Where do small and medium business (SMB) owners go for purchasing advice? Our recent research shows they rely on their peers — much more than any other source of information — to learn about new products and services, to assess the fit of those solutions for their businesses, and to make a final purchase decision. And with the rise of social media, these peer referrals are becoming more important — and accessible — than ever.So, how can you take advantage of SMBs’ propensity to compare notes with one another? By creating a referral program. While hardly a new concept, a well-executed referral program can net you high-quality, low-cost leads. As this data from InsideSales.com shows, referrals have the highest conversion rate of any lead source:

At the very least, a referral program can be a strong supplement to your other lead gen programs, but there are companies who rely 100% on referrals for new business. Dropbox became a household name in part because of its referral program offering extra storage space.

Here are best practices for creating an SMB referral program:

Provide something of value for both the person providing the referral and the recipient. This way, your customers will feel better getting a deal for themselves because they’re helping their colleagues, not selling them. As an example, Constant Contact offers both the referrer and the recipient a $30 account credit.

Test different offers and media before launching your program and in the pilot phase. Your research doesn’t have to be elaborate. Simply call 10 customers and 10 prospects to see what would motivate them to participate and how they would like to learn about the program.

Keep your program top of mind by promoting it on an ongoing basis. Add a regular reminder to your customer email newsletter, include it in product brochures and mention it occasionally in your social media programs. If your program is interesting enough, you may also get free publicity.

Signup

Make it simple for referrers to participate in your program — whether by email, online, social media or other avenues. Include a clear offer with easy-to-understand instructions. Online backup provider eFolder’s SMB referral site has just a few bullets describing its program, and the signup form is easy to complete.

Ideally, the person who receives the referral will get a personalized landing page, which tells them who provided the referral and what the offer is. Be sure the signup process — and the reward fulfillment — is quick and easy.

Preferences change, so you may want to modify and test your program to optimize its performance over time. Monitor it at least monthly to assess the performance and consider changing your offer annually to keep it current and compelling.