Grow Your Business With Referral Marketing

Businesses need a steady base of customers to grow and evolve. On Squarespace, many successful business owners find their first customers through referrals and continue to grow via word-of-mouth recommendations. 

Service providers especially have great success finding customers via referrals, either organically or through personal appeals. That’s because their marketing strategy tends to focus on promoting results, whether that’s photographs of a beautiful wedding, a website launch, or an impactful business workshop.

Although established businesses have an easier time with word-of-mouth referrals, even new entrepreneurs can use referral marketing to get new customers.

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What is a referral program?

A referral program is a structured way to leverage your existing customer base to gain new clients. This might take the form of a direct appeal, where you ask existing clients to recommend you or introduce you to potential customers. You can also use your social media channels to make a broader ask for new customers.

Referral programs often have multiple components. You might send a personalized email to a satisfied client asking them to recommend you to others in their network. If this message draws interest from a prospective new customer, you can reach out and offer them an incentive to work with you. Common examples include a free consultation or a discount on your services. Then you might give the customer who gave the recommendation a bonus, like a gift card.

Note that referral programs are different from affiliate marketing programs. The latter is a commission-based strategy where businesses or individuals use unique web links to promote products and then get a percentage of the proceeds from sales. Affiliate marketing is a better fit for established businesses with a large following.

The benefits of a referral marketing strategy 

Referral programs are effective because they’re targeted. You’re asking customers you’ve already worked with to tap into their own vetted network for potential clients. Clients who come in as referrals cost less to attract and are more likely to become customers.

You’re also asking customers who like your work, which is another advantage. If you’re a career coach who’s helped a client land their dream job or an interior designer who’s overseen a successful home remodel, your clients are likely more than happy to recommend you to others.

Other benefits of a referral marketing strategy include:

• You have people vouching for you. With a referral program, you’re talking to warm contacts—people familiar with you and your work. Having an advocate personally vouch for your skills gives you an advantage. The opinion of these advocates holds more weight than that of a stranger or even your own promotion. 

• You’re attracting a better pool of customers. Finding customers via paid advertising or social media posts can yield a large number of potential customers. However, the quality of these clients is less predictable. With referrals, you’re connecting with potential clients that already know your work. 

• You can reward your existing customers. In referral marketing, everybody wins. Although you’re providing incentives to new customers, you can also use rewards to thank existing customers for their help. Online workshop leaders might offer a referral code for a certain percentage off a future course, while a photographer can give referrers a discount on a future package.

• Referral programs keep you accountable. When a potential customer is deciding whether to work with you, chances are good they’ll immediately seek out more information about your work. You’ll want to put your best foot forward with your online presence. Hair stylists or makeup artists should have a photo gallery of their best work, while marketing strategists might build a website highlighting testimonials. 

See ways to build customer and client loyalty

5 referral program ideas 

The rewards and referral programs that work best for you will depend on your business and clients. Try out one of these five ideas, or stack more than one option based on what people are responding to.

1. Offer a free consultation. Attract potential customers with a free consultation to get a sense of potential fit. Writers and graphic designers often have an exploratory phone call with potential clients. Wedding photographers might meet up with a couple to see if their styles align. Even if these don’t lead to a job, a good impression leaves the door open for working together or referrals in the future.

2. Create introductory packages. Develop deals specifically tailored to new customers. Personal trainers might offer new customers a free month if they sign up for a certain number of training sessions, while an editor might offer a slightly lower hourly rate for new clients for a certain amount of time. 

3. Include a free gift or bonus for new customers. Once you sign a new client or customer, make them feel special with a bonus gift. A photographer might throw in a certain number of prints for free, while a wedding planner could include a specific service with their rate. 

4. Give the referrer an incentive. Don’t forget the loyal customers who are helping you expand your business. Offer your existing clients a discount on a workshop or massage session as a token of gratitude. 

5. Implement a loyalty program. A loyalty program is one of the easiest ways to gain repeat customers. These allow you to offer incentives once a client has booked a certain amount of work with you. For example, if someone books 10 massage therapy sessions with you, offer the 11th one at a discount. 

How to create a referral program

When building out your referral strategy, keep your target clients or customers in mind every step of the way. Like with the rest of your business, this will help you make decisions that fit their priorities and make them excited to refer you to others.

1. Decide which referral program makes sense for your business. A loyalty program makes sense for businesses like massage therapy, where you meet with a client regularly. If you do more project-based work, like a photographer or hair stylist, a one-time discount might be more appropriate.

