Transcript
- Introduction
- Step 1: Choose a Referral Incentive
- Step 2: Make Customer Participation Easy
- Step 3: Promote the Referral Program
- Step 4: Set Up a Tracking System
- Step 5: Iterate and Improve
- Recap
Introduction
Todd: Hey, this is Todd and welcome to the Snoball Effect. This is our Marketing Playbook series. And I've got a special guest, my colleague, Tori Barrington. Welcome to the podcast Tori.
Tori: Hey Todd, good to be here.
Todd: We're going to talk about the ultimate guide to referral marketing with a special emphasis on DIY.
Obviously here at Snoball, we can do it all for you, but we want to give you the tools, the tips, the best practices so that you can do this yourself. So you're ready to jump in Tori.
Tori: Yeah, let's do it.
Todd: Awesome. Let me just set the stage. So we all know that referrals are important, right? Customers know it's important. In fact, 92 percent of them say that it is their most trusted way of purchasing something, when they are referred by a friend. On the other side 64 percent of marketers say it is their number one best way to get leads in the door.
The problem is we all suck at it. We've got really good intentions. We cross our fingers. We hope the sales team is going to ask for referrals. We rub a rabbit's foot and we hope that referrals will come in and hope is awesome, but it's just not a good referral strategy.
So Tori, you and I are going to walk through a bunch of the best practices that we can use right now for a DIY referral program. The reason I've got Tori here is she has been writing all kinds of articles and content and doing research on the best things that we can do for a DIY referral program. Additionally, our team here, we've talked to over 200,000 customers. We've had that many conversations. In fact, I just heard from Claire this morning, Tori, that we've got over 232,000 conversations that we've had with customers. So we're going to distill everything from your brain, Tori, and distill everything from the conversations that we're having from customers and introducing five best practices that people have got to know.
To highlight those quickly. One is to really nail incentives. Obviously you've got to crush that. You then need to make it easy for customers to refer. Then we're going to go into how to promote your referral program, so people know about it and they actually take action. And then also how to track your referral program so you don't go crazy and so you can get the most out of it. And then we're going to talk about iterating and sharpening the saw. So let's jump into each of those.
Step 1: Choose a Referral Incentive
So Tori, let's talk money. Let's talk incentives.
Tori: Before we get into specifics, I just kind of want to talk basics about the incentives.
As you're setting up an incentive for your referral program, or even just thinking of the different types of incentives, what people should be keeping in mind as they're setting that up. So anything come to mind right off the bat, Todd, just as far as incentives in general.
Todd: Just kind of some things to consider before we get into the dollars and cents. It really comes down to just knowing your audience, right? And understanding what they care about. Before you can know what type of incentive to give, before you know what amount to give, just a basic understanding of what your audience cares about. The next thing that I think of is how are you actually going to facilitate this? How are you going to handle the payouts? How are you going to remind your customers? So kind of the process pieces. Those are a couple of things that stand out for me.
Tori: I think one of the big things that people are always thinking about is like you just said, the process behind actually distributing the rewards. But also just picking the right number, right? They don't want to destroy their profits. I think that's a really big worry that people have is that, oh, shoot. I don't want to offer too big of an incentive because I still want to be making money. You know, I don't want to destroy my CAC offering too big of a reward.
But I think people also offer too little of a reward and then nobody's motivated. No one participates. So you have to find the happy medium, which can be kind of difficult.
But I think another thing too, like we were just saying, money is exciting. It's fun for people to be getting these incentives. There's a couple of different ways that you can set up your incentive system to play on that.
So one thing is to have a two-tiered system. So if you're going to offer maybe an initial reward, $20 for the referral itself, and then if they convert into a lead, I'm going to pay them $300. And so that initial $20 reward, is going to get them excited and they're going to be excited that they got that. And it's going to motivate them to make sure that their referral follows through and converts, ‘cause they want that second, that second rush of the $300, you know. It's going to be more motivating for them.
Todd: I love that. I was just talking to Christian, and he's one that facilitates a lot of those conversations, those 200,000 plus conversations. And one thing that he said on your point was that initial rush that you talked about with that first incentive. That first incentive might be just to bring a lead to the table.
Maybe you just send a lead over and they sit for a demo or they let a salesperson in their home and they have a walkthrough. And so that's a smaller incentive. But one thing that he's found is once they've gotten that first rush of endorphins, they're now your wingman, they're now helping you to get that referral to the finish line.
So they've gotten a hit, and now they're going to be following up with their friends saying, hey, have you signed the dotted line for your solar system? Or have you signed up for that pest control? And so anyway, the endorphins can really be your friends to create a wingman and help you close the deal.
