How To Create a Referral Program For Existing Customers

Marketing to new customers is quite common. It is the process of expanding your reach until new customers discover your website. This can be done through social media marketing, guest blogging and SEO. From here, your customer base grow at a rapid pace depending on your reach. The more promotion you do, the better.

But how about existing customers?

Online business owners have this bad habit of forgetting about existing customers in their marketing. When really, these customers are the best people for the job. Having a shopify referral software is one thing to consider when you think about finally involving your customers.

Think about it. Would you rather buy from a company that claims that they are the best? Or from a company that has other people claiming that they are the best? Such is the power of word-of-mouth marketing. It is more powerful if done by a third party.

So if you are not leveraging your existing customers, don’t worry. Today, you’ll learn about one of the best ways to market your products and services through your existing customers. Today, I will go through the steps of creating a referral marketing program that is tailored just for them.

Why Referral Marketing?

Well, referral marketing just plain works. As other online marketing methods lose their value, referral marketing is one of the few methods that continue to work. Why? Well, it utilizes the power of word of mouth. So as long as you have customers who are happy with your products and services, you have people who can promote your business for you.

Guide: Creating a Referral Program for Existing Customers

In this guide, I will cover 6 steps. Here is a brief description of each.

STEP 1: Track Customer Behavior

Before you can give your existing customers what they want, you need to know what they want. One of the easiest ways to do this is to track customer behavior.

You can do this in two ways.

First, you can do it through analytics. Analytics tools like Google Analytics will usually show you the location of your traffic, what they are using and where they come from. Another useful factor is time on page and links clicked. This will allow you to see how your visitors go through your website and what pages they like the most.

Second, you can do this by keeping a tally of your best selling products. This would come in handy if you are looking for an incentive for your existing customers. And it doesn’t even have to be the exact same product that they want. You can just look at the theme of the products that are bought from you.

For example, Althea is an online seller of Korean makeup. They are now holding a giveaway for its Argan shampoo but only until supplies last.

Probably, this is because their hair products are selling or maybe it is because there is significant interest in their products. In any case, it is what their customers want or need.

STEP 2: Know Your Customers

The first step gives you an overview of what your customer wants in the quantitative level. You have looked at analytics and numbers. But in this step, you’ll be exploring the needs and wants of your customers.

You can do this in a variety of ways.

First, you can have a short survey in your website. This can be a survey of customer satisfaction or it can be a survey of what your customer like among your top products. This will give you an idea on what your customer wants.

A good survey tool that I love to use for this is Survey Monkey. It is really cheap and only costs $25 a month and it allows you to have multiple surveys for all of your product categories.

PRO TIP: Don’t have money to spend on a survey tool? You can use Google Forms instead. Google forms allow you to collect data from your customers and it will immediately sort all answers in a spreadsheet.

Another way to get to know your customers is to talk to them. Really, talk to them. You can begin by telling them that you want to hear their story via email. You can contact them and select a few that have stories where your products have changed their lives. You can even feature some of your customers in your website as well.

From here, you should gather every idea that you can get from your customers and use this to decide on your incentive.

STEP 3: Offer an Enticing Incentive

A referral program will not be complete without an incentive. Without it, your existing customers will simply have no reason to refer people to your page.

You may have read about websites like PayPal, Uber and AirBnb and how they grew their business at a rapid pace because of referral marketing. But it was done by having an enticing offer.

Take PayPal for instance. It is an online payment processor. So what it did was that it offered cash in exchange for sign-ups. The result? The sign-ups grew at such a rapid pace. Today, it has billions of users around the world.

Did PayPal lose money? Yes. In the beginning, they did lose some money. However, it was a worthy investment because it had led to the growth of their platform. Now, PayPal is the leading payment processor online. No one can think about online payments without the brand crossing his mind. This should be your attitude as you provide some incentives to your customers. It may seem like an extra expense and it can even lower your overall profits. But it is necessary if you are really serious in growing your business.

So what types of incentives should you give out?

There are different types of incentives.

There is the discount incentive. This is the incentive where you give your existing customers some discount codes for referrals. Uber used this in their strategy and they gave away discounts to first rides for new users.

Another is the cash incentive. As I have mentioned earlier, this is the incentive that has been used by PayPal. This is where you give away cash for every sign up.

The third type is the product incentive. This is where you give away a product that your customer wants in exchange for a referral.

