Referred customer has a 16% higher life-time value. So, referral leads are cheaper and they’ll be more loyal? Sold!

Want to know a secret? A referral customer comes at a much lower cost and has a higher potential for retention and loyalty. Well, it might not be that big a secret, as the Wharton School of Business found that a referred customer has a 16% higher life-time value. So, referral leads are cheaper and they’ll be more loyal? Sold!

So why doesn’t everybody have a referral program in place?  The answer is simple: these type of programs have always been too labor intensive and have relied heavily on the talent and commitment of the sales team to keep them running.

Now, with the recent development in new automated tools it is much more practical to implement an effective referral program that doesn’t place extra burden on your sales team.

Create the Strategy

Are you sold on why referral programs are so awesome? Great! Now, we need to discuss how to create a strategy. We’ve come up with 6 steps you can follow in order to launch a successful program.

Step 1: Evaluate your current contacts

You don’t just have to reach out to your customers; in fact your referral program can reach so much farther than that. You should be asking anyone you’ve made a connection or had an interaction with. This could be via phone call, social media, or email.

Step 2: List possible referral sources

Now that you know your contacts can be anyone you’ve connected with, you can begin listing them out. You could reach out to current customers, past customers, leads that may not have closed, industry leaders, your vendors, etc.

Step 3: Segment inner circle contacts

Once you have these possible sources listed out, you should narrow down a list of “inner circle” contacts. These are people who know what value your business has and would refer you without any incentive. Finding your inner circle isn’t a process that can be automated, you will get more benefit from this if you pull and segment these contacts manually.