How to Build a Referral Program

A referral program is a system that rewards other individuals or businesses for sending paying clients to your company. It is common for service companies like real estate brokerages but also works for companies that sell tangible items, like makeup and fashion products. It takes time and networking to set up a referral program of your own.

Difficulty:

Moderately Easy

Instructions

1. Write an outline of your referral program. The outline should map out exactly how you'll handle a case where an individual sends a paying client to your company. Determine a reasonable referral fee that you can afford but that will also inspire people to want to actively participate in the program.

2. Create a written referral program agreement that you can present to all of your invitees to the program. Base the agreement on your outline and get your business lawyer to review it for clarity. It should provide clear details about the referral process, how to get credit for the referral, payment amount, and the timeline for when you will forward payment after completing a sale successfully.

3. Hire a professional graphics designer to create a web page and matching brochure that briefly describes the referral program.

4. Visit industry networking events with your business cards and brochures in hand. Talk to other colleagues in your industry who may be able to send business your way whether due to an overflow of work or a request for a service that they don't offer. Even if the referrer is a competitor, he can still make money through the referral.

5. Tap your existing client list to further build your referral program. Past clients are familiar with your work and can spread positive word-of-mouth to draw in new clients.

6. Highlight the referral fee when you discuss the program with possible referrers in person, over the phone or through email. This is usually the main selling point and motivator for getting people to start looking for people to refer to your business.

7. Provide referrers with the document outlining the terms of your referral agreement if they are interested so that each person is clear about how the process works. Ensure that they have your brochure to understand your products or services as well as your complete contact details, so that they can call you if they have questions.

Tips & Warnings

• In some cases, you can pay referrers residuals when they suggest other referrers. However, study your state's rules regarding multilevel marketing schemes to ensure your referral program would not fall under that umbrella. Consult with your lawyer.

References

• Business Know-How; The Unwritten Rules of Referrals; John Jantsch