If there was a way to grow your business by attracting serious buyers who spend more money, buy more often, and are more loyal, would you put extra emphasis on attracting them?
The unfortunate reality is that most professionals and organizations spend a lot of their time and money trying to gain clients through advertising, sponsorships and trade shows to grow their business.
These conventional marketing tactics don't always provide a great deal of growth.
On the other hand, making use of a referral program could significantly enhance your revenue
Referral programs could be one of the most efficient tools in your tactical tool belt. But not enough companies are using them to grow their business.
ThinkorSwim (TOS) is a stock trading technology business, and I admire the approach they take to marketing, which is why I frequently use them as an example.
Their referral program is an example of how they like to do things differently. They offer "Swimmers" (their clients) $50 for a referral that turns into an account. This simple program benefits TOS by creating another revenue stream for their organization that is powered by their loyal clients.
Setting up a referral program doesn't have to be difficult and we can see that by looking at TOS' program. Breaking it down into digestible components, we can see what they did to create this additional lead generation source. There are five key components they use to make their referral program an effective strategy.
Be specific
Many organizations and professionals fail to have clear instructions on how their referral program works. You must provide specific instructions or guidance for the referrer. If the plan seems uncertain, chances are very few customers will adopt it.
TOS is specific when they ask current clients to recommend a friend. They also make it very clear on how it works and what needs to happen in order to benefit from the program.
Keep it simple
In order for referral programs to work, they cannot be difficult to explain or execute. They have to be simple otherwise the referrer will not end up referring anyone.
With TOS, all the referrer has to do is refer a friend and get them to sign up for an account with a few clearly stated rules – pretty simple.
Be clear who you are interested in
One of the most common problems with referral programs is that most people don't know who to refer because the company or individual never told them who they were looking for. It's important to tell your referrers who you are looking for so they can easily identify a referral for you.
TOS could have done this a little better as their current communication identifies possible referrals simply as just "friends". It would have been nice if TOS said, "friends who trade stocks, options or futures who want the best trading platform" or "friends who are thinking about trading in the markets." By just getting a little more specific they can provide a little more focus and clarity for the referrer.
Offer an incentive
Without an incentive it might be difficult to nudge a referrer to take action. Incentives are great ways to motivate referrers to act and start generating referrals.
TOS puts their incentive right up front and is the most salient portion you see on the screen - $50 for every friend who opens an account. I'm uncertain if $50 is enough to motivate people to act, which is why it's imperative to test your incentive and gauge what pulls the best results.
Have a great product or service you believe in
This is the most important part of the whole referral process. If you believe in what you are selling, you will have no problem asking clients to refer you to others.
Your product or service needs to be a high quality offering. If it isn't, you need to focus on increasing the value you deliver to the marketplace first. If you decide to skip this step, do not expect to receive a continuous stream of high quality referrals that grow your business. This sounds very simple but is the hardest thing to do.
With a list of awards promoting their trading platform it's evident that TOS has a quality product that delivers great value to all their clients.
Get started
Now that you have a basic understanding of certain components that make up an effective referral program, experiment with your own.
Start as soon as you can because the longer you wait the more potential revenue you are leaving on the table. Referral programs are inexpensive, low risk, high leverage and are one of the most cost effective ways to add new clients to your business.
You have already spent a great deal of time and money investing in relationships with your current clients. Now it's time for that investment to start paying dividends with a referral program.
Ryan Caligiuri is a Winnipeg-based marketing specialist who believes many organizations are wasting their money on ineffective marketing tactics, many professionals and students feel lost because their actions don't translate into positive results, and all three groups are too comfortable blending in and following the status quo. He is driven by the desire to refocus their efforts on what needs to be done to resurrect the impact of marketing.