Customer Referral Programs

Client and Customer Referral Programs

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Having a client referral program is a great way to promote your products and services. After all, what better way is there than to have satisfied clients do the marketing for you? Referral marketing as it is commonly called is structured to maximize the power of word of mouth. According to the first-ever customer referral program evaluation conducted by the University of Pennsylvania and Goethe University Frankfurt, referred customers are actually more faithful and the relationship is more profitable than regular customers. This study found that customers who were referred actually had a higher retention rate, a higher contribution margin, and ended up being more valuable to a company in the long run. Having customer referral programs pays off.

Benefits of Client Referral Programs

Implementing a referral program can yield better results than placing cold calls or utilizing standard lead generation because people trust referrals. Referrals are more personal and because they come from people who have used the products and/or services as opposed to viewing an advertisement from the company. Other benefits that come with referral programs include:

Increased Brand Awareness: a lot of people are talking about your brand, you are gaining brand recognition. Word of mouth causes a chain reaction or what we call ‘viral marketing’ in this digital age.
Increased High Value Clients: Referred clients end up being more valuable in terms of loyalty and dependability than average clients. These are high value clients and you can use them to refer other high value clients, hence creating a never-ending marketing strategy.
Enhanced Business-Client Relationship: Referral marketing can help escalate the rapport between a business and its clients. Your clients will work as your brand ambassadors, which makes it easy to develop a high value business – client relationship.
Major Savings: This is, undoubtedly, the most cost effective marketing strategy . Even with encouraging current customers to spread the word and offering an introduction benefit to new customers, you’ll gain more than you invest.

Referral programs for clients benefit both the business and the client. However, the success of the referral program lies in implementing one that is customized to suit the needs of your business. You need to work with a professional company that will help you design rewards that are suitable for your business and clients. Remember that the rewards and incentives play a major role in the success of the referral program. At the end of the day your referrers should be recognized for their efforts. Rewards may also be in the form of recognition or tangible goods. The important part is that the rewards must be perceived as valuable to your customer. This requires you to research and understand what your customers want. When well implemented, a client referral program can be the simplest marketing strategy to utilize and the most rewarding as well. It will not only increase your bottom line but also help build customer loyalty.

Paul Raymond

March 10, 2014

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