What is a Client Referral Program and Should You Use One?

A client referral program is a formal way to usher in warm or hot leads by incentivizing your brand advocates to bring in leads to you. Instead of hoping someone will recommend your services, you can ensure they do with the help of your client referral program.

(TL;DR at the bottom)

Referrals shouldn’t be expected since they are motivated purely out of kindness and appreciation, and as much as we all like to think that all our customers are bubbling over with love for us that must be paid forward, this just isn’t the case. People are busy and referrals are best gained by giving some incentivization through a referral program.

The hard truth is that no matter how hard you advertise, how good your sales team is, and/or how crafty your PR team is, people don’t automatically trust you. In a HubSpot customer acquisition study, HubSpot shows customers aren’t just willing to take your word for it:

55% don’t trust companies they buy from as much as they used to,
65% don’t trust company press releases,
65% don’t trust advertisements, and
71% don’t trust sponsored social media ads.

A common way for agencies to measure customer satisfaction is through the use of a Net Promoter Score (NPS) survey. An NPS survey is a one-question survey that asks customers a simple question: On a scale of 1-10, how likely are you to recommend our agency to friends and colleagues?

With a simple click of a button, your clients can tell you how well you’re doing in their eyes. Clients that rate you anywhere from a 7-10 are considered brand advocates, and will most likely stay loyal as well as recommend your services to others.

While you may use this method to measure client happiness, it’s largely in vain if you don’t offer some referral follow up. If you have active brand advocates, you can easily turn their positive experiences with your agency into new and repeat business through an active client referral program.

This article will present the reasons why you need a client referral program immediately. Spoiler, this costs you almost nothing has the potential for major rewards. At the end of this post, you should be adequately motivated to start working on your own referral program idea.

1. Word-of-Mouth Referrals Make up a Very Large Portion of Purchasing Decisions

If you walk over to your sales team and ask them the about the value of a referral. Any salesperson knows that a referral is a welcome oasis in the desert of cold leads. Ask your sales team who wants a referral lead you to have and watch as 100% of the hands instantly shoot up.

Why this reaction? Because, according to research, word-of-mouth referrals make up 20-50% of most purchasing decisions. Almost half!

This is especially true if a client is researching a new product for the first time or if the services are particularly expensive. No account executive is going to argue with getting a lead that has already received raving reviews from another client. If your product truly satisfies a need then your only real hurdle is to get visible and to get people to trust you. Referrals do both.

It’s not a surprise that potential clients would be more keen on investing in marketing and advertising services that are highly recommended by a friend. Marketing and advertising are expensive, requires a specific expertise to get results, and company leaders want to make sure they are getting the most bang for their buck.

Additional Perk: A client referral program helps you identify your brand advocates so you can better incentivize them to send over referrals. This is especially valuable in light of the fact that 20-50% of purchasing decisions come from word-of-mouth referrals.

2. Potential Clients Don’t automatically Trust You, But Current Clients Do

We’ve already touched on this, but it’s important to note that trust is a huge factor in a lead converting to a client.

You already know who potential clients trust; friends and family. 81% trust the advice of friends and family over business advice.

But what does that mean for your agency? You aren’t their friend, but I’m sure you already catch where I’m going.

It means no matter no matter how hard your marketing and sales team try and earn the trust of your potential client’s customers will primarily be influenced by friends and family. What’s the best way to ensure trust? You guessed it! You need to institute a customer loyalty program.

Key Takeaway: A customer referral program is a perfect way to get the current client endorsement of your products and services with very little effort for your company.

3. Client Referrals Lead to Faster Customer Acquisitions

It’s simple math. The faster your close times are, the more potential customers your sales team can reach.

Influitive gives some insightful statistics on B2B referrals and notes that companies with referrals have a 70% higher conversion rate and report a 69% faster close time on sales. 69% faster close time on sales—that’s huge!

A customer referral program is akin to hiring an outside sales team to do the hard work for you. A client that refers to your agency will help you establish trust and endorse your products as a solution that works all before your sales team has even talked to the new lead.

All that’s left for your sales team to do is collect payment information.

The cost of offering incentives for a referral is low when you consider the value of a new customer acquisition.

Key Takeaway: A customer referral program will lead to faster close times.

4. Referrals create more potential for repeat customers

It’s important to acquire new customers. However, in terms of how customers affect your bottom line, repeat customers is where the money is at. Stats show the value of repeat business:

  • On average, loyal customers are worth up to 10x as much as their first purchase.
  • A five percent increase in customer retention can increase a company’s profitability by 75 percent. Increase the retention rate of your current customers and calculate your overall growth to see the effects.
  • 61% of SMBs report that more than half of their revenue comes from repeat customers, rather than new business. 82% of companies agree that retention is cheaper to execute than acquisition.
  • The average repeat customer spends 67% more in the 31st-36th months of their relationship with a business than in months 0-6.

With these stats in mind, it’s clear repeat business is where it’s at. But, what does this have to do with a customer referral program?

Glad you asked. They encourage customers to do business with your company more than just once. As they are incentivized to refer your services, they interact with your brand more and more. This provides an opportunity for your Value Added Sales team to interact, upsell, cross-sell, and maintain an ongoing relationship with current customers.

Key Takeaway: Customer referral programs foster repeat business, and that impacts your bottom line monumentally, so it would behoove your business to work on a referral marketing strategy.


1. Referrals provide leads to the sales team that average a 70% close rate.
2. Tapping into referrals is a way to capitalize on the fact that 81% trust the advice of friends and family over business advice.
3. Referrals increase the closing time by roughly 69%. Reduced closing time maximizes the budget and your teams time.
4. Referrals are incentivized to interact with your brand more and more and in so doing, they encourage others to do the same. 61% of SMBs get more than half of their income from repeat customers. Reward programs are designed to increase the lifetime value (LTV) of your customers by getting them to interact with your brand more often in hopes that more interaction leads to greater retention, which inevitably affects the dreaded churn rate.