A Referral Program That Works

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Personal-1087838_1280Most business owners will tell you that customer referrals are the best source of new customers.  In today’s economy, customers are more skeptical and cautious than ever.  Getting recommendations from friends and family is one of the best ways to break through the marketing barrier prospects are putting up.  Investing more attention and money into increasing referrals is one of the best things a business owner can do to increase their sales.

The best way to get referrals is to provide outstanding customer service.  Assuming you are already doing this, you can bring in even more referrals by adding a structured referral rewards program.

This can be a thank-you note or a gift certificate for each referral.  But I would much rather go big or go home!  Consider having a monthly prize such as a big screen TV or an iPad for the customer who refers the most new customers to you each month.  You could enter them into a drawing, with one chance to win for each referral).  Some advantages of this are:

  1. The chance to win a prize creates more excitement and more referrals.
  2. Each month the winner can be featured in your newsletter.  This creates a heck of a buzz and will give your other customers another incentive to refer more new customers.

Yes, this sounds extravagant!  But remember, small thinking gets you small results.  Think big and get great results ! Compare the cost of an iPad at $500 to the lifetime value of a customer. Let’s assume that value is $2,500 (probably low), and you get 20 referrals each month.  This is an addition of $50,000 in sales and a gross profit of $25,000 (at 50 percent cost).  Not a bad trade for a $500 investment.

Your referral reward has got to be a big enough incentive to get your customers to play along.  When the incentive is great enough, your customers will go out of their way to make a referral, rather than struggling to remember your name when someone asks them for a recommendation