Tori: Right. I think another thing too, talking about the system of it all is the payout should happen quickly. Right. But if somebody texts you the name of a friend and two or three weeks go by and they still haven't gotten their initial $20, they don't care. They're going to forget about it.
And then you might send them $20 and it's still exciting, but it's not quite as exciting. Whereas, if within 24 hours, boom, $20 hits their bank account. That's pretty exciting,
Todd: It's so true, Tori. Alex was just showing me some examples of some of the different reviews that companies will have when they fumble their payout. And what will happen is some, like you go from someone who's excited about your company and they have sent over a referral.
Well, some of the most negative reviews have been, “I sent over a friend's name and still haven't got my payout and it's been X number of months.” So you go from an advocate to now someone who's totally angry at the company. So getting that payout, it is a huge pain point , when that's fumbled. And then additionally, keeping the customer who has sent the referral updated on the process.
“Hey, we've talked to your friend Brian and they've had a demo and it's progressing nicely.” Again, you're giving them little shots of endorphins so they can help you in the sales process.
Tori: Last thing that I wanted to mention is that you can also do short-term specials if you want. That's another tactic you might say for incentives. So just for the month of October, we're going to up the incentive. It's actually $50 when you send a referral and $500, if they convert. And so just those short-term specials can play into that too.
But as far as the actual incentive itself goes when choosing what you want the incentive to be, most of the time people are thinking cash. Why is that? Why do people immediately go to cash? Obviously it's motivating, but what are some of the reasons you think most companies use cash?
And then what are maybe some other incentives that smaller companies that can't afford to pay cash, what might they look at?
Todd: Yeah. Great question. I think cash is king, mostly just because it's kind of the common denominator. Most of the time it's going to be a good incentive. People are going to love cash. Secondly, I think it's pretty easy to facilitate. You can send over a Venmo or send them an Amazon card or something, which is essentially cash. So I think those are the two reasons why that's the most common.
But, to your question, I think also we have to think of intrinsic motivators, things where people want to see themselves progressing or see themselves as a brand advocate. So nurturing and conditioning customers to think of themselves as a brand ambassador and maybe inviting them into, hey, you're part of our super special customer advocacy program or customer ambassador program.
And, maybe writing them a handwritten note. That's what Alex Knight does. Our CRO to any of our advocates, he'll write them a handwritten note and send it over to them. And one of them recently took a picture of it and shared it on their social media. So that wasn't cash, but that was one way to feel important and to feel like, hey, this company really cares about me. So those are some of the intrinsic ideas that come to mind.
Tori: I think something else too is just access to things, right? And so if you're doing a service like carpet cleaning, your next one is free if you send us a referral. Or maybe they're going to collect points instead of cash because maybe cash isn't something that's readily available, you don't feel like you can spend. But you can have them collect points and maybe they're redeemable for whatever when they accumulate their points. Or exclusive access to something if you have a certain product and you're launching or you're launching a new service, you know. Maybe they get exclusive access to that.
So yeah, there are kind of ways you can be creative
Todd: On that, just a specific, like a guideline. If you're talking about monetary incentives versus discount incentives, there was this rule about when to use dollars as your incentive versus when to use a percentage. Do you remember what that was?
Tori: Yeah, I think that was Jonah Berger in his book Contagious and I think it's the Rule of 100. If the discount is going to be over a hundred dollars, then write it out as $100 off.
But if it's going to be $15 off, that's not as exciting, but that might be 50 percent off their next purchase, you know? And so, if it's under a hundred dollars that the discount is, then call it by the percentage.
Todd: So, okay. Thank you. Thank you. You recalled that really nicely. And I forgot that that was Jonah Berger. So if you're giving a discount, if it's over a hundred dollars, put it in dollars. That'll be really motivating. If it's under a hundred dollars, look at writing it out in percentage.
So let's pivot back to the conversation around cash. So really there's a couple of things you have to consider. And first and foremost, you need to look at your CAC and make sure that at the end of the day, you're not going to sabotage your referral program by coming out of the gate with something that is just way too high. Then you're going to have your CFO on your case and they're just gonna squash your referral program.
Also, something I learned from Christian. Again, he's the one facilitating these conversations with customers. So remember, we've got our two stages. So that initial reward that is just given for sending over a name. If that's too high, you're actually going to incentivize fraudulent referrals. So someone just going through their phone and just saying, yep, I'm sure grandma needs this. So does uncle john. So and they'll just go through and just blast out a ton of referrals. And so just be careful with that. Watch that. So even though you need to watch the finances, when in doubt, err on the side of a larger payout, especially when the deal is closed.
