How to Reward Customers for Word-of-Mouth

Personal referrals can help small businesses bring in business. Urge your customers to spread the word with these incentive ideas.
Chief Ideation Officer, CODA Concepts, LLC
September 26, 2012

Though we're in the digital age, personal recommendations still go a long way in business. Word-of-mouth referrals account for a good portion of new customers for many small-business owners, and the ease of making recommendations is only made simpler with e-mail and social networking. Incentivizing your current customers to refer their friends and contacts can boost business. Here are a few ways you can get the most from referral incentives.

Offer reduced rates and credits for referrals. Who doesn’t like to get a great deal? If customers are happy with your services and can save a few bucks by telling a friend about your company, they’re likely to take you up on the offer.

PostcardMania offers two-way credits for referrals; both the current customer and the new customer receive an account credit when a referral is made. This not only encourages current customers to make referrals, but gives new customers an added incentive to try your services at a reduced rate.

Turn your customers into partners. You can turn your customers into partners with a revenue-sharing program. Hoopla Doopla, a cash-back shopping website selling products across a broad range of categories from over 1,700 online stores, uses this strategy to bring in new business.

Current members can sign up for the partner program to become Hoopla Doopla affiliates and earn money for sending traffic to Hoopla Doopla through banner ads and links. When referred visitors make a purchase, the affiliate earns a percentage of the purchase price.

Offer transferable rewards to past clients. If your business model is based on a one-time service or purchase, rather than an ongoing relationship, it’s worth your time to keep in contact with past customers periodically. Parties that Cook is a mobile cooking party company that stages corporate events as team-building activities. While most companies only hold these events a few times each year, it’s important for Parties that Cook to stay top-of-mind. The company sends a card to past clients one year after their events, with a photo reminder of the day’s events and a $200 discount for booking another party.

The discount is transferable to anyone within the organization, so it can also be used by other departments within large corporations. Parties that Cook also offers a standard $75 American Express gift card to any client who refers a customer resulting in a booking.

Keep in touch as contacts move on. Referral incentives don’t have to involve cash or prizes. Sometimes, a relationship is all it takes to earn a recommendation. Many people switch jobs several times over the course of their careers. If your primary contact at a client moves on to another company, keeping in touch with that person will allow you to continue to nurture that relationship.

“Often times we're re-hired by the same individual, who now is at a new firm. Or that individual will refer us to someone else who they've recently met, since we're staying top-of-mind with them,” says Jon Payne, president of Ephricon Web Marketing.

Spread the word about referral programs. Once you’ve created a referral incentive program, you want to let your customers know how they can earn these rewards. PostcardMania relies on word-of-mouth and postcards with a tear-off portion to give to a friend or contact. In addition, they use blog posts and social media to get the word out, with a bonus incentive: When a customer shares a PostcardMania blog post about the program, they earn a $50 credit.

Other ways to inform customers about referral and rewards programs include e-mail marketing blasts with program details, having a static referral rewards page on your company Website to explain specifics and requirements and using social media to broadcast referral incentive opportunities to your followers.

When it comes to earning new customers, personal recommendations are marketing gold. By incentivizing your customers to recommend your business to their friends, you’re creating a win-win solution: You get new business, and they get a reward.

Read more customer service stories. 

Angela Stringfellow is a PR and MarComm Consultant and Social Media Strategist offering full-circle marketing solutions to businesses. Angela blogs via Contently.com. 

photo: facebook.com/hoopladoopla 

Chief Ideation Officer, CODA Concepts, LLC