If you’re ready to expand your customer base, then it’s time to create a solid referral marketing system. But before you can get started, you’ve got to make sure that your customer interactions and product/service offering are worth the referral. Once you’ve refined those areas of your business, you can feel good about asking someone to pass on your name to others.

Ready to get started?

Let’s cover how to create a referral marketing system that works best for your business.

#1 Set Goals

The first step to creating a solid referral marketing system is deciding what your business goals are. Are you a new startup trying to create an initial customer base? Or have you been in the game for a few years and want to retain customers?

Once you define your goals, you’ll need to determine how your referral strategy can and will help you reach them. Take an honest look at your current referrals. Do people organically share your business with others by word-of-mouth? Or are there any referrals happening at all? How many do you need to increase profits? To break even?

Now that you know where you stand when it comes to referrals, you can begin to gather ideas for the strategy that will work best.

#2 Analyze Your Customers

Look at the data. What does it tell you about your target customer? What kinds of people engage with your business most often? Answering these questions will help you determine what your ideal customer looks like. This is the first step toward making a strategy for referrals.

Next, identify the current customers you have that would be the best referrers. They are the ones who know the most about your business, who purchase from you often, and who believe in your product or service.

#3 Equip Your Referrers

In Step 2, you determined which of your current customers would be ripe for referrals. Now, you just need to give them the tools to be successful. A big part of equipping them to do the job right is to educate them about your brand.

Make sure they know what makes you different from the competition — in many cases, they’ll know this just by interacting with your brand or using your product or service. Also, tell your referrers what types of clients you’re looking for (also from Step 2). And last, make it easy for your referrers to pass on your name by connecting with them on social media and by developing content that adds value and sending it their way.

#4 Develop Your Referral Strategy

Now it’s time to identify…

Referrers who would refer to your business without an incentive and which ones would need a little bit of a “push.”
The right time to ask, whether it’s right away or after trust has been established. This may be different for different customers, so it’s okay to come up with more than one plan that is contingent upon the type of customers you’re reaching out to.
The right time to ask again and in what circumstances you should call it quits (keep in mind that it’s okay to ask multiple times as long as you are following a plan, not being too pushy, and you haven’t been told by the customer that he/she is uninterested).

Next, develop plans to incentivize and motivate your customers about referrals.

Decide when and how you’ll incentivize your customers for referring to your business. You can offer discounts, early access to sales, or even a free product or service for those who refer.
Create a referral script for your team so that when they speak to customers about referrals, they’re all communicating the same message.
In your promotional materials, remind your current customers how much you appreciate their referrals and that you offer incentives when they pass on your name to another customer. Look for ways to incorporate referral reminders into things like your blog content, newsletters, emails, and social media ads. And don’t forget to create a landing page for referrers to input the new customer’s information when they’re ready.

#5 Ask

It’s time to put your plan into action. Grab that list of ideal referrers and reach out. Remember: your customers may be motivated in different ways, so if you see that part of your strategy is falling short, don’t hesitate to change it!

#6 Recognize Your Referrers

People loved to be recognized for good deeds, and referring to your business should count as one of them. When you thank and recognize your referrers, you further solidify your relationship with them. You can send a simple email, card, or a gift, or you can give them discounts or other exclusive perks.

#7 Track Your Progress

Once you’ve got a few weeks under your belt, it’s time to analyze the results and adjust accordingly. Take a look at the numbers: how many referrals have you gotten? What process worked best? In what ways can you make changes to your strategy to realize more ROI?

The Bottom Line

Remember: change is good, and it’s also necessary. So as you implement your referral marketing strategy, you might have to make several changes before you nail down a plan that really works. Be open to that, and remember to keep the customer experience at the forefront of all of your efforts. After all, if that falls by the wayside, then referrals will too.