How to Close More Deals With a Robust Referral Program

referral programs

In this day and age, information about any brand has become readily accessible. A quick internet search reveals a wealth of details on all products and services on the market. Much of the talk concerning a company is no longer controlled by the brand itself; instead, that control is mostly in the customer’s hands.

Whether past or present, how customers speak about a business directly impacts its sales. It’s why you, as a brand, should treat customers well. It’s also why you should explore the idea of a formalized referral program, as such an initiative allows you to cultivate the right message around how customers discuss your products or services.

But it isn’t just the messaging that’s important. In B2B and B2C spaces, as much as 80% of all purchases involve word-of-mouth recommendations during the buying cycle. People trust recommendations from other people more than they do from brands themselves. Why not incentivize referral activity by rewarding those who connect you with other customers who fit your ideal? Using a referral program will bring customers into the loop of helping you grow your business. You’ll not only connect customers to your brand, but also to your vision, mission, and values, which can strengthen brand loyalty. Increasing customer retention by just 5% is said to raise profits by 25% to 95%.

Referred customers also come with a better understanding of your brand. They have second-hand knowledge of what your product or service delivers and are coming to you for a specific solution. There’s no need to sell them on your offer; instead, it’s about reinforcing the trust already present. Trust is an accelerant for growth, allowing the relationship to mature faster and more meaningfully. The onus is on you to keep that trust strong.

Building a Solid Foundation

Building a referral program might sound pretty straightforward, and it is to a certain degree. However, businesses often stumble in the very early stages of a program’s construction, running into questions such as: How will a referral be handled? How do we ensure that our referral partners understand the approach and treatment of those referred? You want a referral customer’s experience to be similar to that of the customers doing the referring. The last thing you want is for anyone to hesitate to refer your business to others because you haven’t settled on the details and relayed information to those participating in your referral program.

Decide who will meet with these customers to discuss leveraging your service; decide what the pricing model will be like and why the referred customer’s experience will be just as positive as the customer who referred them. By clarifying your process, you give potential referral partners the confidence they need to hand you valuable referrals and put their names and reputations on the line as they further connect themselves to your business.

The other issue businesses run into is measuring the results of referral programs. The key is to have clearly defined metrics of what you expect from your referral program – and to be able to back up why those metrics matter. Are they based on experience and data for “what is right” regarding how your referral program works for you? How are you measuring passive referrals? Where can you expect to see an impact on sales? What sort of timing is realistic?

Beyond that, your referral program should also have a transparent and formalized process in place well before launch. Just because a potential customer comes through the doors due to a referral doesn’t mean nurturing this high-value lead is any less vital. Get clear on the program’s next steps, document the process, and relay that information to your team. Then, set clear expectations for everyone involved in the process. Otherwise, these referrals can start falling through the cracks.

Implementing the Essential Components of a Referral Program

Though no two referral programs will look the same from one company to the next, a few components are essential to success. Here are the top three:

1. Get internal buy-in.

Research has shown that only 5% of employees understand their companies’ strategies, which puts into question the implementation and execution of a strategic plan. From marketing and sales to delivery and customer service, each of your employees will directly impact a referral program’s success (or failure). Make sure everyone is aware of its details before launch. More importantly, share the “why” behind it. The why helps frame your referral program strategy for all team members’ work activities and allows them to better engage with the new initiative.

2. Keep it simple.

Process improvement is something all organizations should be working toward. However, a recent study found that just 16% of businesses have complete visibility into processes. That number drops to only 7% when it comes to real-time visibility. Look at your referral program — reviewing the entire process — to make sure it’s easy to understand. If, for example, the reward system is too complex, your referral partners will quickly lose interest. Lean toward simplicity and immediacy. When someone gives a referral, reward the contribution as soon as your business and its processes can support it.

3. Deliver Mutual Benefits.

Referrals should be a two-way street, especially since customers acquired through such means have a 37% higher retention rate than those acquired through other channels. What’s more, referrals are four times more likely to refer other customers. Don’t only reward referral partners with points or cash, but also with referrals. The best referral programs feed leads back to referral partners, where both parties enjoy the benefits of such a program: to meet, create, and retain new customers.

Just because your business does good work or offers a quality product doesn’t automatically translate into referrals. Sometimes, you need a referral program to make sure those on the team remind customers that your offering will work for others – and that a reminder (and an incentive) might be necessary to encourage the referral. Ask, and you might just receive.


  • Ryan Shapiro

    Ryan Shapiro is the senior vice president of sales at Sapper Consulting, which replaces cold calling for its clients. It’s cooler than it sounds.

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