So as far as the amount of the incentive, obviously take your CAC into account, take the financial impact into account. So with those caveats considered and that kind of warning label on there, if you find out that your current CAC, money that you're paying Google for leads. Let's say that you find out that that is, you know, $1,000 for the cost of acquisition of a new customer. So consider anything south of that as a potential reward for your customers. Would you rather pay that $1,000, to the robots over at Google? Or would you rather pay $800 to your customer? And I think that that choice is pretty clear.
Anything else that we need to be aware of as far as the amount of the incentive, Tori?
Tori: Yeah, I think profit margin is another thing to keep in mind because obviously when you're thinking how much you're willing to offer, CAC is a big one. But you also need to consider your profit margins. And most of the time those line up. If your CAC is a little bit higher, you probably have a little bit higher of a profit margin because it took somebody a little bit longer to choose you because it's a bigger purchase.
‘Cause if, you're selling solar panels and you know, so your customer's paying you $30 grand to install solar panels on their roof. Maybe after all’s said and done your profit of that was $10,000. So okay. Yeah under a thousand dollars You can afford to spend that on the incentive because you just made $10 grand from that one installation.
But thinking of a smaller company like maybe pest control or lawn care. Maybe somebody comes over and they mow your lawn and it, you know, costs them, you pay them $20 every time they mow their lawn. Maybe their cost of acquisition is a little bit higher than that. Maybe they're spending a little more on Google. Maybe it's $50 a customer. They want to be profitable.
They're not going to be able to offer you anything over $20 because that's what you're paying them to come mow your lawn. So I think keeping profit margin in mind too is pretty important.
Todd: Yeah. And so what should my number be? Well, it really depends on a lot of factors, right? It depends on your industry. It depends on your CAC. It depends on your profit margins. It depends on what's really going to excite your customers.
A shout out to you, Tori, you did a really nice write-up, in our Content Hub where you broke this down. And so go on to Snoball.com, check out our Content Hub, click the little tab that says Referrals, and you'll see all of Tori's content there. And there's one specifically that talks about incentives.
And she breaks that down as far as how to consider your CAC, other things that you may want to consider. So I really, really recommend that. And at the end of the day, I think it's just going to take some experimenting to find out what's really working, right?
You launch an incentive program and you're really excited about it. And the feedback you get from your customers is crickets. Nothing. A silence. Then, okay, it's time to adjust. It's time to try some different things.
And the last little thing that I'll say is, I mean, we said err on the side of more exciting, right? More of a payout. If you're having issues internally selling that idea, then go to your executive team, go to your finance team and say, hey, can we just try this for a month and put a sunset on it? And you're going to find that internally you're gonna have much better luck actually getting that referral program approved. If you say, hey, we just want to try this for a month. We'll treat it as a special, then we'll sunset it and we'll analyze, iterate. And we'll talk more about that here in a minute.
Step 2: Make Customer Participation Easy
But let's talk about the next one, Tori. Which is, out of all of our research that we've done, we have found, we have discovered that customers prefer things to be easy. Walk us through that one.
Tori: I know, isn't that surprising? Didn't expect that one. Yes, so according to Nancy Harhut, one of the quotes that I really like from her book, Using Behavioral Science in Marketing. But she says, and again, it's obvious, but, “Your customers and prospects have the natural tendency to go with the flow or the suggested or easier choice.”
And so take a second and kind of think of the most complicated possible way you could get your referral program out to people. Like, let's say a customer goes to your website. Then, they have to look in the footer, click a button that says About Us, scroll through the About Us page, click on a button that says Referral Program, then there's a button that they click and it goes to a form, then they have to fill out their information, click Next, fill out their friend's information, click Next. Fill out some extra questions, click Next. How do you want to receive your payout? Click Next. There's just so many questions. You're going to lose people.
Todd: That's right. Like joining your referral program is a part time job now. They've got to do so much work.
Tori: That's not worth it. And so I think just making sure you're erring on the side of as easy as possible. Obviously, the easiest option would be you text them and they text you back. Here's my friend, Joe, his number is, and that's it. Obviously, that's the easiest. Just tracking can be kind of difficult that way, getting the text into a spreadsheet, whatever. That can be kind of hard.
But any other options Todd that people might consider for the submission part of it?
Todd: Yeah. First, I got to underscore what you just said. It's one thing that we do really well here at Snoball and we want people with a DIY program to replicate it is using text. For a lot of people, you can have them come where you are to join your referral program or you can meet them where they're at and that's on their phone right in front of them. So that's the easiest, easiest, easiest way just to underscore and emphasize what you just said.
