority, who are happy to refer you, but often forget to. Some sporadic sharers are hidden – they do recommend you, but they not the referee tell you this.

3.      The Sealed Lips Brigade. For whatever reason (and rarely because they don’t rate you) there will always be some client who won’t refer. That’s okay, we might be a little perplexed as to why this is, but them being a client is enough of a reward (in most cases).

The aim is to keep the Top of the Poppers doing what they do and properly thanking them for it, as they are enormously valuable to your business. A referral scheme won’t really change their behaviour as they are already doing sterling work, but it’s only right to thank them properly.

A referral scheme can have most effect with the Sporadic Sharers, as it can be a regular reminder for them to refer you. It keeps you front of mind, and whatever the incentive is, if it is well thought out and appealing, will lovingly poke them into more referrals.

In my experience, most of the Sealed Lips Brigade will be impervious to the allure of a client referral scheme. They have sworn an oath of silence and nothing will persuade them to talk. But you might convert a few along the way.

If you have a small client base, you can quickly divide them individually into the three categories – this will help you design a scheme that works for the people at which it is targeted.

Things to consider as you design your referral scheme.

A little bit of creativity and thought will go a long way to making a scheme that is effective and lasts. Have a ponder on these points to help.

1.      Make it on-brand. Start by going back to your brand story and values. This should help inspire and direct the design of the scheme. If you are all about ethical marketing, your scheme might be about planting trees for every referral you receive.

2.      Get creative with the name. Let’s not call it a referral scheme, it may bore people into a coma. Come up with a name that fits with your brand and might even get people excited about taking part.

3.      Think about what would feel valuable. Look at the types of clients you are trying to incentivise. What would be most valuable to them? Write down all the ideas you can think of. Some will be non-starters (I mean, they might get incentivised by two weeks in Barbados, but that is going to play havoc with your profit margins). It’s also useful to jot down things you know that wouldn’t appeal, so you can keep well away. 

4.      Decide if you are discounting. The referral incentive can be as simple as a percentage off next purchase for your customer – common with product-based businesses where purchase frequency is high. For service-based businesses, a discount can encourage the referrer into a repeat purchase too, but would the discount be large enough to be appealing to those clients?

5.      Or are you adding value? The flip side to the discount coin is adding in value. For example, if a retainer client refers someone to you, you can give the referral a complimentary mini consult, or add extra time into their package as a thank you.

6.      Consider exclusivity.  For a referral scheme to work hard for you, the thank you needs to be something that is attractive enough to create action. So think about making it something exclusive only to referrers – access to a special webinar or event, for example.

7.      What are the mechanics? To create a referral scheme that is even remotely scalable, think about the mechanics and aim to make it as automated as possible. It doesn’t need to be complicated – maybe set up an online form where the referee can share a link to the form that gives the referred some info and a way to get in contact. This way, everyone’s details are in one place. Or a simple Excel to log referrers, or add a column into your CRM to track referrers with ease. 

8.      Set out the guidelines clearly. Don’t fudge it, or you’ll annoy your clients who refer – so be clear if the person referred into your business needs to sign up for a number of months, or a specific level of product or service, or a certain level of expenditure, before you give the referral their thank you.

9.      Measure it. Get a few months of your scheme under your belt and see what’s happening. If you offer a choice of thank yous, track which ones are popular. Find out which customers and clients are your top referrers – if you don’t have a tiered scheme where multiple referrals are aggregated into bigger rewards, you may decide to do something for your vip referrers as an extra thank you.

10.  Go directly to the Tool Shed. If you’ve done the thinking on the above points, can I please refer you to the Tool Shed? The new tool this month is all about creative ideas for referral schemes, to inspire you to create an on-brand, EXCITING scheme that clients want to be part of. Stroll over to the Tool Shed, wander over to the Clients and Customers section and download it for free.

I would urge every small business to set up a client referral scheme. It is what they call in the trade a no brainer. Set it up well and have a great central idea that you can communicate clearly and consistently, and it will deliver new clients to your door.

Now, anyone know a good plumber? I appear to have accidentally knocked the bathroom tap out of the window…