I’m a big fan of testing before building (or buying). Marketers armed with data can quickly test a hypothesis, learn, and find out what works all while saving time and money.
Referrals shouldn’t be an edge case either. Before implementing a referral program for your customers, you need a signal that this is worth the time and effort to implement.
How can you do that?
I won’t say it’s easy, but it might be easier than you think. Let me explain.
People need to be happy with your product
I’m fully aware that this is easy to say, and much tougher to do, but if your product isn’t solving a problem or making someone’s life easier, then why do you think customers would recommend it to a friend? Oftentimes people will share new products with friends as a signal that they’re a trendsetter, but the product has to have some type of “wow” factor. You look really lame as the friend who tells others about a sub-par product. It’s your job to find out how much people like your product, and if they don’t, you need to find out what you need to improve. It’s that simple.
Net Promoter Score – the secret sauce
For those of you who aren’t familiar with NPS (net promoter score) surveys, this is an age-old technique used by companies to gauge whether a customer would promote the business to a friend or colleague. It looks something like this:
“On a scale of zero to 10, how likely are you to refer to a friend or colleague?”
It’s pretty basic, yet wildly powerful at the same time. A NPS survey will unlock a key bit of insight for businesses who are questioning whether they should create a customer referral program. This key learning is “how much do you (the customer) like me (the business)?”
NPS on Steroids
So let’s say you send out a NPS survey, and you get 10 responses. Let’s say 100% of responses were above a 5/10, but only one individual gave you a perfect score of 10/10. What happens now?
Do you scratch your head, and try to figure out why some people gave you a low score? Nope.
While administering your NPS survey, you can give it a shot in the arm by asking a single followup question – “What caused you to answer this way?” People that think your product is mediocre will tell you exactly why they gave you this score, giving you golden nuggets of feedback. Even better, people who love the product will tell you WHY they love your product, giving you insight on what makes people hooked.
Don’t scale your referral program yet
So let’s say your product only gets 9/10, or 10/10 for the promoter score. The product is starting to find its rhythm and fit with customers. What next? I personally would advise against implementing a referral program at this point. You still haven’t figured out what would compel the customer to recommend your product to friends or coworkers. Assuming you used one of the tools I mention above, simply email the individuals that responded, and start testing offers manually. Is 10% off an order not enough? Is a $15 Uber credit too small? You get my point. You need to find something that resonates. Once you’ve found that, it’s time for the full implementation of the customer referral program.
Yes, you might get rejected by customers, but you’ll also understand WHY they aren’t interested in your offer.
I love the internet, but there’s very little reinventing the wheel. Companies like Comcast, DirectTV, and others have been using customer referral programs for ages, so don’t be afraid to look offline for inspiration. Likewise, start hunting around the interwebs and see how other companies are leveraging happy customers to grow their business.
I hope this post helps you start testing whether a customer referral program is something your business can use. If you use the process I’ve outlined above, you’ll be rich with customer insight, and there will be less ambiguity around whether a referral program will work…or flop.
Image courtesy of Kromkrathog / FreeDigitalPhotos.net
Luke Thomas is a Growth Marketer at Safari. He enjoys working on growing companies, reading, and hanging out somewhere between marketing and engineering teams. He writes about marketing on Gainbits and you can say hi on Twitter at @lukethomas14.