The other thing is have a web page that gives them all the details so that when you send them a text, you can go right to a landing page where they see the details, they see the conditions. It's super clear. So maybe this is a web portal or maybe this is just a web page. Also, in your newsletter, you might have a little form there. This is something that maybe they're getting every week or every month, and they've got a nice form there. And remember, keep those forms simple.
And you're going to have people creeping in from all over the org saying, hey, what, on that referral program, I also want to know who their cousin is. And it would be really helpful if I knew their salary. And it'd be like, you're going to have people making requests from you for other departments saying, ooh, we want this data. Keep that form simple.
We really recommend two fields, get their name, get their number. Or get their name, get their email. Every new field you add on there. I mean, this is just marketing one on one. You're going to lose five to 10 percent of people for every additional field you add on there. So that's what I would recommend is website, newsletter, and these forms and keep those forms super simple.
Tori: I love what you just said, just those two very simple fields for them to fill out. Think about it though, too, that your phone, your computer, they remember that basic information. So when you click on the name field, it fills it out for you. Click on the email field, fills it out for you.
There are a couple that you can ask that's going to require zero effort on their part, except for to click enter because their computer already knows their name, their phone already knows their phone number. And so, keeping those fields simple is gonna make it even less work for them because their internet browser remembers that information.
So, keep that in mind.
Todd: It's so true. Thinking about it that way, Tori, is get that, make sure that form is optimized for mobile because that's where they're on. It'll auto populate their fields, but also that's where their contacts are, is in their phone. So make sure that that form looks really good on mobile to make it easy for folks.
Tori: Going back to what you said, including some kind of website page, website portal. I wanna just double click on that for a second. Obviously, the best place would be the hero section of your homepage because that's what everyone's going to see, no matter who they are, everyone's going to go to your homepage, but that's not realistic.
We still have to use our website to talk about our company and to talk about our service and our product and whatever. But we also don't want it to be hidden away somewhere. So what are some places that you might suggest, or that maybe we've seen customers use on their website, where it is accessible, it's easy to find, their current customers can find it, but it's not so front and center that it's annoying.
Todd: Yeah, think of your website as having really two doorways. The first doorway is for prospects and they're the ones coming into your home page. They're coming into some of your major service pages, right? And so obviously you don't need to pitch your referral program to prospects. So those pages have another purpose.
But the second doorway is where your customers are going to come. So just think of that. And many of the places to place your referral program naturally just come to mind. So I think of maybe your content hub, maybe your newsletter, maybe where they log in. And so that they can access anything on your site, so the help center. These are all places where you can place that referral program, so that you meet them where they're naturally going to go.
And if you think of those two doorways, I think, you know, where you place this form becomes just really, really obvious.
Tori: Another thing too that I wanted to touch on is, if we're trying to make this as easy as possible for people, but we're not trying to annoy them. But if you text somebody once, and they don't respond, the easiest option to keep top-of-mind would be to text them again, and then the link is there. It's easy for them to see that landing page in the text, or to see the form like we just talked about.
But, we don't want to be annoying. We don't want to spam them. So how do you balance that? We want to make it easy. So we want to text them more, but we don't want to spam them.
Todd: Now it's a great question. And again, I'll start with a basic mindset. Think about your customer. They're most likely going to send referrals. when there's a happenstance. They just happen to be in a conversation with a friend while going out to lunch. They happen to be at a family reunion. And so, like you said, you just want your brand to be top-of-mind so that organically these conversations come up.
And that's why it's so important to nurture conversations over time. Instead of forcing people to just look at their phone and send you referrals, you want the opportunity to just come up organically, which means you need to be top-of-mind. So one thing that we do here that we've learned is from that initial referral request, you're going to be able to gauge their sentiment. If you ask for a referral from a past customer and their initial thing is, you know, F you, I wouldn't refer you, to my worst enemy or something like that. Okay. This is probably someone I shouldn't pester anymore. They're a detractor. Great. Let's try to resolve their concern and see if we can flip them.
But you're going to see from that initial response, whether or not they're a potential advocate. If they say, oh, I love you folks. And no one comes to mind right now. That's an answer you're going to get most of the time with your first outreach is, oh, let me think about it. Or, no one comes to mind right now. Okay, that's a really great response saying no, cool, I don't have a referral, or not yet. That can be a really good indicator of a good sentiment.
So that means they're going to be more open to follow-up. And that's somebody that I think you can respectfully remind them so that when they are out to lunch with their sister, then you're top-of-mind and they can bring it up. So that mindset and that application is what I would recommend.
