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You may see some papers on your office wall about it. You may have read it at your local grocery store and even your bank may be giving out flyers about this.
Referral programs are everywhere, in your workplace, in small business and in large company buildings. But why is there a need for these programs?
What is a Referral Program?
A referral program is a business strategy that makes a company pay someone for referring a client or opportunity to them. Also known as affiliate programs in the online world, one is usually paid a certain amount per sale or lead that he or she generates through promotion or simply by just telling someone about a product or service.
It can also be considered a bonus or extra money as you can actually earn doing it part-time or just by casually spreading the word about a product.
Although it is commonly a business arrangement that companies use to get clients, it might also be used to get employees. A small merchant also takes advantage of this as giving out a referral incentive does not always mean giving out cash. Awards, rewards, free items and gifts in kind may also be given as an alternative.
Is There a Need for an Employee Referral Program?
Large companies not only have client referral programs, especially if they badly need people, they might have to put an employee referral program in place. An employee referral program is where a reward is given to employees who can help in finding the perfect people to fill a position.
According to a recruitment website, it is still one of the most powerful recruiting tool. Not only that, this produces great quality hires who become successful in their chosen field. It also somehow helps in decreasing attrition rates in companies, as most employees hired or referred by a friend will most likely stay because of that friend who works in the same company.
Another reason most companies implement an employee referral program is the belief that “same feathers flock together”, meaning if your employees are pretty serious and diligent about their work, then there is a possibility that they hang out with people with the same attitude, thus, those friends will also be fit to work in your company.
Making a Customer Referral Program Effective
Having a customer referral program in place in your business is a great way to get new customers. Whether you are a lawyer, a real estate agent, a physician, an insurance sales representative or a large marketing company, you should start getting ideas on how to make this program and how to ensure its effectiveness. Here are some things to keep in mind when starting out a customer referral campaign:
Provide your customers the tools to refer their friend. This is by giving them flyers or referral cards that they can give out to friends and relatives. This way, they would really think that you are helping them, while in reality, they are the ones helping you.
Send them a letter about the program. No, not every week. Maybe sending them information about your referral program every quarter will help them remember. It’s also not too overwhelming for them and they won’t feel like you are shoving the program down their throats.
Give your existing customers something. Send them a thank you note, an appreciation email or send something to them, a product sample or whatever. This will make your customers feel that they are your partner and not just people who give them business. This is one of the best ways to make them feel comfortable helping you out. Of course, with the special way you are treating them, surely they would want to tell everybody about it, right?
People are still the best advertising mediums. With the feelings that customers can convey about how they love or loathe your product, surely, their friends or anyone they speak with will get carried away and their decision of whether they will buy your products or not will be affected by their relationship and “belief” on that person.
Tenant Referral Program
A tenant referral program is a tool to make vacancy rates as low as possible. Your tenants, whether they are still living in your property or they already left, can say things about you and your property. So you must make sure that they only have nice words to say! This is where a tenant referral program comes in.
A property owner will give out incentives to their tenants if they direct a friend or family to the building to rent. These incentives may come in different forms, but the most common examples of these are giving out rent discount, giving grocery certificates from nearby establishments, gas station discount cards and free laundry and dry cleaning services for a certain time.
These referral programs are actually very important, because your tenants are your property’s representative. What they say about your place may make or break your business.
AT&T Referral Program
Top companies also have referral programs. They usually put a client or customer referral program in place especially if there is a new product that needs promotion or if they simply just want to expand. One of the huge companies that offers referral programs is ATT.
AT&T is a telecommunications network that offers phone and Internet services, among others. Because of their frequent innovation, they launch new products every time, thus, they are also very keen on promoting these products to their market. The company knows pretty well that their existing customers are their best marketers, so they provide them with these programs.
One of the referral programs of AT&T is for the Uverse product. In this program, existing customers who refer a friend or family to the company will get $25 for every referred person who activates their services with the company.
Sprint Referral Program
Another large company that offers a great referral program is Sprint. In fact, Sprint has a great program in place since it’s not only the current customer who will get the incentive but also the person he referred. That’s $20 for the customer and $10 to the referred friend. There are conditions to get the referral though: they will only be given if both phones will be active in the Sprint network for 30 days.
Everything Plus Referral Program
Sprint has another referral program, which is fairly popular to customers who want everything from this company. The Everything Plus Referral Program of Sprint, according to their website, allows the customer a savings of $840 a year. The only difference here is that, a Sprint employee is the one to refer a person. Meaning, to take advantage of this program, the prospective customer should have been invited or called by a Sprint employee, as the employee ID or CID is needed for application.
Referral Programs of Other Companies
Anyone can build a referral program, however, you should be aware of the pros and cons of giving these out, as this costs money. But for those who have already succeeded, this is something that they are keeping for a long time. Successful referral programs are not a monopoly of bigger companies such as Verizon Fios, Microsoft, ING, Scottrade, Mozy, Avantlink , Amtrak or Google Adwords, other smaller names have also succeeded in making this work. From realtor to contractor, to mortgage agents, to smaller software companies and physicians looking for a patient, and even government offices have found that referral programs are really effective. Some of the entities that have referral programs are the US Army, Child Care Resource, Tissa, Neopets and Dropbox.
Studies say that referral programs may fail. Of course, nothing is fool-proof. However, if you have studied the programs before implementing them, then chances are you will succeed.
Whatever the reason you ‘re giving it out, and whatever the rewards you’re giving is a small matter. What’s more important is that you keep your business integrity and you make your customers happy. In the end, it’s what your customer will do, and what they will do reflects on how they feel about your company or services.
Referral programs reflect how satisfied your customers or employees are with the company. With a great business relationship and the right incentives, you can entice them to bring more sales, customers or capable people to your business.