For many of us, the holidays are a chaotic but ultimately rewarding time. We take the bad, including travelling and shopping, with the good, which for many of us includes spending time with family, friends, and loved ones while celebrating in traditional ways. For small business owners, and especially retailers, the holiday season and fourth quarter can mean a lot of hard work, stress, and uncertainty. Yet it can also mean a lucrative finish to the year, leaving your business on a strong, solid footing going into the new year.

Do You Have A Customer Referral Program?

Due to the popularity and growing ubiquity of giant retailers like Walmart, Amazon, and Target, small retailers know it is almost impossible now to compete on price or selection alone. In order to stay afloat, you must find an unfilled niche and build a loyal customer base that is seeking more than just the best price. Whether it’s superior service, an advanced selection of merchandise, or even a unique brick and mortar location, it’s imperative that something sets you apart. A good way you can encourage your existing customers to become “raving fans” of your business and spread the word about your unique business is through a customer referral program.

Make Sure Your Existing Customers Are Thrilled With Your Business

The old adage “don’t put the cart before the horse” can apply to a retailer who implements a customer referral program without first ensuring that their existing customer base is actually willing to refer their friends, family, and colleagues. Although it is vital to incentivize the referral process, no incentive is lucrative enough to compel a customer to recommend an average or shoddy business, as doing so could harm their own reputation with others. A customer referral program will only work if your existing customers are thrilled enough with your business that they believe others will be just as thrilled with the experience as they are. If you are dealing with issues such as resolving customer complaints, responding to average to poor customer reviews, or if you aren’t seeing new customers return, there are likely other issues that need to be addressed, and other branding and marketing strategies to implement before you can begin developing a referral program.

Don’t Offer A Weak Or Limited Incentive

Another mistake that small businesses make while developing a customer referral program is not making the incentive lucrative enough, or even choosing an incentive that most customers simply aren’t interested in pursuing. Remember, you’re asking a lot of your “raving fans”. You’re asking them to personally advocate for your business and put their own reputation on the line with friends, family, and colleagues, so offering a minuscule discount is often not enough. Try to find the optimal balance between adequately rewarding your customers and still making the actual referral financially lucrative for your business.

Offer Attractive Incentives

In addition to making the incentive rewarding, you may need to determine what type of incentive is the most attractive to your customers. A one-time discount, no matter how generous, may not be that interesting to your customers. Yet a free product or service after a set number of referrals may be more interesting and compelling. You may also consider offering gift certificates or cards as incentives as well. Consider offering more than one incentive or reward at first, and then revise your program at a later date to only incorporate the one that is more popular with your customers.