Step 3: Promote the Referral Program
So let's pivot over to one of my favorite things, which is how to promote your program consistently, how do you get people to just remember? How do you get your referral program in front of them? We already touched on this, but one of the best places to do that is on your website. Another great place is just consider every touch point of your customers, whether that's text, email, newsletter. Anything else come up, Tori, as far as other touch points or where we could promote our referral program.
Tori: Yeah. I think you mentioned the basics, texting, email, newsletter. Those are kind of the basic ways we're going to communicate with our customers. But I think there are ways that we can create our own fun way of communicating. And so if you maybe send gifts on their birthday or something, you can have a little card in there that mentions the referral program.
Or like you said before, Alex sends handwritten notes. So that doesn't just have to be thanks for the referral. You can send handwritten notes to them reminding them about the referral program. Maybe it's been a month since the installation and you send them a note like, hope the first month has been great, and remind them about the referral program.
Another thing is sending them swag and that keeps your company top-of-mind as well. Even if the swag just comes with a little sticky note that has the link to the referral program on it, you know. But those are kind of other ways that I think we could communicate with them in a more fun way that's not maybe the natural ones that we think of.
Todd: I'm a huge swag fan, so I love that because if you can find swag that they'll actually wear. I mean, you talk about something , to really instigate an organic conversation with other people. Like, oh, I love that hat, who's that company or something like that. And it really gets the conversation going. Another thing we found is shout out your customers on social media. Do a little spotlight of them, tag them on social media, and that's a really good way to re-engage with them.
But after you do all of these things, you can't forget to do just the most basic thing. And sometimes we see companies just hesitate to do this. And that is ask for that referral. So maybe you just sent them some swag and you're like, oh no, no, no, no, no. I just want those referrals to come in naturally. Maybe they just left a review for you. Oh, that's a good time to ask. And don't be afraid to say thank you so much for that review. Is there anyone else that you think we could help and treat them as well as we treated you?
So you've written about this, Tori, about the best ways we can ask. What are some of those best practices that you found?
Tori: Yeah. I think a lot of people are afraid to do the asking part because it's the awkward part. ‘Cause like you said before, over text, most of the time you're going to get the, sorry, no one comes to mind yet. In person, you're going to get the same thing. And so no matter the way or the form of communication, that's the regular answer.
And so there are some best practices, things we can do to just make sure that it's a positive experience regardless of their answer.
And the first one is just to identify the right timing. So you just mentioned if they left a review, that could be a really good time to, to remind them about a referral. Going back to Jonah Berger and his book Contagious, a great book, but, he says, “One way to generate word of mouth is to find people when they are already fired up.”
And so thinking about just kind of the emotional peak, or as Christian, our internal expert calls it, moment of delight.
So finding those moments of delight when they are fired up, when they're already excited about your product or service, that's when you want to ask.
So, you mentioned the review. What are some other times maybe that Christian's mentioned in your discussions or other things that yeah, are a big deal and you should ask.
Todd: Yeah, you touched on this. Just different milestones. If you're installing solar, it's when that installation is done. It may be when they get their first bill and wow, they just saved all this money.
Another thing I see is after you've solved a problem for them. And this can come in two forms. Maybe you just fixed their garage door and now they're delighted and they're just like, oh, thank you. So train your technicians to say, hey, is there anyone else that where I can fix some of these problems for them? That's another moment of delight.
And here's one that surprised me, Tori, and tell me what you think about this. Maybe you get a negative review. Maybe someone comes in and complains to your support team and then your support team crushes it and they actually solve that problem. That's one thing that I've seen is that was when the pendulum swings from, I hate your guts to you solved that problem. Sometimes that swings really far to wow, I love you. I mean, you guys are the best. That's a great moment to say, hey, we've worked really hard to solve this problem for you. Is there anyone else that you can think of?
Here's one of my favorite things, just to insert quickly. This referral as kind of your carrot, you think about the good healthy customer service, customer communication habits that it incentivizes for you as a business owner or as a marketer. Like, now you're trying to solve problems for your customers cause that referral is, in your peripheral vision, you're communicating with them.
You're reaching out to them. You're finding out about how their service was. A good referral program it just instills all these best practices that are going to just help you treat your customers better than ever. It's one of the reasons why I love a really good referral program. It just means everyone wins here throughout the entire customer journey.
Tori: Yeah. I think as well, a lot of the moments that we just talked about, these moments of delight, tend to happen at the beginning or right after installation or right after you cleaned their home or whatever your service is. A lot of the time that's when they're going to leave the review or that's what the milestone is. Yeah, their first bill. So it's a month later. And so a lot of the times those milestones and those moments are towards the beginning of their journey.
