“The inspiration for my marketing strategy arrived in the mail,” says Jeanne Mitchell. She operates jTee’s, a wholesale quilted-design T-shirt business, out of he home in Perry, Oklahoma. “For the hundredth time, my book club sent a reminder that I could earn a free book by referring a friend. It suddenly occurred to me that the strategy must work or they wouldn’t keep using it.”
That’s when Mitchell decided to create her own referral-incentive program. She printed 3.5-by-8.5-inch postcards promising her current retailers: “We will reward you for your effort if you help us get the word out.” The card, which includes spaces for the names of the referring and ordering parties, explains the system: Existing customers get one free T-shirt for every 12 ordered by the account they referred. When the new client places an order, Mitchell sends the referring party a coupon redeemable for the merchandise.
The program works because Mitchell’s target market, quilt store owners, constantly exchange products ideas. She places several cards in each order shipped, so she doesn’t even invest a postage stamp. Everyone wins.
“My customers win because they receive free merchandise, and I win because new customers come looking for me,” Mitchell explains. In short, her customers have become her sales reps.
You, too, can turn your customers into a powerful sales force. Rather than waiting passively for word-of-mouth to work its magic, why not give people something to talk about? All you need is an effective referral program (see this month’s feature “How to Reach the Affluent”).
But before you jump into your own program, be aware that referral incentives may not always create a win-win situation. They can backfire if you overstep professional boundaries or put any pressure on your existing customers to send new business to you. An incentive program tends to work best when you never directly ask people to sell for you. Instead, as Mitchell does, just lay the idea of referral incentives before your customers. If they want to pick up the ball and run with it, fine. Otherwise, let go of the idea. Don’t push it.
The referral program you develop will depend on several factors, including the nature of your business, who your customers are, and how urgently you need new business. Outlined below are the three key elements: education, inspiration, and communication.
EDUCATE YOUR CUSTOMERS
Assuming you offer high-quality products or services, your existing customers represent your best source of future business. They’ve experienced the benefits of working with you, so their recommendations carry more weight than a dozen direct-mail campaigns and 10 cold calls combined.
Yet many of your customers probably think you have all the business you need. Others may not realize the full range of products and services you offer. Your circle of influence–family, friends, and former or current colleagues–represents another often-untapped source of referrals. Even if these people don’t need your product or service, they undoubtedly know others who do. However, they can’t refer customers to you if they don’t understand your business.
One easy-to-use educational tool is a capabilities brochure, which presents an overview of your business. After reading your brochure, customers and everyone else in your circle of influence should be able to describe what you do, who needs your products or services, what qualifies you to perform the services or provide the product, what sets you apart from the competition, how long you’ve been in business, and any noteworthy achievements or customers served.
In addition, include a section in the brochure (or prepare a separate flier) describing your referral-incentive program. It should clarify when–under what circumstances–people should refer someone to your business, what procedures they should follow when referring, and how and when you will reward them for referring customers to you. The essential types of rewards include future discounts, free products or services, a referral fee, and gifts.
Here’s a quick test to determine how successful your educational campaign has been to date. “Ask 10 people you know to describe what you do and who your likely customers are,” advises networking-seminar leader Joy Pedersen of Rockaway, New Jersey. “Write down their responses and check whether they have an accurate handle on your business.” Pedersen, founder of four professional networking organizations, including Express Success, also warns: “You might find their misconceptions very disappointing. Just remember, it’s your grade on the line, not theirs.”
INSPIRE YOUR CUSTOMERS
A few kind souls will refer customers to you just for the sheer joy of helping others. And a few other business owners will provide referrals in the hope that you’ll help them in return. Whatever the reason, though, a little inspiration always helps. So states Dianna Booher, corporate trainer and prolific author of 26 books on business communications.
“Whenever we do a corporate program, we ask the customer to write a testimonial letter,” says Booher, who recently moved Booher Consultants out of her Euless, Texas, home when her staff grew to 12. “We sak the customer to document any positive to comments and to address specific issues like why they decided to hire us and what the results were.”
These inspirational letters achieve three objectives. First, writing an endorsement of your business strengthens the customer’s commitment to you. They now have a vested interest in your success. Second, they understand you are in the market for new customers and may immediately refer someone. And third, you have ammunition when seeking new accounts.
Once Booher receives the letter, she sends the customer a gift, such as an autographed book or a cassette tape series. “Customers are always thrilled because it’s so unexpected,” she says. “Often they’ll call to say, ‘I’ve never received anything like this before; no one ever went to the trouble.’” The next time they hear of someone needing a trainer, whom do you think they recommend?
“Even if the referral doesn’t become a paying customer until three years later, we still pay the promised fee,” stresses Booher. Such honesty goes a long way toward inspiring future referrals.
REMIND YOUR CUSTOMERS
Your efforts to educate and inspire your customers will be incomplete without the final component: communication. That’s spelled “f-r-e-q-u-e-n-t r-e-m-i-n-d-e-r-s,” but it’s only the icing on the incentive cake you’ve already baked.
George Churilla–a Tualatin, Oregon, independent representative for several hardware and software companies–is a charter member of the frequent reminder club. He offers a 10 percent finder’s fee (or a prearanged flat fee) to anyone who sends business his way. He says, “People are usually willing to provide referrals, but they just don’t think of it unless you prompt them.” To insure a steady flow, Churilla mails out mini fliers designed to look like $100 bills or fill-in-the-blank checks with the message, “Good toward your next purchase when you refer a friend.”
Churilla also uses a double-sided business card. On the back it reads, “This card is good for [blank].” He says, “I ask everyone I met if he or she knows someone in the market for hardware or software. If there’s the slightest hope for a referral, I’ll fill in the blank with an appropriate motivator.” For example, if the person mentions she’d like to organize her bookkeeping, Churilla fills in: $50 toward the purchase of accounting software (for a referral that spends $500 or more).
“That card is like money burning a hole in someone’s pocket,” he observes. “It’s a constant reminder of the reward that awaits when business is sent my way.”
Still, while it’s heartbreaking to admit, your business isn’t foremost on your customers’ conscious minds. Undeterred, Jim Southwick aims for the subconscious. “I see to it that my customers have subtle reminders of my business throughout their offices,” says the president of Southwick Specialty Advertising in Portland, Oregon.
“Whenever we interact with customers, we leave behind items to remind them of us, whether coffee mugs, Post-it notepads, or memo cubes,” he says. “So even when we’re not around, we’re still communicating our name.”
But without regular communication, these little gifts might be meaningless. So Southwick regularly mails out idea catalogs, holiday promotions, and update fliers to spark a referral. Whenever he ships an order, he includes a handwritten thank-you note. In closing, Southwick will suggest the customer let him know if any of her colleagues need his help.
When he receives a referral, he immediately sends a gift and a note assuring the customer he will take excellent care of her business associate. Southwick says, “I’m constantly communicating the message: ‘Good things will happen if you refer business to us.’ “No wonder referrals represent more than 25 percent of his business.
Whatever communication techniques you choose–whether it’s handwritten notes, novelty items, newsletters, new product announcements, or fill-in-the-blank cards–your objective remains the same: to continually educate your customers and keep them motivated to send business your way. Once customers realize that their referrals will be richly rewarded, they probably won’t mind receiving helpful reminders. In fact, they’ll welcome them.