Customer Referral Program Guide

Looking to add a customer loyalty program for your business? I know, I know, creating a customer loyalty program is one of the biggest trends for all businesses. And for many businesses, it is a great marketing asset to increase customer retention and acquire new customers. But a customer loyalty program isn’t always a fit for every business. There are many reasons why, which can include the type of service/product you are selling or it could just be due to the channel your service/product goes to market. Whatever the reason is, you can still increase your customer retention and acquire new customers by building a Customer Referral Program.

A Customer Referral Program is a great to way to encourage your current customers to invite their family and friends to your business, helping you grow. Additionally, customer referral programs can build your brand awareness and showcase your company in a positive light. Plus let’s not forget, people love to share, whether it be a selfie or a recent experience at a restaurant, they want to let the world know (or at least most millennials do).

Now you might be somewhat skeptical about why people would want to share their experiences with your business. Well there are many reasons as to why people like to share, but I will focus on 2 key innate reasons. First off, people share fundamentally to make themselves look good. And secondly, people share to connect with others, developing relationships.


Let’s first start with why sharing makes people think they look good to others. Back in 1959, Erving Goffman, a sociologist, wrote a book about how people try to control the impression that others have of them. Goffman analyzed how people acted in certain ways when in contact with others, just how actors act to portray a certain role to their audience. The concept of his book was that everyone of us creates an identity that we want others to portray of ourselves.

By applying Goffman’s thinking, if someone shares a positive experience at your business, they are trying to portray themselves as a knowledgeable person that people can rely on. I would say most of us would like for others to believe we are knowledgeable.

And now moving onto the second reason, people share to connect with others. As humans, we have this innate need to share things with others, as a way of connecting. When someone purchases a new pair of shoes from your store, they want to share about this awesome experience with others as a way of connecting and building a relationship.


Through a customer referral program, you are providing an easy method for your customers to look good and connect with others. In addition to the these 2 reasons, we also recommend incentivizing your customers for sharing their experiences and referring their friends. By providing an incentive, such as referral points that can be redeemed for gifts, your customers will be more likely to continuously share their experiences and refer friends.

And yes, I realized I have spent most of the time on this post talking about why a customer referral program can help grow your customer base. But what you really care about is, how much more money will this make you.

Well let’s dive into that. The average conversion rate for customers is anywhere between 1% to 3%, but according to Marketing Metrics, the conversion rate for repeat customers jumps anywhere between 60% to 70%. And RJ Metrics found that repeat customers spend more per visit then new customers, repeat customers spend roughly 3 times more.

Now what do these figures really mean? The new customers you acquire through your customer referral program can help take your business to the next level. By retaining your new customers you can expect to earn additional revenues and lowered costs, ideally increasing profits. But remember, your customer base will grow by how effective your customer referral program is. So make sure that you devise a program that is meaningful to your customers and provides them with the incentives needed to encourage them.

For a step-by-step guide on how to craft your customer referral program, stay tuned to our next blog post. We will walk you through how to build your customer referral program and provide you with our helpful tips.

And if you can’t wait for more information about customer referral programs, feel free to contact us at 1-800-277-2342 or fill out the contact us form below.


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