Customer Management

Growing Your Service Business with Customer Referrals

June 4, 2016
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The Weight of Customer Referrals

Unsurprisingly, business statistics and polls indicate time and time again what many of us assume to be true. People are more likely to trust the recommendation of a friend or personal contact over anonymous reviews, advertisements, and other sources. Sources show that personal, customer referrals are up to 4 times more likely to buy than a non-referred person.Here are a few positive stats about customer referrals:

  • 65% of new business comes from referrals
  • 92% of survey respondents trusted referrals from people they knew
  • People are five times more likely to buy when referred by a friend
  • The life time value of a new referral customer is 16% higher
  • 83% of consumers are willing to refer after a positive experience—yet only 29% actually do

At the end of the day though, people are also busy and distracted at times, so it’s up to you as the service-business owner to help make sure your customers are referring and growing your customer base in the most successful way possible.

Customer Referral Program Techniques

It’s important to consider a few factors when coming up with a customer referral program for your business, especially when it comes to the necessary incentive you will offer:

  1. Referral programs should be used in the context of recurring services if possible; so the internal cost of your referral discount is spread out over many services. Find your best recurring service customers and begin your referral program with them.
  2. Make the reward for a successful referral meaningful! A referral reward should be significant enough to really encourage your customer to put the effort forth in spreading the word about their relationship and positive experiences with your company. It could be a significant discount on their services, or a one-off gift like a catered lunch or new coffeemaker. Or provide your customer a few options to choose from!
  3. Reach out to your best customers to let them know about your referral program, and ask for their help in spreading the word about their good relationship with you, while letting them know that they will be rewarded and that you appreciate their efforts on your behalf. Oftentimes companies will begin a referral program and over time forget to periodically communicate this to their customers. Keep the communication lines open. When first launching the program, a letter and phone call are a good idea. Later on, a quarterly postcard or letter is good practice. Another place for this kind of information is on any invoice you might send. In FieldPulse and many accounting programs, invoices can feature a custom text line. Perfect for a little reminder of your referral program.
  4. Reward the newly referred customer, and reinforce the positive image your existing customer has already created in their mind. You can score a customer-centric double whammy by showing some appreciation to the new customer as well. Their reward does not need to be as significant as the referral reward but it will go a long way in helping to establish a good relationship with the newly acquired customer. Also make sure to communicate the information about your referral program to the new customer in the first 1-2 visits, aka the “Honeymoon Period.” During this time, there is usually greater focus and communication between the customer and yourself and as such present the best opportunity for them to take your referral program message to heart.
  5. Make your referral program easy to implement and easy to track. The last thing you want to do is for a customer to successfully refer a new customer and then forget to reward them according to your program. You’re likely to disappoint both the old and new customer. It always pays to ask a new customer any time they come in whether they were referred, and your referral program should offer one or two options for providing proof of the referral, such as sending you an email copy if applicable, or even a quick phone call so you can add a note to their customer profile (a great use of the Notes feature in FieldPulse).

Customer Referral Template

Let us help get you started on the way to setting your very own customer referral program. Below is a sample letter/email/postcard for you. Please use this text as your own, or make any changes as you see fit.Dear [CUSTOMER NAME],Let me first thank you on behalf of [YOUR COMPANY NAME] for your business and loyalty.

Our success is built upon great customers like you.We’d like to announce a new customer referral initiative so more customers can receive the same great level of service that you are already receiving. We believe that a customer referral is the best way to recruit new customers.

As one of our top customers, we would like to reward you for referring new customers to us.For every referred customer who schedules services with us we’d like to reward you with 25% off your next scheduled service.

To get started, simply send us an email at [YOUR COMPANY EMAIL ADDRESS] with the names of any companies/clients who we might expect to hear from so we can make a note on your customer profile and ensure you receive the credit you deserve!T hanks for your business and support![INSERT YOUR SIGNATURE. INCLUDE CONTACT INFORMATION]

Components that Make a Good Referral Request

When writing the letter/email/postcard keep it short and to the point. You are busy, and they are busy, so don't waste time with irrelevant information. Make sure you address the email to the customer; this can be as simple as adding their first name to the opening and including a sentence about the recent job in the letter. Personalization stands out to the customer and speaks directly to them. This will also make it feel more personal and less like a sales tactic.

Customers will want to know what is in it for them, so make the reward clear for the referral. Also, make sure it is clear how to cash in on their referral. Do they need to use a provided link, or send you the name of clients that they have given your number to? Include a signature with your contact information.

Make it easy for the customer to have your information ready when they are talking with a friend they want to refer. You may also want to send a few business cards with the letter. This way they can easily hand off your contact info to their friend.

Easy to use,
easy to customize,
and easy on your wallet.