top 5 referral must-dos
TRANSCRIPT
TOP 5must-dos for a
Successful referral program
1. Devote the time, money and
resources needed to set the program up right the first time.
Companies sometimes think launching their referral programs as pilot studies and
then growing them into more robust programs later is the way to go.
Approaching a referral program with
“one toe in the water ” will net potentially inconclusive and often
mediocre results.
If the referral program is going to be an integral part of the enterprise, then find a
way to incorporate all the parts of the enterprise necessary to ensure program
adoption and success right from the start.
2. Understand IN PRACTICE how
leads are currently making it into the sales funnel.
Before considering a referral program, companies need to truly understand how their sales team
interacts with the tools they are provided when it comes to
current customers and potential leads.
There are ways to successfully integrate referral programs into CRM systems that can streamline the work being done and increase
ROI without introducing a change in the organizational culture or sales process.
3. Make the call-to-action for
customers crystal clear.
simple The message is
1. Tell your customers what you want them to do.
2. Tell them how to do it.
3. Tell them what they will get for doing it.
4. Promote the referral program
everywhere customers go, and promote it constantly.
Research on referral program success rates shows that broad promotion of a company’s
referral program is a significant step in getting customers to refer multiple times.
If a current customer gets a referral program invitation email from a company but has no referral in mind, the email will be
ignored. However, weeks later, the same customer may identify a referral and will need to be able to easily find a link
to the company’s referral program.
Without frequent and continued promotion, referral program success is
left completely to
chance
5. Follow FTC compliance
and IRS tax laws.
The Federal Trade Commission recently passed a law under its 16 CFR Part 255,
“Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
The regulation states if a person makes a post on any social network (such as Facebook, Twitter, Instagram, Pinterest, or
LinkedIn) and stands to gain a profit from the endorsement or testimonial, he or she must at a minimum include a statement
such as, “This is a paid endorsement,” or “#paidad.”
Your referral program Terms and Conditions should include this language so you can be certain your program is compliant with the most current statutes and you are
protected against legal action.
Terms & Conditions
Second, depending on the amount of the referral reward and the rigor it takes to achieve it, companies need to consider
how much money any one customer could potentially earn in a calendar year. The reason for this is simply the IRS.
If a customer receives over $599.00 per year in rewards, to be compliant with US
tax laws the company who paid those rewards must
collect a W-9 from that person and submit a 1099 to
the IRS on the customer’s behalf.
There are referral program vendors that will track 1099 information and disseminate the paperwork as needed to be certain you stay compliant with US tax laws. Be sure to ask if
these are features of their platform when talking with a potential referral program vendor.
