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Marketing efforts: social media, cold calling, website, print ads, SEO, email newsletter, direct mail – you’re doing it all! But are you leveraging your customer base to grow your business?
If I had a dollar for all the businesses and entrepreneurs who’ve told me that “word-of-mouth” is their best source of new business, I’d be a rich man!
Referrals!
But how can you systematize this? How can you make it better, and more predictable?
The first thing I will say is that it’s a referral program – emphasis on PROGRAM. That means “system”. It has to be well thought-out, designed, implemented, and maintained.
It takes effort on a consistent basis. Yes, you have to work at it. But as I’ve said 100 times about marketing, “there’s no silver bullet.” So, add this to your business development efforts.
Here are some thoughts on how to get started, and how to maintain it over the longer term.
- Who are your customers? Understand their demographics, why they buy from you, and what they appreciate about doing business with you.
- Where are they active online? What else do they buy? What other products are similar to yours, but don’t directly compete?
- Where else might they shop around town? Local merchants or dealerships?
- Can you engage customers directly to refer prospects to you? Sure! Do you ask for 1 or 2 referrals every time you provide a service or product? Make it a habit.
- Are there salespeople who sell other related products or services you could network with?
The easiest way to get referral business? Ask!
Long ago, I bought a VW Jetta from my local Volkswagen dealer. On my birthday for the next several years, I would get a hand-written birthday card from Phil, the sales rep. In my birthday card, he would include two business cards, and would ask me to come see him or hand the business cards out to two of my buddies who were in the market for a car. Would I oblige? Of course I did.
Referral programs can benefit other businesses too.
I remember a neighbor who was an insurance agent. You know – cars, houses, life, etc. One of his clients was a guy who owned a restaurant whose specialty was home-baked pies. My neighbor Ralph went to his client, and got some gift certificates for pies, and would give those to people who referred him business AND to the new clients. Here’s the kicker – the restaurant owner didn’t charge Ralph until the coupon was redeemed! Everybody wins, local business is supported, and no money is wasted on coupons that are never redeemed – like so many gift cards get wasted today. It was just smart.
If you look, you will find sales reps at other businesses similar to, but not competing with, your company, who will want to network with you. Think about what else your customer is likely to buy, and pick a few good people to refer clients to. If you sell yachts, for example, you might network with high-end auto dealers or charter airline sales reps. My advice: pick 1 or 2 and stop by regularly to see them and keep the fire burning. Keep their brochures on your desk and ask them to do the same to help each other out.
Regarding payouts or finder’s fees: keep it simple. I much prefer a 1-time finder’s fee (like first month’s revenue for a new consulting client) to a recurring payment. It keeps it simple to calculate, and you’re not having to account for it every month. Keep it simple!
OK, so you have an online business – an e-commerce site. Even better! There are SO many options, and they’re easy to automate:
- Both parties benefit: referring customer and new client.
- Discounts to referring customers by giving them a code to give to others.
- Gamification – let your customers earn points for a cool prize or special recognition.
- Let them compete for who brings in the most new referrals.
- Think outside the box and keep it fun!
Check out the list of examples Visa from ReferralCandy.com provides on his blog called, “An Epic List of 47 Programs,” covering companies like PayPal, Uber, and Airbnb. There are so many great examples there, and they WORK.
And there are software companies out there just waiting to help you set something up! You can find a whole list at capterra.com/referral-software.
Referrals are a great way to get new business. They’re not the “silver bullet” mind you, but they can be effective. Just remember, a referral program is a system to be maintained, not something you set up and just expect it to run forever. You must check in, see how it’s doing, modify it and tweak it along the way, and give it some attention.
Do YOU have a referral system you’d like to share or recommend? I would love to hear about it, and so would our readers and listeners. By all means, share it on the website at businessbyday.com, or email me at rick@businessbyday.com.
Happy Selling!
–Rick