I'm sure a lot of companies listening, they've got a lot of legacy customers that they're thinking, there's probably a lot of potential there. I got a lot of customers in the past that I didn't ask for referrals, but are these moments of delight past? Now they're just complacent with the service that I offered them. They don't care. They're not going to refer someone. But I think something to keep in mind is you can create the right moment. So, don't be afraid to create that moment of delight. Even if it was two years ago that you installed their solar.
Or you haven't done pest control with them for a year because it's out of season or whatever, but you can create that moment. So even just going the extra mile next time, if it is a regular occurring service, and maybe you think they're a little complacent because you've been mowing their lawn for a long time and it's every Friday.
And so they don't really care anymore. They're not as excited about it. But go the extra mile. Next time you go over, do something special. Again, swag, fun stickers, handwritten notes, those things are always good. But even just cleaning up a little extra or, I don't know, there are just things you can do, I think, in each service that go the extra mile.
Todd: You highlighted a couple of things there and I just want to drill down on it and be even more specific. I think at the point where you're engaging with the customer is a great opportunity to create these moments of delight, right? So, like you said, let's say you come in and you fix someone's toilet. Well, what if you clean up the entire bathroom and surprise them. They let you leave and it's cleaner than when you got there. Let's say you fix someone's garage door and then you, the technician, does just a quick video on their phone to say, hey, this is what I was able to do. And let me just show you a couple of tips on how to maintain this. And then, they send that to them the next day or something.
Like, these are just extra mile things that you can do at the point of service, where I think you can create those moments of delighted. And then train that technician when they see the sparkle in the customer's eyes to say, hey, is there anyone else that I can do this for? I think those are great ways to get referrals and to actually earn them in the most legitimate, authentic way possible.
Awesome. So let's talk about. All right, you're now ready to ask for the referral. So one thing that we've learned about customizing that ask. With our 200,000 conversations with customers, we've learned a few things. And it's this crescendo of effectiveness. Right? So let's say the company reaches out to somebody and says, hey, would you like to send us a referral? All right, meh, that's pretty good.
You may get some referrals off of that. Then you add in there, hey, this is Tori from ABC Carpet Cleaners. Do you want to send us over a referral? Great. You've added a face to that. You know, this isn't rocket science, so the effectiveness is going to increase. Well, here's what we've discovered just turns it from good to great. This is where you might say, hey, Brian, this is Tori. I work with Tyler. He was the one that serviced your carpets. And I'm wondering if there's anyone that you know that Tyler could come out and service. So that's a level of personalization where you're putting a face on the company, you're calling them by name, obviously. But you're saying, hey, that person that helped you out last time, do you have a referral for that person? That level of customization is where your referral rate just goes sky high.
You wrote a lot on this, Tori, about you can bake a lot of these best practices right in your template, right?
Tori: Yeah, I think templates are a double edged sword, so making sure that you're using them correctly. But we, on our website and in our content, have a couple different referral request templates that you can have access to and customize for yourself. But the templates only work if you're still customizing them.
And so I think you can bake the idea into the template, especially the pattern or the format of it. You want to start with their name. Then you want to introduce yourself, introduce the sales rep that helps them, the service, the whatever. And then mention a specific detail. Maybe throw in the holiday that was last weekend that hopefully you had a good weekend.
I mean, there are things that you can in the template list out and put in parentheses, you know, mention this here, mention this here, mention this here. So it's good to have a template so you don't forget to include the best practices. But you don't want to have a template that's just hi there this is Tori, we helped you last week. Do you have a referral?
I mean, if that's the template, it's not going to be effective.
Todd: Hello, valued customer. One, two, three.
Tori: Right.
Todd: We value your patronage and we are so thrilled to take your money again, you know? So yeah. There's definitely some best practices there and so I'm going to add your link into the description about where some of those templates are. Cause I think that's a really good resource.
But another thing that you can bake in. Or another best practice when it comes to your messaging. And it's something that we borrow from the marketing world. And it's the Rule of 100. And basically it's an aspirational goal that says, keep your email correspondence, keep your email message under 100 words. If you can't, sometimes that's really hard to do, but that's your goal.
When it comes to text, keep it under 100 characters. So let that be a little bit of a guide to keep this concise. Keep this to the point and you're going to increase that response rate because your customers are actually going to be more likely to read it. So just something to remember there.
And then I want to talk, I just got to touch on this. If there's any hesitation though, you just really want to back off and not pester people. These are your customers. They're the best asset you have as a business owner.