2. Identify the customers you want to attract. Knowing your customers well can help you develop a more tailored referral program. For example, stylists who specialize in certain areas (like a haircut method) could focus their attention on prospective clients who want that service. If you’re launching a new business, ask friends and family for referrals.

3. Build a referral strategy into your overall marketing strategy. The best referral strategies operate in tandem with your overall marketing strategy. Make a referral program part of your ongoing promotions. An email newsletter is a great way to offer periodic discounts to customers or solicit new business.

4. Hone your online presence. Your personal brand and marketing activities are crucial to the success of a referral program. You’ll want to have an online presence that demonstrates your services and examples of your work to people who might want to work with you. Once your business starts to grow, this presence will also be your calling card for prospective customers.

5. Make it clear you’re open to new clients. This is one of the most overlooked aspects of a referral program. If you don’t make it clear you’re looking for new clients, people might assume you’re too busy to take on more work. A social media post noting you have room in your schedule for additional clients will suffice. 

6. Leverage social media. Ask your existing followers to be advocates for you and your work. This can be as simple as asking them to share your posts to their own network or tag people who might be interested in your work.

7. Build feedback into your client work. After you complete work for a client, ask them to provide a review or testimonial for your website. These at-a-glance reviews add up over time and enhance your reputation. In your wrap-up messages to clients, you can also ask people to recommend you to others or keep you in mind for future work.

Don’t be afraid to make your requests for referrals more personal. Emphasize that referrals help you grow your business and allow you to keep doing what you love. Your clients value your services, so drive home that this is a way they can support you.

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Examples of referral request messages

It’s not always easy to ask a customer to reach out on your behalf. The best referral messages are authentic and match your usual approach to communication. For example, you might prefer a personal email to a client rather than a blanket email to your list.

For more general referrals, one example:

Hi [existing customer name]—

I wanted to let you know that I have time in my schedule in the coming months to take on new clients. If you know of anyone looking for [the service you provide], please consider recommending me.

In addition to the work we’ve done together, I’ve recently worked with another client doing [detail client work]. Feel free to pass along my website [website link] or LinkedIn [account link] to anyone interested.

Every client makes it possible for me to keep doing what I love. Thanks for your consideration!

Best, [your name"

You can also use messages to offer returning customers a bonus for referring people from their network.

Hi [existing customer name]—

As someone who’s bought one of my online courses before, I wanted you to be the first to know I’m getting ready to launch a new one.

To thank you for your support, I’d like to offer you a 10% discount when you sign up. Just use the following code: [code]. Feel free to pass along the code to a friend who also might be interested. 

I hope to see you when we launch!

Best, [your name"[/code]

[code]If you provide services that require long-term planning, like wedding photography or DJ services, you might want to send a more general email that gently creates urgency.[/code]

[code]Hi [customer name]—

Wedding season is going to be here before we know it!

My schedule is already starting to fill up for next spring and summer—but I still have select weekends available. If you know of anyone getting married who needs photography, please have them keep me in mind. 

I offer multiple photography packages to fit different budgets. They can email me here [your email address] and set up a free consultation.

Thank you for your support! 

Best, 
[your name" [/code]

[code]Examples of referral messages on social media [/code]

[code]You can also use social media to lay the foundation for more personal referral messages. For example, you can post on LinkedIn that you have the capacity to take on more clients. This text can be a little more conversational and casual. As an example:[/code]

[code]Great news! I have some time in my schedule in the next quarter to work with new clients. If you know of anyone looking for [the service you provide], I am open for business. In recent months, I’ve done things like [detail a few examples of client work]. Reach out via DM here or email [email link] and we can chat"[/code]

[code]On a photo-heavy channel like Instagram, you can post a similar message and include a call to action, like asking followers to tag a friend in the comments who might like your work.[/code]

[code]How to measure the success of your referral program[/code]

[code]A referral program is ultimately built on trust. If you’re not getting the results you want, adjust the parameters of your program to see if you start getting successful referrals. There are some telltale signs of success to watch for.[/code]

• Your prospective customers become loyal clients. The first and most obvious sign of success is an uptick in new customers. If you convert potential clients into engaged ones, it’s a sign that your program is going well.

• Your new customers start referring their contacts. Another sign of success is when your new customers start recommending you to their network. 

• You start getting referrals without sending messages. Organic business growth is the ideal outcome of a referral program. Instead of having to proactively seek out referrals, the work comes to you automatically.

• Your customers leave positive testimonials. When someone is moved to praise your work, it’s a good sign that you’re on the right track.

• Your online following grows. Not every referral leads to work immediately. Some people prefer to follow your work and reach out when they have a need. Posting your accomplishments via newsletter or social channels is a good way to leave the door open for future work.

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