Why word-of-mouth referrals drive the most business

When customers are compelled to share a positive experience with a company with their friends or post about it on social media, you know they were genuinely pleased. And that’s one of the most powerful marketing tools a small business owner can wield.

Ultimately, no amount of advertising, marketing technology, or promotional efforts even come close to the impact word-of-mouth referrals have on purchasing decisions, according to a 2019 Small Business Marketing Report from QuickBooks and LinkedIn. Similarly, 83% of consumers heed suggestions from friends and family more than all other forms of advertising.

What does this mean for small businesses? Never underestimate the power of word-of-mouth referrals. They are and will always be one of the most effective ways to drive new customers and grow your sales.

5 actionable strategies for more word-of-mouth referrals

It’s tempting to simply do your best, sit back, and have your customers refer new business from their friends and family organically. But that’s not how it usually works.

As a small business owner, you need to actively (and thoughtfully) encourage your happy customers to spread the word about your brand and refer new clients. Here are five actionable strategies you can use to increase your referrals today.

1. Encourage user-generated content

For the uninitiated, user-generated content (UGC) is content in the form of social media posts, videos, blogs, and other digital content pieces about a brand—posted by consumers.

It’s the equivalent of word-of-mouth marketing on social media. Not only does it add to the credibility of your business, but it also lets you reach more people in a cost-effective manner.

So how do you encourage your customers to create user-generated content?

One clever way is to run a contest or campaign that encourages and incentivizes your customers and followers to share user-generated content with their social media networks.

The idea is to make it a fun and rewarding way for people to post content featuring your brand on their social media pages.

Plus, by harnessing our innate desire to compete with others, you can come up with a win-win campaign idea that’s fun for your customers and spreads the word about your business organically. Then you can jump-start the competition by getting a few of your most vocal customers or local influencers involved in spreading the word through their communities.

Starbucks ran the#WhiteCupContest to drive UGC.

2. Launch a referral program

Even your most satisfied customers may not think to send referrals your way. But when you formalize the process and launch a referral program that articulates this opportunity to your customers, referral leads are easier to track, streamline, and maximize.

Referral programs are a great way to spread the word about your company by incentivizing existing customers. But remember, a strong referral program is one that offers a valuable incentive. It needs to be substantial enough to compel your customers to go out of their way and send prospects back to your front door.

You might consider offering incentives like gift cards, product giveaways, discounts, cash, and loyalty points toward future purchases.

Depending on the type of products or services you’re selling and the value of an average customer, you should think critically about how you want to reward your existing customers for referring new business your way.

While a $5 gift card to a local coffee shop may suffice in some situations, the incentive should always align with how much your company stands to benefit from the addition of each new customer. Meaningful referral incentives will make your customers want to spend time thinking about who in their network could be a good fit for you.

3. Nurture brand advocates

Brand advocates are customers who voluntarily elevate your brand through their own word-of-mouth marketing. They’re a valuable asset, so taking great care of them should be a priority.

Whether it’s giving your company an organic shoutout on their social media channels, sharing your content, or leaving a positive review on forums and review sites, there are many ways they can spread the word. Brand advocates tend to be loyal and actively recommend your brand to others.

Take, for example, a Popeye’s chicken sandwich campaign. Immediately after announcing a new sandwich, the brand’s most loyal advocates took to Twitter. They stormed the site with reviews and positive memes that ignited a social media battle with competitor Chick-fil-A.

Over the next two weeks, one Popeye’s tweet got over 87,000 retweets and over 325,000 likes, netting the brand more than $23 million in advertising value without spending a dime. Much of that success was due to how effective their brand advocates were at wanting to spread the word and support their favorite chicken brand.

As a business owner who wants to channel these advocates towards spreading the word in meaningful ways, it’s imperative to identify this group of people and build long-term relationships with them. You can showcase their content on your social media pages or blog, invite them to your launch events, and offer them a token of appreciation.

By nurturing your relationships with brand advocates, you can acknowledge and reward their efforts when they generate more referrals.

4. Over-deliver and forge meaningful relationships

At the heart of any word-of-mouth referral program lies a solid relationship with each customer. And that’s not something that can be developed overnight.

When you focus on building meaningful relationships with your customers, getting word-of-mouth referrals becomes easier. You’ve delivered an experience that compels them to speak positively about your brand.

And there are many ways to connect with your customers and build lasting relationships. You might start a blog to communicate with or give a voice to your customers, engage with them on social media, listen to what they have to say, deliver a personalized experience, or run a strong loyalty program.

5. Collaborate with influencers

Apart from the traditional word-of-mouth marketing, if there’s another related, authentic marketing channel that works wonders, it’s influencer marketing.

If you launch a referral program to reward your customers, you’ll need to make some noise about it. And partnering with the right influencers in your space is a great way to do that.