And so obviously you don't want to pester them. And that really comes down to nurture that relationship, nurture the conversation. And then something that I can't overemphasize is during that conversation, they're going to have requests. They're going to say, I'd love to refer someone, but first, I really need this issue resolved. Great. Get that over to your customer support team. This is a two way conversation. This isn't gimme, gimme, gimme. This is, oh, you want something as well. Let me take care of that or let me get that to the right people. Now's your chance to create one of those moments of delight when you solve that problem for them. So remember it's a give and take because you're nurturing a real relationship.
So we've got all these best practices. That's been super helpful. What's the next really important step that we need to remember as people trying to create a referral?
Step 4: Set Up a Tracking System
Tori: Yeah, I think, a lot of the times people do these first three steps and they think that they're done. So they've got their incentive set up , they think it's a good incentive. They know that it's an easy program to use. They're promoting it all over the place. But then they think that that's it, you know, it's being promoted. So it's out there. So It's gonna work.
But really the next step cannot be forgotten, and that is to track and then analyze the program's performance. And so a lot of people don't think that this is important because, yeah, if your program is running, then your program's running, right? You're gonna get referrals, it's all good. But there's no way you can iterate or improve or know if the program is effective if you're not tracking it, right? There's no way to know if your $100 referral incentive is actually motivating to customers. There's no way to know if the referral payouts are going out on time. I mean, there's a lot of things that if you're not tracking, you're never going to really know how effective your program is.
It gets chaotic ‘cause there is a lot to track. And so in a second, we can kind of talk about the DIY part of it, how you might go about doing it manually. But as far as why tracking is important, I just want to really drill that into everyone's brains because it is, it's so important. So is there anything else Todd that comes to mind as to just why referral tracking is important?
Todd: Yeah. Just to underscore what you said and then build off of that. Just really the importance of measuring its effectiveness because let's be honest, your first take at a referral program, you're probably not going to get it right. You're not going to get the incentive right. You're not going to get the communication cadence right. Maybe you're going to sabotage your referral program, because you've got the wrong incentive. So your finance department comes over and says, hey, we can't continue this. And so it's not working.
And if you're not tracking it, you're not gonna be able to answer any of those hard questions. And so your referral program will just die. Additionally, you're not going to know where those referrals came in from. You're not going to know who are your top referrers. And so you're just going to miss out on a ton of referrals.
So I think tracking it is going to help you internally to make the people happy that are asking the hard questions about the effectiveness of your referral program. But then also it's going to make your customers happy. Those that are sending the referrals, because you'll be able to track when it's time to send out the payout, you're going to be able to track who are those that are sending in referrals so you can roll out the red carpet for them. Those are some of the other ideas of why the tracking is so critical.
Tori: We just kind of named off a lot of reasons why, but just really quick, the things that you should be tracking. Some of these can go in a spreadsheet and some of them might just be a monthly process that you just make sure that you've got a SOP somewhere that monthly you're checking these things and keeping track of them. But some of the things to be tracking, to be able to get those numbers to report.
We want to track how many referral requests are going out? How many people are responding? How many referrals have actually been sent? How many of those are converting? How many of those even were good referrals, right, that maybe the referral responded and was interested in the first place. How many of those led to demos? How many of those converted? And then other things too, just like the incentive amounts. When did the promo start? When did it end? How effective was it in the middle? The CTA is in your newsletter, on your website — what are those clicks looking like these days?
There's a lot of those things that we do want to be tracking and there are different ways to go about them. Obviously not all of those can fit into a spreadsheet, but those are just some good ones to keep in mind as you're setting the program up.
Todd: And I want to link in the description your article about this, where you break this down exactly how to track your referral program. But you may hear this and think, wow, that's a lot of moving parts. You can track this manually. You can always hire a company like Snoball and we'll bake in all these best practices and we'll do it for you. But to get started, you can do this manually and build up some momentum until you can use a system like Snoball.
But because there's all these moving parts Tori, what are some tools that are inexpensive or better yet are free that people can use to kind of put some order around this potential chaos.
Tori: Yeah, I think most of it can get done with just Google sheets and Google forms. You can track most of these things in columns and rows. Having a Google forms, that can be helpful and you can link up a Google form and a Google sheet, which is helpful to just automate that process a little bit. If you're wanting to send out emails to people. Again, you want this to be personalized, but MailChimp and HubSpot can be good places to start. They do have free versions. I know for MailChimp you get 500 contacts for free and a basic CRM and a couple other features. And then HubSpot also has some of those foundational CRM tools.
