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Creating A Successful Client Referral Program: Part 1 – What It Is And Why Your Agency Needs One

Published on February 19, 2022 by Sharon Morrisette

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According to an annual benchmarking study (jointly sponsored by the Home Care Association of America and Home Care Pulse), a top priority for many home care agencies continues to be ‘increase the number of clients.’

The success of any home care agency depends on building its client base, and there are multiple ways to attract new leads and increase revenue.

However, the source that consistently ranks highest, year-on-year, is referrals from past and current clients and their families.

Most agency owners know the importance of this ‘word of mouth’ marketing, yet many fail to capitalize on its full potential – from tracking and measuring it to actively encouraging it to happen.

They often leave securing referrals from existing clients to chance or only engage with it passively, if at all.

To successfully leverage current client relationships, beat the competition, and drive new business, agencies really need to step up with intention and a clear strategy to acquire those all-important client referrals. 

Setting up a client referral program is one great way to get this particular ball rolling!

What is a client referral program?

Referral program - Smartcare Software

A client referral program is a marketing tactic in which you actively encourage clients/patients and their families to advocate on behalf of your agency, to attract new leads and help your business grow.

Rather than leaving it to chance, a referral program will inform and incentivize previous and existing clients/patients to spread the word about your agency and its services and then reward them for doing so.

This can include indirect recommendations, such as writing reviews or submitting client feedback surveys, but more typically involves sharing their experience of your services directly with family, friends, and colleagues.

With a client referral program, agencies simply establish a standardized system that rewards existing clients for referring new ones. In some cases, agencies choose to give both the referrer and the new client a reward as an incentive for using their program.

When managed correctly, client referrals are one of the most powerful routes to organic growth and a cost-effective form of marketing. In addition, they are proven one of the best ways to attract high-quality clients while also building current client satisfaction and loyalty.

What are the key benefits for home care agencies?

Increase ROI - Smartcare Software

Setting up a client referral program requires some time and effort, but it pretty much runs itself once it is in place.

Referral programs see some of the highest return on investment (ROI) of all marketing channels and deliver numerous other benefits for home care agencies:

1. Provide a formal, standardized process

Just because your agency provides high-quality care services that your existing clients are more than happy to recommend doesn’t mean that they actually will!

Without a system in place that everyone knows about, leaving things to chance, you are potentially wasting a lot of golden opportunities for client referrals.

Introducing a client referral program provides a formal, standardized process for informing, engaging, and rewarding all your clients for the referrals they make.

Having a system in place makes it quick and easy for your clients to make referrals, automatically and consistently rewards them for their efforts, and enables you to gather data to keep track of where your best leads are coming from.

2. Track and measure new leads – referral analytics

Word-of-mouth marketing is not easy to track without a system in place, which means valuable data can be lost. A referral program system can automate the key steps, track referral campaigns and engagement, and provide vital client referral analytics.

This collected data can be used in numerous beneficial ways. For example, to help your sales and marketing team nurture and engage clients/patients through personalization and clearly understand what works best for getting great leads (and increased conversions) for your agency – taking your business to the next level.

3. Attract new leads at a lower cost than traditional advertising

As an agency owner, you will be aware of the challenges involved in constantly finding new and creative ways to expand your client base and grow your business. You’ll also be mindful of how costly more traditional types of marketing can be.

A client referral program, using your existing clients to bring in new business, not only helps to expand your client base and increase revenue but is an easier and more affordable way to do so.

While the incentives/rewards you offer will cost your agency, remember they are fixed costs (per referral) and will only need to be paid out when a lead is received or converted.

The result of developing a good client referral program is a much lower client acquisition cost (CAC) for your agency – including increased conversion rates (30%), revenue growth (80% over two years), and extended client lifetime value.

4. Result in higher-quality clients that are a good match for your agency

Recommendations from people we know come with a higher level of trust compared with any other source of information. Research shows that 92% of people trust a recommendation from family and friends above all other forms of marketing/advertising.

As a result of investing in a client referral program, your agency will receive more credible leads that are shown to be 18% more likely to be a good fit for your agency and with, on average, a 16% higher lifetime value rate (LTV).

5. Improve existing client retention, increasing satisfaction and loyalty

The main aim of a client referral program is, of course, to gain new clients. However, when executed well, a referral program is something that can also improve your existing client retention – for both intrinsic and extrinsic reasons.

For example, confirming (in their own mind) that they are happy to recommend your agency reinforces positive feelings towards your brand, which innately improves client satisfaction and loyalty.

Additionally, being personally rewarded for referrals – cash payments, discounts, loyalty points, complementary services, and so on – will also positively impact client satisfaction and retention.

Client referral programs can also help your team build better relationships with existing clients and win their trust by asking for their feedback on current care services, making them feel valued as individuals and as part of your business community and success.

6. Create a viral loop for your agency

When clients hear about your referral program and find out how easy it is to use, many of them will be ready and willing to share your services with their network. Word of mouth travels fast, especially via social media!

As a few of their friends, family, or colleagues become new clients, they are also likely to share their experiences via your referral program within their own networks.

This sharing cycle will continue and increase exponentially – known as ‘a viral loop’ – and can significantly boost your new client acquisitions without you having to lift a finger!

7. Increase agency brand awareness and reputation

As a client referral program gains momentum, it can help an agency’s existing (and potential) clients get to know more about the agency brand story, the services it provides, and improve its overall reputation.

Incentivizing your clients/patients to help tell your story and share their positive experiences of your services makes referrals resonate more strongly, and can significantly help to boost your reputation and credibility in a highly competitive market.

8. Drive profits up while keeping costs low

Low cost - high value and profit - Smartcare Software

In the 1990s, Fred Reichheld found that referral rate is positively related to a business’s profit growth.

This concept serves as one of the basic components of the Net Promoter Score (NPS), which measures the willingness of existing clients/patients to recommend your agency.

Having a client referral system in place, which is easy to use and provides instant rewards, is likely to increase your clients’ willingness to endorse your agency – directly impacting revenue growth and profit.

In addition, the financial value of every client referral you receive is significant for three main reasons:

  • the cost of sale is lower, compared to acquiring a net new customer
  • the sales cycle is typically much shorter
  • client retention is higher, leading to further savings.

If you want to grow your business and increase profits, you might not need to rethink your entire sales and marketing strategy. Instead, think about working towards the goal of generating more client/patient referrals from the satisfied customers you already have.

It’s important to remember that the success of any client referral program relies entirely on having happy, satisfied clients who are willing to recommend your agency and services. This is why it is vital to ensure you have satisfied existing customers before you begin.

Creating a client referral program for home care may seem daunting, and there is no one-size-fits-all approach. Each home care agency is different and will need to find the right system that works for them.

Thankfully, there are plenty of technology tools to help, like Smartcare’s customer relationship management software (CRM).

In Part 2, we provide tips for the best ways to establish a client referral program within your agency and take a closer look at how the right technology can help.

Please call us today or request a free demo if you’d like more information about Smartcare’s sales and marketing suite.