This transcript was generated from the episode audio and may contain minor errors.
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What's up, what's up? Welcome to Side Hustle School. This is your host, Chris Guillebeau, episode 1360, 1360. This is our bi-monthly classroom episode. We're gonna talk today about how to ask for referrals.
Your existing customer base, at least once you have one, is the single best source of referrals. And the good news is you don't have to pay to advertise to them. But how can you develop a regular process of encouraging referrals? This is so critical. I mentioned this is the bi-monthly classroom episode.
If you'd like to check out any of the archives, all the previous episodes that we've done, focused around a specific topic, just go to sidehustleschool.com/classroom. You can scroll back and take a look or a listen to anything that you might have missed or that seems particularly relevant to you. There are so many resources linked there. Lots of different tools, exercises, activities, assignments, et cetera. And of course, I always encourage you to use your time well.
So if you're listening along and you're like, oh, I mostly listen to Saddleschool for the stories, I don't necessarily need to know about how to set up my basic website with WordPress or whatever it is, then that's okay. Well, let's focus on what's important to you. We still have two new stories or case studies each week along with all the interactive features such as questions and answers and Throwback Thursday episodes. So today, for those who are still here, let's look at the topic of how to ask for referrals. Where can you find the most active, efficient, and relevant people to evangelize on your behalf?
As I said earlier, sometimes even for free. The answer is they're right in front of you, your existing active and happy customers. Generally speaking, most people like to be helpful. This is a key point. Most people, most of us, let's say we like to connect our friends and peer network with resources that could benefit them.
So this group, your current customers or clients, are the most likely candidates to eagerly bring more people your way. Let's talk about how that works. How does that actually work in practice? Well, first things first, sometimes people just need a nudge. If someone is a happy customer, they're often happy to spread the word.
They're often happy to refer your product to your service. If you just think about it again as, most of us as individuals, we like to help people. We like to help our friends. If there's something that's made our life better, we're often more than willing to talk about it or post something about it even sometimes without any kind of compensation or reward or anything, just because it's helped us so why wouldn't we want it to help other people? So sometimes people just need a nudge.
Tell them how important it is. You also want to make it easy to refer. Like no one should have to explain the concept in detail and forward out a whole bunch of different links. Oh, I've got this thing and it's really cool. Well, how does it work?
Well, it's complicated. Let me start explaining it to you and then I'll keep explaining it to you. So this is kind of your job. As a side hustler or business owner, if you have taken the time to craft a compelling offer, it should be very easy to understand, which then in turn makes it easy to refer. So the more clarity you have in your offer, first of all, the better the conversion rate is going to be.
The more people you're going to be able to serve, the less skepticism that they'll have when they encounter your offer. And that in turn connects to referrals. Like the more clarity, the easier it is to refer. It's just a very positive virtuous cycle that kind of builds on itself. Now, having said that, about how people sometimes just need a nudge, you may also want to consider incentivizing them in some form.
So incentivizing your customers to spread the word about your business or your offer can be highly effective and often very low cost marketing, at least compared to spending lots of money on social media ads or something else. And so as a consumer, you're probably well accustomed to how this works for so many apps, subscriptions, credit cards, all sorts of other products. These days it's very common for customers to receive a bounty or a referral bonus of some kind, some type of incentive for bringing in business. So it's not bad at all. In fact, it's common practice to think about how you could encourage your customers to be more active in making those referrals.
So if we're going to talk about designing a referral program, whether it is incentivized or otherwise, I've got five tips for you. Five tips to design the best possible referral program. I'll bring this to you after this quick message from our sponsor. Really appreciate all these companies sponsoring us and allowing the program to be completely free to you. So let's say thank you to them, tell you about their offer, perhaps, and then five tips to design the best program.
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Five tips to design the best possible referral program. Number one, build referral language into your customer experience and make it easy. So as people go through the experience, as they purchase, as there's a post purchase, communication, as there are different email updates and such, like all of these different touch points and all these different touch points they encounter, encourage them to tell their friends. Leaving aside an official program, just encouraging them to say, hey, pass this on, right? So build that referral language into your customer experience and make it easy.
Number two, to go to the next level, set up a referral program, an actual one that rewards customers with money or some other benefit, some kind of bounty. So that way, you actually have a, okay, sign up here, here is the link, use this link, we're going to reward you with more product, with a discount, or as I said, just with cash, right? So some kind of referral program that rewards customers with money or another benefit. Number three, another benefit, that phrase, is key because it doesn't have to be monetary. Like just because we are consumers motivated by rewards of all kinds, so too are our customers.
And in fact, the easiest option is to give customers more of what they're already buying from you. If you are a fitness coach, for example, this works in the service world. Give them a free week's worth of training. They refer a new client who commits to a three month package. So just making some specificity there, tying it to a clear action.
If you have any commerce business of some kind, so a product business, give them a gift certificate to your online store. This way, your costs are going to be a little bit lower, and also you're just going to encourage more and more engagement and more touch points with your business. So to go to the next level, set up a referral program, could be some other benefit besides money. Number four, for best results, combine an ongoing referral program with a special promotion. This strategy can help you dramatically increase referrals.
When I say special promotion, this is a limited time, one time offer. A lot of businesses are really good with this. ClassPass is an app that I have used at different times to find workouts and yoga studios in different cities when I travel, and right on the home screen, they are always encouraging referrals. Like the touch points are very consistent. They're always saying like, you know, earn $40 when you refer a friend.
But once a year, sometimes twice a year, they increase the bonus to where you can actually earn a $500 payout if you bring in a certain number of new users, you know, in a brief period of time. So I always notice a lot more people online talking about ClassPass whenever that happens. So special promotion combined with that ongoing referral program. And now last but not least, you know, if you are not ready to set up a whole program, like I get it, there's still something really easy that you can do. And that really easy thing is, you know, if nothing else, make a simple ask at the conclusion of any successful business interaction.
And you don't wanna make this ask until you have completed the service or fulfilled the order for the product. You know, first you wanna make sure the customer is truly delighted. But then ask them if there's someone they know who could benefit from the same thing you just did for them. Because again, if you have done your job well up to this point, it should be a pretty easy ask. However you do it, don't miss out on this active group of people who are the most qualified to bring you new clients, buyers, subscribers, or customers of some kind.
I'm gonna leave you with an assignment and a book recommendation. My book recommendation for looking at referral systematically is the referral engine by John Jans. John has written a number of helpful business books all focused on small business. This one is actually my favorite, the referral engine. So check that out.
And if you have customers, your assignment for the week is ask them for a referral. Hey, don't be afraid, go and ask them. And if you're still working on your idea, consider how you could actively build referral language into your process. By the way, are you enjoying side hustle school? Let me tell you, I'd be super grateful if you would tell a friend about it.
I would be super grateful if you'd go to somebody you know who needs another source of income, perhaps in this difficult time, or just perhaps because we all need that and say, hey, here's this free resource. It's a podcast. It comes out every single day. You can subscribe on Apple Podcasts or Spotify and wherever you listen to podcasts. And by the way, if you don't know how to listen to podcasts, let me show you how to do that too.
There's still a lot of people out there who don't. All right, with that said, you can read notes for this in every classroom episode this year at sidehustleschool.com/classroom. Thank you again so much for listening. We've got much more coming up. Be sure you are subscribed.
My name is Chris Guillebeau. This is "Side Hustle School." [Music]
from The Onward Project.
