How To Build a Referral Program

By Sam Bowman

According to Truelist referral marketing stats, “People are four times more likely to make a purchase after a referral from a friend.” We trust our friends and what they tell us. So, when they hype up a company and its services, we’re more likely to go with their suggestion.

That’s why referral programs are critical. Your customers generate a lot of business for you just by telling their network about their experience. It’s only right that you reward them for their efforts. 

Before we offer tips for establishing an effective referral program, let’s discuss why rewarding your customers through a referral program is necessary.

A Must for Your Company

One of the most significant benefits of creating a referral program for your plumbing company is that it helps you build a loyal customer base. Some 2022 referral marketing statistics revealed that “Referred customers have a 37% higher retention rate compared to other customers gained through other marketing channels.”

Existing customers are 31% more likely to spend more than new customers. And it’s much easier to sell to the—60 to 70% probability—than to new customers—5 to 20% probability. So, if you can retain more of your customers, there’s a good chance they’ll spend more with you, and it’ll be easier to sell your new services to them.

Ultimately, your plumbing company’s success depends on your ability not just to get new customers but to also turn them into repeat ones. And an effective referral program can do that for you.

Establishing a Referral Program

You want a loyal customer base, and you want to use a referral program to get it. But how exactly do you create a referral program your customers will be excited about and actually participate in? These five tips can help.

Have a Company Worth Referring

For a referral program to work, you need satisfied customers first. So, make sure you have a company worth referring to before anything.

Go above and beyond your customers’ expectations. Tailor your services to their needs. Do the little things right, like arriving on time to every appointment, providing accurate estimates, keeping every interaction professional, and responding to every complaint.

Make your customers so happy that they can’t help but refer your company to as many people as possible.

Understand Your Customers

Doing what everyone else is doing with their referral program won’t get you the results you’re looking for. Instead, you must understand what your unique customers want and give it to them.

What kind of rewards do your customers want? They may want to earn points toward free future services. Discounted services are another idea. Or they may like the idea of having various choices once a referral goes through. 

You can ask your customers which referral rewards appeal to them. You could also use customer journey mapping to tailor rewards to your customers effectively. A potential customer’s pathway to becoming an actual customer can reveal things about them that help you choose referral rewards they’ll resonate with.

It’s also essential to address the organizational silos in your company to ensure every department is working together to bring each customer’s desired referral program experience to life.

Giving customers what they want in a referral program makes them more likely to participate actively.

Nut and Bolts

Putting your program together is the most tedious part of the process. You have to hash out the details of what qualifies as a referral, how your customer can submit one, when they become eligible for their rewards, and how you’ll keep track of everything.

Document all the above and discuss who creates and maintains the program. Then, move on to marketing your referral program.

Marketing

There’s no point in creating a referral program if you aren’t going to make sure your customers know about it. In other words, you must market your referral program. This will do two major things:

1. Convince your current customers to participate in your referral program;
2. Get potential customers excited about doing business with you.

You want to create a detailed marketing strategy for your referral program. Establish goals for your marketing and how you’ll track progress toward them. Choose the channels you want to use. Make some notes about your competitors’ referral programs. And talk about the kind of content you want to create.

In addition, to get the most out of your referral program marketing campaigns, be sure they don’t alienate any group in your customer base and instead appeal to as many of your unique customers as possible.

To do this, create content in various formats, such as videos, images, and infographics. Content specific to each marketing channel is also essential. Account for a range of abilities, backgrounds, and experiences. And use your data to personalize your campaigns and content for your customers.

Consider a Soft Launch

Starting slowly with your referral program isn’t a bad idea. You don’t want to do lots of work on a program, construct an elaborate marketing strategy, only to have it not resonate with your customers. Consider a soft launch instead to see what kind of response you get before you go all out. 

Choose a segment of your customer base and reveal the details of your referral program to them. Tell them they’re the first to participate in your referral program and that you’re looking for feedback on its current state.

Then, give those who engage with your referral program’s soft launch additional rewards as a thank you.

Sam Bowman writes about people, tech, wellness, and how they merge. He enjoys getting to utilize the internet for community without actually having to leave his house. In his spare time he likes running, reading, and combining the two in a run to his local bookstore.