The power of referral.

• Author: Tsai, Annie
• Position: Business & Finance

PICTURE THIS: after a long day's work, you sink onto the couch and turn on the television. As you flip through the channels, you see a commercial for a new local restaurant. Later, as you scroll through your Facebook newsfeed, you see that a friend has checked in at that same restaurant, posted a picture of his meal, and captioned it, "Delicious! Can't wait to come back." Which is more likely to make you reserve a table: the commercial or your friend's endorsement?

If you are like most, you are much more likely to be influenced by your friends' recommendations (even if they just are online friends) than by ads. In fact, a Nielsen report reveals that 92% of consumers trust recommendations from friends and family above all other types of advertisements, and they are four times more likely to make a purchase when referred by a friend.

Here is the takeaway for businesspeople: referrals are a huge, sparkly, tied-up-with-a-bow gift and, if you already are not working to harness and maximize their power, it is past time you started. Businesses are so busy focusing their energy on acquiring new customers that they often neglect one of their most valuable resources: active referrers. Though this may be a small percentage of your overall customer segment, setting up a basic program to support them and encourage their activity is well worth your time and resources.

In fact, if your company is delivering value to your customers, you probably already have active referrers--even if you are not aware of them. These people are posting positive reviews about your business all over the social media landscape and bragging about you to their friends simply because they love what you offer or how well you treat them--in other words, because you have earned their loyalty.

Harnessing that loyalty is a no-brainer, and here is the thing: these active referrers often do not expect, or even want, incentives for referring others. Sure, you can offer incentives, but do not think you have to break the bank in order to get referrals from current customers. In fact, I advise that, before you spend the time designing a referral program based on monetary rewards, test out how willing your customers are to help spread the word.

If you are ready to harness the power of active referrers, here are tips on designing offers that continue to nurture your most valuable customers:

Be an equal-opportunity rewarder. Reward the referrer and the referee. This should be an easy...