There is no better form of advertising than word of mouth. If you aren’t utilizing the happiness of your current customers to bring in new customers, essentially their friends and family, then you are missing out on a ton of business and profits.
A referral program is not only a great way to get new customers, but the absolute best way to keep current customers coming back to you again and again. Referral programs offer some kind of reward to have one customer recommend your products or services to another customer. Usually these rewards programs cost less than marketing cold to a group of unknown, potential customers.
The reason this type of marketing works so well is because people generally listen to their friends, family and coworkers. They respect their advice and act on it. It’s an easy sell when someone comes to you and says “My friend bought from here and liked it. I’d like the same thing that they got.”
Here are some ideas for effective referrals:
- The best referrals are simply when your current customers are so thrilled with your service that they just tell others about you unprompted. This is free! Of course you should be handing some extra business cards to your current clients and customers and be asking them directly for their recommendation just like a call to action on your website. Say something to the effect of “If you are happy with us, please let your friends know about us.”
- Another great way to get referrals is to be unique and different. If all auto repair shops’ waiting rooms are filled with auto magazines, your waiting area should be a fun-filled place with a toy center for kids, snacks, coffee and other types of entertainment like cable T.V . Nothing gets people talking like a unique, comfortable and memorable experience.
- If you are going to start a referral program that includes rewards, make sure that the rewards are appropriate for your business. You also want to make sure that the reward isn’t too large that it will eat up all of your potential profit from the new sale.
- Your reward, although still allowing you to make a profit, should be substantial. If the effort to tell other people about your business is more than the reward is worth then your program is not going to work.
- You should make the reward contingent on a purchase from the new customer but don’t make it complicated. “The referral has to visit three times and spend over $100 each time before you will receive your bonus.” This kind of complexity will discourage referrals. It will also discourage your staff from wanting to explain it and sell it.
- Try to avoid a referral program based on luck or a lottery-type referral. Customers tend to think that no ticket is a winner and that the company is pocketing the promised winnings even though this is not the case.
- Send out details on your referral program to current clients and past clients every 90 days or so through the mail or email. This is steady enough but not too much to be overbearing.
- Add a line to your email signature about your referral program and to the back of all of your business cards.
- Some of your customers may feel strange accepting a reward for their simple willingness to tell others about how happy they were with your services. If this is the case offer as an alternative a donation to a charity in lieu of cash back.
I referred friends and family to my dentist and they sent me out a letter simply stating how happy they were that I referred their services. I didn’t get a reward or a free visit but that letter made me feel great! It showed that they were truly appreciative to take time out to send me a letter. I will be sure to recommend them again and again. Sometimes it is these simple gestures that make one company stand out from the next and truly exceptional.
The bottom line is that referrals are a great way to get business and they don’t have to cost a ton of money. If you aren’t focusing on generating sales through your current customers then you are missing out on a ton of sales, new customers and profits.