Collaborate with influencers to get your referral offers on their social media pages and blogs. You can also integrate them into your referral campaigns and let them share a special promo code with their followers. Sharing promos will help you tap into their community and track the effectiveness of the collaboration.

This strategy isn’t only applicable to luxury watch brands or travel companies either. If your customers (and prospects) spend time following notable influencers on a particular social media platform, then you’ve got an opportunity to get your message in front of more targeted customers.

How to ask customers for reviews and referrals

The best way to get more reviews and referrals is simply to ask. However, what matters is how you choose to do that. Here are four ways to politely ask your customers for referrals (without sounding desperate).

1. Send personalized emails

The most effective way to reach out to your customers is through email marketing. It’s non-intrusive, personal, and cost-effective.

You could send a mass email to every customer in your database at once. But with the right tools, you’re likely to get a better ROI if you send personalized, targeted emails to customers who’ve recently engaged with your brand, left a positive review, or made a purchase. The trick is to catch the right customers at the right time. When their experience is fresh in their minds, they’re likely to refer your business.

Be sure to send personalized emails with an attention-grabbing headline, simple copy, a clear call-to-action, and visual appeal. Like the email example from ZooShoo, you can even combine your referral offer with a post-purchase email when your customer is still excited about their purchase.

2. Add social share buttons on your website

Today, social media is the first place consumers go to talk about their brand experiences (both good and bad). Adding social sharing buttons to key pages on your website makes it easier for customers to spread the word about what they like.

You can add social sharing buttons directly onto your product pages or even within your blog post content to help maximize your customer engagement and generate more traffic. Here’s an example of how I strategically insert social sharing opportunities in my own blog content.

You’re not limited to adding share buttons on product pages and in blog content, either. Seize the opportunity to capture customer excitement by asking for a share on the post-transaction page, immediately after they’ve bought. Using a tool like AddThis, you can even pre-populate a sample message.

3. Automate referral requests

You probably don’t have time to reach out to every customer and ask for a referral. Save time and energy by automating your referral process. You can insert details about your referral program into your email newsletters, across your website, and in your post-purchase emails.

You should also include regular mentions about the referral program in your social media calendar. Then share about the program at regular intervals to stay top of mind with customers.

4. Display a note on the thank-you page

The thank-you page is often the most underutilized page on a company’s website. It’s the final page that appears to a customer after they’ve bought a product or signed up for a service. These pages are often left nearly blank. They don’t seize opportunities for further engagement or relationship-building.

Someone just bought a product from you. How about a win-win offer that rewards them with a discount on their next purchase and asks them to refer a friend who can get a discount on their first purchase?

Dropbox does this to great effect on their thank-you pages. And it’s become a central referral engine for their business.

Where to showcase reviews on your website

Have positive reviews? It’s time to show them off.

What’s the point of reviews and testimonials if you don’t share them far and wide? Doing so makes it a lot easier for potential customers to trust you. What matters is you’re displaying these reviews prominently where they’ll make a difference.

Here’s where you need to showcase your reviews.

Your homepage

Your homepage is likely to get the most traffic, making it a crucial spot to place reviews. Whether it’s on the homepage banner or further down in a dedicated section, there’s a high chance that new visitors will consider reviews before making a purchase.

A dedicated landing page

If you have a lot of testimonials to showcase, create a dedicated landing page just for showcasing your best reviews. Apart from displaying images, you should also consider adding video testimonials for increased engagement, like the Shopify team has done.

An exit-intent popup

Exit-intent popups appear when exit-intent technology senses the user is about to leave without making a purchase or taking the desired action. It’s meant to be the final attempt to convert the visitor.

We know positive reviews are a great way to build credibility and influence purchase decisions. That’s why including them on the exit-intent popup message can be a useful way to make visitors re-consider your product or service. Take this clever example from Monday.com to heart.

A sidebar

If you don’t want to clutter your homepage but still want to display testimonials, you can tastefully add them to a sidebar on your website. Sidebars can be visible on every page, as a part of the prospect’s journey to making a purchase.

Sales pages

If you’re selling a service or higher-touch product, a sales page that describes the in-depth benefits of working with you is a must. Highlighting testimonials here is critical because that’s where you need to convince your visitors to become paying customers.

Take, for example, my content marketing services page that features multiple video testimonials and quotes. Displaying testimonials here has proven to be a great nudge. Multiple clients have told me these testimonials heavily influenced their decision to work with me.

Will you get more word-of-mouth referrals?

As a small business owner, you’re bound to have budget constraints. And that’s the best part about word-of-mouth referrals.

Referrals are one of the most cost-effective ways to generate more buzz about your brand. And they can lead to a steady stream of new customers and elevated sales figures, regardless of your industry.

Start implementing these strategies to get more referrals and grow your business.

Editor’s note: This article first appeared on the QuickBooks Resource Center.