But there's a good chance too that if you are a growing company that your sales team already has a CRM in place and they probably have a couple of those email contact tracking tools that you might be able to just kind of jump in and use. It's not free 'cause the sales team's probably paying for it, but your portion of what you're using, you shouldn't have to increase the payment for that tool every month.
So those are just a couple that I can think of.
Todd: Well, I love that. And if somebody goes into Google and types in, you know, free CRM tools for a small business, you're going to find, one of the top results is Capterra and they'll give you the top 20 right there of really inexpensive or free CRM tools. Whether it's Zoho or a free version of HubSpot or something like that.
But essentially the mindset that we want you to remember is treat your referral funnel like you treat your marketing and your sales funnel. That means take it seriously, look at some of the tools that are available.
I just worked with a customer and she brought up her process and her process before she signed on with Snoball. She laughed about it. And I said, how are you managing your referral program before Snoball and she held up a stack of sticky notes and she said, these were all over my screen. So just know you're not alone. If you feel like you're herding cats here, you're not alone. But there are some really basic and free tools that you can use to track your outreach to manage your customers and to send out emails , and text messages, to your customers.
Tori: I think the whole point of starting out with this DIY tracking is so that you can prove to executives later that this is successful, we need to be paying for a tool like Snoball. So we know that not everybody is at the point that they can justify using Snoball right now for their referral program. A lot of the smaller companies might not be able to.
But if you're doing it yourself and you're tracking, you're going to be able to prove the ROI and prove that we're getting way more referrals and our CAC is crazy low because we're only spending money on incentives. That's it. And so once you can prove that, then it's more likely that you're going to be able to get the buy-in of the executives of the C-suite to be able to then purchase a tool like Snoball to make your life easier.
Step 5: Iterate and Improve
Todd: Right on. So great. We're tracking everything so that we can justify our referral program. Now let's talk about refining it and optimizing that as our fifth pillar to building a DIY referral program.
Tori: Yeah, so this is a pretty, we'll go through this step pretty quickly because it really is just going back and doing the other steps we just talked about all over again, really. But some of the things that you are going to want to pay attention to and test and refine and change.
You're going to want to probably change different incentives, try higher amounts, lower amounts. You're going to want to incorporate customer feedback once your referral program is in place. You're going to hear about it. And if you don't, you can always ask, but if maybe you have repeat referrers that you're getting a lot of referrals from the same person, ask them if it's easy or how it would be easier for them to submit a name or if they've got any feedback. Then implement that.
You're also going to want to probably diversify your promotional tactics. So if right now you're really only doing a newsletter, maybe try it on social media. Or maybe you only have it on your website right now, let's start trying to text people. So just diversifying those tactics. And then of course streamlining the process trying to figure out any possible ways you can to make it more easy. Once things are in place, you'll probably realize that that button is probably not necessary. We can link that together differently, or whatever, and that will help. But obviously things are always changing, and so if you're going to get value out of your referral program, like I said before, just have a monthly SOP that you're going to go through all of these things every month.
Just double check everything, look at all the numbers. And then decide if something needs to be changed for the next month.
Recap
Todd: I love it. So those are our five ways that you can actually crush it with a DIY referral program. And that is nail your incentives, understand the human brain and iterate and discover what the best incentive is for your customer. And then also just make it easy for your customers, just get out of their way, find ways to remove those roadblocks so people can understand and people can participate in your referral program. And then promote it, make sure it's getting in front of people, where they're looking at your website, where they can easily find it. But also meet them where they're at and make sure that you're promoting effectively and consistently.
And then track this, track it so that you can justify your referral program. So you can improve your referral program and just so that you don't go crazy from your referral program. And then finally, just that mindset that you left us with of iterating. You're not going to nail it on your first time. So iterate, refine and improve your referral program until it's it becomes a real driver of new business.
So that's it. Tori, thanks so much for letting me pick your brain. Thanks for all the stuff that you've created and thanks for joining our podcast today.
Tori: Yeah, anytime. Happy to help.
Todd: I love it. So I'm going to include in the description all the resources that Tori has created so that you can actually just crush it with your referral program.
She's got The Ultimate Guide to a Referral Program PDF. She's got articles with templates and point by point instructions on how to create your incentives, all the things that we highlighted. So go there and use that to build out your referral program.
At the end of the day, referral programs, they don't have to suck. They don't have to drive you crazy. They can be intentionally done and they can consistently get new customers that are really going to help you grow in the most authentic and the most sustainable way possible.
And that is with a legit and a high performing referral program. So we hope that was helpful. And thanks so much for joining the Snoball Effect of the Marketing Playbook series. We'll see you next time.
