How to Create a Referral Program That Brings in a Steady Stream of Clients

Reports suggest that word-of-mouth influences up to 50% of all purchasing decisions.

That’s a huge opportunity for your business! Yet, many local businesses aren’t tapping into it with a referral program.

In this guide, I’m going to show you exactly why referrals are a goldmine, what you're missing out on by not using them, and how to set up a referral program that brings in a steady stream of new clients.

Let’s dive in!

Why Referrals Are a Goldmine + What You’re Missing Out On

Referrals are one of the most powerful ways to grow your business. Here’s why:

• Trust: People trust personal recommendations more than any ad or marketing message. When your existing clients refer friends or family, those new customers come to you with built-in trust.

• Cost-Effective: Instead of paying for costly ads, a referral program uses your existing customers to bring in new leads for free or at a minimal cost.

• High Conversion Rates: Referred customers are often more likely to buy. Why? Because they’re coming in with the assurance that someone they trust has had a good experience with your business.

By not using referrals, you're missing out on these benefits. You’re relying too heavily on ads, which can be expensive and less effective. A referral program, on the other hand, is a no-cost way to build trust and grow your client base.

How to Set Up Your Referral Program

Now that we know why referrals are so valuable, let’s dive into how you can set up a referral program for your business.

It’s easier than you think, and you don’t need to be a marketing expert to get started.

1. Decide on the Right Incentives

The first step in setting up a referral program is deciding what rewards you’ll offer to customers who refer others to your business.

Your incentives should be valuable enough to motivate people to take action but sustainable for your business.

• Discounts: Offer a discount on future purchases or services. For example, a 10-20% discount could be a great starting point.

• Free Products or Services: Offer a free service (e.g., a free consultation or product) after a certain number of referrals.

• Gift Cards: Give a cash-equivalent gift card (e.g., Amazon, Visa gift card) as a reward for each successful referral.

• Exclusive Access or Bonuses: Provide exclusive access to sales, special offers, or events for customers who refer others.

Choose an incentive that’s affordable for you and valuable to your customers. The more attractive the reward, the more likely people will be to refer others.

2. Make Referring Easy

Now that you’ve chosen your incentives, it’s time to make it as easy as possible for your customers to refer others. The simpler the process, the more likely they are to follow through.

Here are a few ways to streamline the referral process:

• Referral Links or Codes: Give your customers a unique referral link or code that they can easily share via email, text, or social media. Whenever a referred person uses that link or code, it’ll automatically be tracked back to the original customer.

  • How to Set This Up: Use tools like ReferralCandy, Yotpo, or Referral Rock to create custom links or codes for your customers. These tools automatically track the referrals and can be easily integrated with your website or e-commerce platform.

• Referral Cards: If you operate a physical business, create small referral cards that customers can hand out to friends or family. The card should include a referral code or link, so new customers can use it when they visit or make a purchase.

  • How to Set This Up: Print cards with a simple URL or referral code and hand them out during checkout or service. Include a call to action like, "Refer a friend and get 10% off your next visit!"

• Referral Form on Your Website: Include a short form on your website or checkout page that asks customers, "Who referred you?" and let them input the name of the person who sent them.

  • How to Set This Up: Use your website platform (like Shopify, WordPress, or Squarespace) to add a small field to your checkout or sign-up form. Most website builders offer simple form integration that lets you add this feature quickly.

• Email and Text Reminders: After a customer makes a purchase or receives a service, send them an automated email or text reminding them about the referral program. This message should include a link to their unique referral code or a way for them to refer others.

  • How to Set This Up: Use tools like MailChimp, ActiveCampaign, or your CRM system to create automated follow-up emails thanking customers for their business and asking for referrals.

3. Promote Your Referral Program

To ensure that your customers know about your referral program, you’ll need to actively promote it. After all, if no one knows it exists, they won’t participate!

• Announce it on Social Media: Post about your referral program on your business’s social media accounts. Use eye-catching images or videos to show the rewards and encourage customers to get involved.

• Email Campaigns: Use email to keep your referral program top of mind. Send an announcement to your list explaining how the program works and why they should participate.

• In-Person: If you have a physical location, mention the referral program when customers make a purchase or receive a service. A personal reminder can often motivate customers to refer.

4. Track and Reward Referrals

To keep everything organized, you need a system to track who’s referring and when those referrals turn into actual customers.

Here’s how you can do it:

• Use Referral Software: Referral platforms like ReferralCandy, Post Affiliate Pro, or Ambassador make it easy to track referrals automatically. When a referral is made, the software tracks it back to the original customer and issues rewards once the referral becomes a paying customer.

• Manual Tracking (for Small Scale): If you’re just starting out and don’t want to invest in software, you can manually track referrals using a simple spreadsheet. For example, when a new customer signs up, ask them who referred them and record it.

Reward your referrers as soon as a referral converts into a customer. You can send an automated email or text thanking them and delivering their reward right away. Quick rewards keep people motivated to continue referring.

5. Nurture Referred Clients

Once a new customer comes through a referral, don’t stop there. Treat them just as you would any other customer to keep them coming back—and referring others.

• Welcome Email: Send a personalized welcome email thanking them for joining your business through a referral. Include any first-time purchase discounts or special offers.

• Follow Up: After their first purchase or service, follow up with them to ensure they’re happy. This builds trust and loyalty, increasing the likelihood they’ll refer others in the future.

Creating a referral program doesn’t have to be complicated. By offering the right incentives, making it easy for customers to refer others, and using simple tools to track everything, you can build a referral system that delivers a steady stream of new clients.

Need help implementing your own referral program? Contact us for a free consultation!