Now, incentives are not limited to these three types. Be creative and think about bonuses that you can give your existing customers. Sometimes, the best incentive is not cash, a discount code or a product. A simple supplemental item to an existing item will do.

STEP 4: Leverage User Experience

Word of mouth is powerful. In fact, people tend to believe word-of-mouth marketing more than a company’s self promotions.

This is why reviews are now quite common not just for products and services but also for locations. You’ll always see places for star ratings and testimonials in most products and companies online.

You can also implement this in your own website by allowing user reviews. While this can be a double-edged sword for you will also open your store up to criticism, it will allow authentic reviews of your products right in your website. With this, your customer doesn’t need to leave your website just to read some reviews. They can just read the reviews right from your page.

Now, allowing reviews doesn’t guarantee that there will be an absence of negative reviews. In fact, it is inevitable. Since negative reviews are natural, it is important to prepare for it. You can do this by approaching your customer that had a bad experience and offering to amend it by a product replacement or through other forms of sanctions.

If you reply to negative reviews, it will create an image that your company doesn’t ignore its customers.

The secret of word-of-mouth marketing is in the intention. Companies who promote themselves have a lot to gain. They gain customers and sales. But people who promote products simply because they liked it have nothing to gain. And they are just sharing their experience out of their good will. The result is a powerful testimonial that not only promotes the product but also drastically improves the brand image.

How can this help your referral marketing? With a review system, you are setting up your website to have a consistent flow of customer data. It will show you exactly what your customer thinks about your products so that you can give them the incentive that they will respond to.

STEP 5: Test, Test and Test

Now that the ground is covered (You should already have an idea on what your customer wants and you have some incentive ideas), it is time to launch your referral program.

For this, you’ll need three things.

First, you’ll need an incentive. This is your bribe. Your existing customers need a reason to refer people to you. And you need this for that. You should have sorted this out in STEP 3.

Next, you’ll need some benefits. This is the benefits that your bribe can provide. If it is an item, you can list how much the item is worth. If it is a discount code, state how much your existing customer can save.

Third, you’ll need a referral page. This is where you ask your existing customers to refer people to your website. It can be a page that has some spaces for friends’ emails or it can be a place where customers can send discount codes or incentives to their friends to sign up.

For this, you will need referral software. You’ll need a software that will help you gather all of the new signups and reward existing customers who are responsible for it. If you are going to tally your customer points manually, it will take you a lot of time. But with a referral marketing software, you can tally it and send rewards to where they are due.

But it doesn’t end there. As this step says, you need to keep testing. It is not enough that you launch a referral program. You also need to promote it as well as tweak it for maximum returns. This is where split testing comes into play. This is where you alter certain elements of your referral page to see which one will give you better results.

Alternatively, you may also want to switch out your incentives from time to time. It may be wise to keep your incentives limited so that your customers will have a compelling need to refer people right away. If the incentive is free-for-all and doesn’t have a time limit, there will be no sense of urgency. And your customer will just put off the task of referring people to your page. But if it has a time limit, everything changes. You get rid of the procrastinating nature of customers and encourage them to refer people for the reward.

STEP 6: Ask for Customer Feedback

A referral program will always be a work in progress. So it never hurts to ask your customers about what they think about it after you have launched it.

You can ask them several things.

  • You can ask them about the products that they like to receive
  • You can ask them about the types of incentives that they like
  • You can ask them about the experience of the people they referred
  • You can ask them about what can encourage them to refer more people to your site

You can use these ideas so that you can create a referral marketing program that is designed to get new customers from the power of your existing customers.

Conclusion

Your existing customers are in a better position than anyone to refer people to your website. They have bought from you and may have liked your products and services. Not utilizing them in your marketing efforts is a grave mistake.

Fortunately, a referral program opens your doors to the marketing power of your existing customers. It gives them a chance to promote your products and services to their family and friends.

8 Response to "How To Create a Referral Program For Existing Customers"

  1. Comment From Bob Berrick

    This is a good idea!



  2. Comment From Roger Smith

    Very helpful article!



  3. Comment From Martha Kennedy

    Thank you for the help!



  4. Comment From Orly Perkson

    This is just what I needed.



  5. Comment From Yohhannes Garcia

    Is it really good to invite the existing customers?



  6. Comment From Anthony Martin

    So it seems nice to have customers part of the referral program.



  7. Comment From Kelly Parker

    Do they really have to have a separate referral program?



  8. Comment From Denverly Flinstone

    What are the benefits of giving them a separate one?



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