If you own a local business or are a local product distributor, you likely know how powerful customer referrals can be to your bottom line. While most business owners recognize this opportunity, many mistakenly leave Referral Marketing out of their annual local marketing strategy. 

Perhaps you're thinking:  "Referral Marketing - as a strategy? Referrals should be organic," which, in part, is correct. Referral marketing should be organic; however, if you aren't providing your satisfied customers with the tools and an incentive to share their experience(s) with their social networks (via referral marketing tactics), you're missing out on a huge opportunity. 

At the end of the day, nobody talks about businesses that allow themselves to be forgotten. In order to get a significant amount of referrals, you need to ensure that you've made it EASY for customers to refer you. To do this, you need a referral marketing plan.

To get started, follow these steps:

1. Consider the companies that you've referred. Why did you refer them? 
Taking a minute to consider the companies that you've referred will help you to identify some tactics or methods that can help kickoff your referral brainstorming process. Once you've identified several referral marketing masters, consider what seems to 'work' for them.

Example: My gym has practically mastered the art of referrals. They continually run members-only promotions that encourage members to bring friends and family into the gym (free training, free gym bag, discounted month, discounted Smoothies, free body analysis, etc.). As such, I've referred several neighbors and family members. So, If you have a membership-based business, take note!

2. Identify Your Target Referrer 
Not all of your customers are going to be your best referral candidates. Carefully consider who among your most satisfied customers are your target referrers. Once you have that person identified, think about what makes him/her happy with your service. What do they find valueable? You want to make sure that the value(s) and benefits(s) that they will be sharing align with your referral marketing goals.

3. Create Your Custom Referral Plan
Ultimately, everyone likes to get a deal. Offering a discount, free item, unique promotion, etc. is often the best way to prompt referrals. Most satisfied customers will be more than happy to recommend your business - especially if you're offering them an incentive to do so. To ensure that your plan gets off to a successful start, make sure that all of your employees are onboard. 

NOTE:  As a rule of thumb, industry experts suggest waiting until the transaction (i.e. cash register exchange) is complete before asking for referrals.

4. Elicit the Correct Information
Using a referral form or card will help you capture the information you're after AND will encourage referrals.  Consider creating a personalized form or card of some sort (that offers a discount/free item to BOTH the referrer and the referree). Following the business transaction, send/provide these referral cards to your satisfied customers.

5. Keep Track - and Keep in Touch!
Don't worry if a number of your referral candidates don't immediately recommend your business. Depending on your business, the referral process might take longer (i.e. car dealerships). Make sure you have your referral contacts' info on file and keep in touch with them by sending quarterly letters or newsletters.

Example: The car dealership that I bought my last car from sent me a personalized tin filled with cookies around the holiday season. I've sent them two referrals and won't forget them anytime soon (i.e. - Send more cookies, please!).

At Balihoo, our media planning strategy team provides many of our clients' local business owners with integrated marketing plans. The different types of referral programs that I have seen this team come up with is remarkable. To continue exploring the art of customer referral programs check out this Entreprenuer blog post. Or to learn more about building a breakthrough local store marketing plan, check out this free white paper.