Referral programs are usually associated with retail businesses and services like window cleaners, gardening services, and a host of others. I’ve even seen dentists run referral programs.
The purpose is to encourage your satisfied customers to encourage family, friends, acquaintances, and associates to do business with you. Its kind of like word of mouth but with incentives. If your business is exceptional in some way, word of mouth is bound to work for you but it’s going to work better if people have an incentive to refer customers.
The nature of the incentive will differ from shop to shop depending upon the nature of your customer base and your business. You may offer discounts on future orders for referrals, gift certificates, or even cash incentives. So for instance, if you want to encourage the PR people with whom you deal at your corporate customers to refer your business to other corporate PR people (they all belong to associations, attend lunches, network etc.) then tell them that you have a referral program. Tell them you’re happy to send them and a guest to dinner at their favourite restaurant for any referral that places an order with your shop. Keep in mind that other options may be more appropriate, depending upon circumstances.
More important than the apparent reward is the fact that you’ve made them aware that you’d appreciate referrals. And more important than the reward to them will be the opportunity to help promote your business. People tend to take pleasure in referring businesses they like; it’s an all round win-win opportunity. The incentive is just a catalyst—the PR person probably doesn’t need a free dinner, but it’s the gesture that counts.
The key of course is that you have something exceptional to offer and your customers have no hesitation in recommending your shop. And, as always, crunch the numbers because it must make economic sense.