If you’re not yet leveraging the power of word-of-mouth marketing and client referrals then it’s time to change that!

Too often I see business owners obsess over chasing the next sale, getting a new client or closing a deal, when actually you have an entire “sales force” at your fingertips with satisfied and happy clients who would be happy to share more about you and what you have to offer.

In this post, I’ll share five of the most common types of referral programmes you can use in your business to get more clients, and how to successfully implement it and ask your past clients for referrals.

How do Referral Programmes Work?

A referral programme (often also called “Refer A Friend” programme) is a process in your business that helps incentivise your current and former clients to refer other people to you and bring you more more.

Many think that you need some form of complex system in place to make it happen, but it really doesn’t have to be complicated at all! In fact, the easier it is for someone to refer you a client, the more likely they are to do it.

It’s believed that referred clients tend to be 18% more loyal that a customer acquired by other means and can bring you 25% higher profits too (source: Annex Cloud).

It’s not surprising actually – think about the last time someone recommended you a restaurant you should go to or a movie to watch? How much more likely are you to trust a recommendation versus stumbling on the movie for the first time on Netflix?

Types of Referral Programmes

There are many different ways you could incentivise your clients to send you a referral, but here are the top five most common types.

1. PERCENTAGE BASED

This means that you will pay your past client a percentage of the project total.

For example, if a client refers you a friend who books a $10,000 project with you and you have a 10% commission in place, your past client will receive a $1,000 referral reward.

It’s important to note that with any type of referral programmes, commissions are paid only once the client completed a project and paid their final invoice. So make sure to make it clear in your communication and terms & conditions, if you have any.

With a percentage based commission, you may decide to put a cap on what’s the maximum commission you’ll pay out. For example, for any successful referral your client may receive a 10% reward of the project total of up to $500. This means that if the referred person books a $10K project, your former client still gets a maximum referral reward of $500 instead of the $1,000.

2. FIXED AMOUNT

Instead of a variable commission, you may decide to give your former clients a fixed amount for a successful referral no matter the total of the project (for example a $250 referral reward per successful project).

Reward your old and new client

Wanna take it a step forward and reward your former client and your new client as well? Then consider taking the same amount off the total invoice (i.e. $250 reward fee for your former client and $250 off the invoice for your new client).

Add a charity element

If you make charitable contributions in your business (by donating a percentage of your profits, for example) then you could consider incorporating that into your Referral Programme. For example, you could give your former client a fixed referral reward (for example $150) and match that amount to donate to a charity. You could even get your client to choose which organisation they would like you to donate on their behalf to make them part of the experience.

3. DESIGN CREDIT

Instead of sending out money, you can also assign design credit your client can use with you in the future. This could be a fixed amount or a percentage of the project total.

I’d recommend putting an expiry date by when they can use the credit (for example, $500 to use within 6 months) in case your prices go up. You also wanna ensure you offer this to clients who you actually enjoyed working with, so you don’t get stuck doing “free” work with “red flag” type of clients you were happy to get rid of.

In general, you don’t have to let every single client know you have a Referral Programme in place – I’d suggest only offering it to your Ideal-type of clients who you’re confident will bring you similar clients in the future.

4. GIFT

You don’t have to thank your client for a referral with money. You can also send a nice personalised gift to express your gratitude!

A good gift would be something personal and in line with their business or personal interests. What I like to do is to keep track of my client’s personal interests in my CRM which they mention on our calls or perhaps share on their social media. This allows me to create a more high-end and personalised experience for them and infuse Surprise & Delight elements at different steps of their journey.

For example, if your client is into aromatherapy why not send them a box of essential oils? Do they have a pouch they love dearly – matching wear is always a win! If they’re big travellers then a nice passport holder would be a great surprise!

5. WORD OF MOUTH

Finally, there is, of course, the good ol’ simple word-of-mouth strategy too, which is actually what most people do!

A Referral Programme doesn’t have to be in exchange for something but I would still recommend sending your past client a handwritten note, gift card or some flowers to say thank you – they will appreciate and remember that gesture!

Implementing your Referral Programme

Whichever Referral Programme you decided on, it’s not enough to just “have it” in your business, it’s important to implement it as well and let your past and current clients know about it.

Below are some tips on how to best incorporate your referral programme into your business and get more clients to refer you in the future:

1. DECIDE HOW WILL PEOPLE REFER YOU MORE CLIENTS

What’s your chosen method of communication when it comes to referring you more clients? Would a simple email intro suffice? Or do you have special referral questionnaire your former or new clients need to complete? Do you have a “How did you hear about me” question in your contact form?

Make it easy for people to refer you more clients and for new leads to share about where they heard from you.

2. TELL YOUR CLIENTS ABOUT YOUR REFERRAL PROGRAMME AT THE END OF YOUR PROJECT

There is no better time to ask for a referral than when your client’s gratitude levels are high, and that’s at the end of your project! Whether you send your clients a “goodbye email” or something more formal like a Client Goodbye Guide, make sure to include a section about your Referral Programme in there.

If you send your clients a gift at the end of the project, that’s also a good opportunity to thank them and ask them for a referral.

3. STAY IN TOUCH

Just because you wrapped up a project with a client doesn’t mean it’s the last time you should speak to them. In fact, client nurturing and maintain a relationship with them is incredibly important to ensure they come back for more work in the future and refer clients to you. You want to stay top or mind!

So schedule in reminder for 3, 6, 12 months into the future to send your former a quick check-in email and see how they’re doing. During holiday period or for their business anniversary, you may want to send some flowers or a card to surprise them. Remember, you want to build an ongoing relationship with each client, not a one-night-stand type of thing.

4. ASK THEM DIRECTLY

The best time to ask for a referral as I mentioned before is when the client is happy. So whether you just wrapped up a project, or they received a gift from you, or a nice handwritten note – that’s the perfect time to ask for a referral.

In his book “Exactly What To Say”, Phil M Jones has a great formula for asking for a referral:

“You wouldn’t happen to know…” – this thrown down a challenge, which makes people want to prove your wrong;
“…just one person…” – just one because it’s reasonable and seems a simple ask, and they’re more likely to think of someone by name;
“…someone who, just like you…” – this has the person narrowing down the options and gives you more of their right prospects, plus it pays a subtle compliment;
“…would benefit from…” – and then emphasize the specific benefit or positive experience they have experienced with you.

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Whichever strategy you go for, I hope that this post helped you realise the importance of client referrals for your business and got you excited to put together a Referral Programme if you don’t have one already!