Acquiring new customers requires a lot of effort and money. Businesses employ various marketing techniques to get new customers to purchase from them.

Referrals are the cheapest new customers acquired. Referrals are also more likely to buy, as when a friend or family recommends a product or service to them, they are more confident about buying it.

Businesses can motivate their existing customers with various kinds of incentives to refer new customers to them. These referral incentives can be included efficiently into a Customer Loyalty Program, as loyal customers are more likely to be motivated enough to recommend new customers.

Customers are motivated to refer new customers only if they themselves are satisfied with the products and services offered by a business. Therefore, it is essential to understand what satisfies or motivates your customers enough.

Businesses can give the following incentives to their existing customers to refer new customers:


Excellent products and services

One way to satisfy customers is by offering exceptionally excellent products and services. Word of mouth about your great-quality products can do wonders for your business.

If you sell a premium product, then your customers are most likely motivated by the quality of products and services delivered than other monetary incentives.


Premium services/products

You can offer premium services or products to loyal customers who refer new customers to you. Premium services can appeal to customers who value comfort and prestige-based incentives. For example, lounge access to travellers of an airline may encourage them to recommend relevant customers to the airline.

Value-based community building benefits

Many customers refer a service or product to their friends, family and other acquaintances when they want to build a community of people using the same product or service as they are. This can work if you attach a value to your brand. This value can be related to a social cause, status, cultural trend, etc. For example, a business which supports eco-friendly production activities is promoted by nature-loving customers among their social circles with similar interests and values.

Satisfied loyal customers can be encouraged to become brand ambassadors for a business to promote the cause or value supported by the business.


Reward points

A customer loyalty program can easily offer reward points to customers who refer new customers to the business. The points are awarded when referrals makes purchases, to ensure that the reward cost to company is justified by new customers acquired.

These reward points can be redeemed by customers for future purchases. At times, loyalty programs offer reward points to both referrers and referrals, so that after a person has recommended your products/services to others, referrals get an extra nudge to buy the products.

Discount coupons

Loyal customers who prefer monetary incentives can be given discount coupons when they refer quality customers to a business. Discount coupons can be delivered to customers in their email inboxes or through SMSs and Apps.


Preferential services

Similar to premium services are preferential services. For example, at a cafe, loyal customers who suggest relevant customers may be considered VIPs and are served on priority basis. When customers feel special, they are encourage to speak well about the brand. This motivates them to promote the brand among their social circles through online and offline modes.

Connect with customers

Sometimes, the best incentive for customers is to show that you care. Your business can use customer data to send birthday greetings and other such messages to customers. You can even offer birthday discounts to customers once in their birthday months. This makes them feel special.

Customer preferences can be understood with the help of a good loyalty software to offer customized incentives to customers to remain loyal and refer new customers. Knowing your customers’ buying patterns can be one of the biggest assets for your business.

Every business’ customers are different and prefer different things. Understand what your customers prefer and test some of the above methods to incentivize customers to bring you referrals.

It is easier and effective to tap your loyal customer database to get referrals, as those people already return to you from time to time to buy products and services. They have displayed interest in your products multiple times and hence can be assumed to be satisfied with your offerings.

In this manner, a customer loyalty program can be leveraged to not only retain existing customers but also to acquire new customers.

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