Should a small business have a referral program?
Often, yes, if happy customers already send friends your way. A referral program makes that habit easier to notice, track and thank. Keep it simple: one clear ask at the end of a job, one question to every new inquiry about who sent them, and one thank-you that is the same for everyone and stated in advance. If a referrer mentions a reward in a public post, they should usually say plainly that they get something for referrals.
When a referral program helps
- You already get some work from word of mouth, and you would like more of the same.
- Most customers finish the job happy enough that you would be glad to hear they told a friend.
- Your service is one people ask friends about before hiring, as is common with home, care and repair work.
- You have room for more work of the kind your customers would refer.
Keep it simple
- Ask once, at the right moment, usually when the job is done and the customer is pleased: if you know someone who needs this, we would be glad to help them too.
- Ask every new inquiry how they heard about you. When the answer is a person, record the source channel as referral and note who sent them.
- Offer one thank-you, the same for everyone, and say what it is before anyone refers, so no one feels misled later.
- Thank the referrer every time, whether or not their friend hires you. Share details about the friend only with the friend's okay.
Thank-yous that work
Often, a note or call means more than the reward. A handwritten note, a phone call or a small gift often lands better than anything elaborate.
If you offer a reward, keep it something you can afford to give every single time, and avoid rewards that depend on how much the friend spends. Those can make a friendly recommendation feel like a sales pitch.
If referrers mention the reward in public
The FAQ does not address referral programs directly; applied to referrals, it means the following.
The Federal Trade Commission's endorsement FAQ says that when someone recommending a product has been paid or given something of value to promote it, that connection usually should be disclosed clearly and conspicuously. It says even a small incentive may need disclosing if knowing about it would affect how much weight people give the recommendation.
The FAQ says a disclosure is more likely to be seen when it sits very close to, or is part of, the recommendation, and gives starting a post with "Ad:" as one example. It also says it is not okay to offer a discount only to people who say good things in reviews (and Google's review policy bans incentives for reviews at all; see the related answer on getting reviews the right way), and that a business should tell people in advance when they need to disclose what they received. On businesses, it is direct: "Your company is ultimately responsible for what others do on your behalf."
In practice, that means asking referrers who post about you to say plainly that they get a thank-you for referrals. This is a plain summary, not legal advice.
Sources
Related answers
- How can a small business get leads without paying for ads?
- How do you get more reviews the right way?
- What should you ask a customer after the work is done?
Lead systems and lead tracking
A lead that waits a day goes cold, and a lead with no source teaches you nothing. Ascent Vision fixes both.