Strategies to Increase Customer Referrals

What is the most effective and efficient way for a business to get new customers? You guessed it: customer referrals. There’s a reason why companies have used this proven strategy for centuries because it works and is much more cost effective than business seo strategies.

Referrals are one of the most powerful and cost-effective ways to grow your business. When a satisfied customer refers their friends or family to your business, it not only increases your customer base but also builds trust and credibility. However, getting referrals is not an easy task.

Let’s talk about a few time-tested strategies to increase customer referrals, with help from business leaders who know a thing or two about the topic.

Why Referrals Work

Customer referrals are powerful for driving new traffic and sales, and they won’t be going away soon. Here’s why.

“Nothing is more influential than a recommendation from a trusted friend. A referral can influence people more than the best campaign or broadcast. Referrals are the Holy Grail of marketing and advertising.” – Mark Zuckerberg, CEO of Facebook

“Referrals are one of the few strategies with a clear, discernibly high return on investment. Make your referral program up-front and center so that customers know what benefits they can earn.

“Offer incentives for referring new customers such as a discount on a future purchase. Providing this beneficial deal will excite your current customers and it could also create a chain reaction in which one customer refers to another customer, who refers to another one.

The incentives should be obvious and non-debatable. Make the offers too good to refuse! You’ll earn back any costs in a snap if you do it right.” – Aidan Cole, CEO of Nailboo

This way you can get your customers to think of these customer referral deals as beneficial for both themselves and for their friends or family members.” – Amber Theurer, Chief Marketing Officer at ivee 

Strong Incentives

It’s a foundational rule of economics: people respond to incentives. Coordinate the right incentives for customers and newcomers to yield huge results.

“At PayPal, our initial user base was only 24 people. Traditional advertising was too expensive. But by paying people to sign up and then offering more to refer friends, we achieved amazing growth.” – Peter Thiel, Investor and Co-Founder of PayPal

“Try connecting with your long-time customers in order to inquire about or encourage customer referrals through a friendly email. Since your repeat customers are clearly satisfied with what you have to offer, you may not have as much trouble seeking out customer referrals from them. After all, if they are pleased with your products or services, they would likely want people they care about to enjoy them as well.” – Ben Teicher, President and CEO of Healthy Directions

“Providing incentives to refer friends is a good way to get the ball rolling with referral programs and to grow businesses. For example, if referring friends gets everyone involved discounts, they are more likely to use your brand. After they use the brand, you can then work on building customer loyalty.” – Jeff Goodwin, Sr. Director of Performance Marketing and Ecommerce at Orgain

Digital Tactics

In the age of the internet, referrals happen a bit differently. Here are some tactics to make referrals more appealing and impactful.

“Create an incentive for customers who refer their friends to your company. You can offer a reward for each referral they send to you, or create a system where they earn points for referrals that they can redeem for prizes, merchandise and more.” – Courtney Buhler, CEO and Founder of Sugarlash PRO

“Our audience is typically B2B, so we send satisfied customers to our G2 reviews page, an industry standard for software companies to collect reviews and prospects to compare and contrast products/services. The reviews are credible and honest, and interested candidates will come across these reviews when searching Google. Furthermore, recent studies show that consumer reviews are trusted nearly 12 times more than product descriptions and produce an average 18% uptick in sales.” (CXL) – Shaunak Amin, Co-Founder and CEO of SnackMagic

“One strategic way to encourage customers to recommend your brand to others is to include a referral card in their order. If you don’t sell a physical product, you could include similar messaging in an email post-purchase for them to give to someone else. Make sure to include an exclusive offer and promo codes that can be traced back to your customers so they can be rewarded for referring people.” – Benjamin Smith, Founder of Disco

“Create a website with reminders and notifications that encourage referrals. It should not be hard to figure out. Use plug-ins that automate the process for you or create your own system from scratch. There should be no extra steps or confusion. Make things foolproof to get more customers through the door.” – Ashwin Sokke, Co-Founder of WOW Skin Science

“You can get more referrals by using your competitive advantage. Because I work in a small private practice – as opposed to working at a larger facility- I have the advantage of creating an improved and customizable experience for my patients. The decisions I make are based on them and not on some hospital policy. In addition, being in private practice allows me the opportunity to establish relationships with my clients.” – Zachary, Okhah, M.D., Founder and Chief Surgeon at PH-1 Miami

Customer Satisfaction

There’s no better business strategy than making your customers a top priority. Do this, and referrals take care of themselves.

“Having a great rapport with your customers is a great way to get them to encourage their relatives or friends to also support your brand. Keeping that relationship with them will also keep your brand at the front of their mind when they are asked who they go to for specific things.” – Michael Fischer, Founder of Elite HRT

“First, focus on the customer experience. Thrilling is an online marketplace for vintage and secondhand clothing and accessories. One of our goals is to make vintage and secondhand shopping online easy and fun. By creating an easy and fun customer journey, we create a community of buyers that are both thrilled with their purchase and excited to tell their friends about Thrilling. That positive experience organically adds more people to our funnel.” – Shilla Kim-Parker, Co-Founder and CEO of Thrilling

“If you want to increase your customer referrals, create share-worthy experiences customers can’t help but talk about. Choose packaging that is beautiful, distinctive, and high-quality. Including little extras that are on-brand that will wow your customers can make a huge difference in whether or not they choose to share about their purchase.” – Sara Shah, Co-Founder and Co-CEO at Journ.

Ready to make the most of your customer referral program? Put these strategies into action and reap the rewards for years to come.