How To Set Up Dynamic Referral Systems
Massively and Effortlessly Increase Referrals
and Business Prospects
Years ago when you moved into a new home, were you ever visited by the "Welcome Wagon?"
Years ago when you moved to a new town the local Welcome Wagon lady used to pay every new family a visit, bringing a basket of goodies and freebies from various local businesses.
This was a great marketing idea since recommendations are the number one motivation for many people to try out a restaurant, doctor, dentist, gardener or a myriad of other service providers.
The personal referral is unbelievably more powerful and important than picking up the local paper or perusing the Yellow Pages. How many times have you gone to a business because someone gave them a good recommendation? Even though the person giving the referral may be a complete stranger, there is something about a live person recommending a specific product or service that gives it legitimacy.
Most people today don't want to take the chance they won't get good service or enjoy the food at an unfamiliar restaurant, so a recommendation from someone takes away their fear of making a poor choice.
Here's something else to ponder
Can you think of any business you've been to lately that asked you to give them some names of people you know who may be interested in their product or service? I'm talking about referrals, and most businesses miss out on what could prove to be their ultimate marketing tool… the personal recommendation.
The average business simply provides you with their products or services. In the case of a restaurant, they provide you with food. In 99% of restaurants, when you go to the register to pay for your meal, all they do is take your money and give you a receipt. They believe if you liked their food and their service you'll probably tell someone else about them eventually. That's called a "passive referral" and it typically brings them a few new customers, but not in any significant numbers. Basically, it's like throwing something against the wall and hoping it sticks.
It makes you wonder why more businesses don't realize the power of their customers influence when it comes to generating a massive number of referrals. It only requires them to ask for those referrals. People trust what others tell them about a business, both good or bad.
A business that "gets it" can leverage that trust and satisfaction with their products or services. If you're enthusiastic about a business, wouldn't you be happy to refer others to them so they can enjoy the food… or the excellent work performed by their painter or handy man?
Now what if we take this further and offer an incentive program to the customer providing the referrals? Can you imagine how something like this could motivate a consumer to give as many referrals as they can?
So what would be a good reason for a business not to employ this powerful prospect building model? This strategy is virtually no-cost, no risk and little to no effort.
In addition, the loyalty factor for a highly satisfied customer is off the charts. The referring customer feels a certain sense of responsibility for recommending the business since they want others they care about to know and experience the same excellence they were treated to. And when their referrals experience the same results they did, it enhances the reputation of the referee and grants them a measure of prestige that's so common in all human beings.
Using the Power of Referrals
Would a powerful referral system that increases your "bottom line" by 5% to 20% or more help improve your business? Making more money is always the goal of every business, yet most business owners leave tremendous sums of money on the table by not having dynamic referral systems in place that excite their customers enough to recommend their business to others?
Once you have such systems set up, all it takes is follow-up by yourself and your employees. Creating a referral system that rewards your employees and customers is not only possible, but simple once you have your system in place. Making sure your employees are on board with the plan and trained to use it is important if you truly desire to get referrals on a steady basis.
A Dynamic Referral Systems can produce a majority of your customers.
Your customers don't and won't waste their time conducting research to decide which business to buy from. Consider your own shopping habits. When was the last time you spent hours trying to find a new car repair mechanic, grocery store or restaurant?
Because most people just find it difficult to make choices about mundane things like shopping or restaurants, they would prefer that someone they know gives them a suggestion or referral. This process removes the stress from their decision about where they should shop.
Most folks love trying new places after receiving positive recommendations by friends or associates. They feel if "Sue" or "Joe" says the place is good, they'll have a positive experience as well.
People want instant gratification and direction on what business to try, especially when the product or service doesn't play a major role in their life.
Do you realize it's 500% to 1,000% more costly to use other advertising methods to bring customers to your door than to get just ONE referral? Many businesses spend 15% or more of their total revenue on their advertising budgets… yet their referral customer base is twice that of the clients who come to them through paid advertising!
With the hundreds of categories of referral programs available, we can put our attention on two that are proven and tested, have a successful track record, take very little time to implement, require little to no money or personal risk to put into action.
There are several types of Referral Systems:
- The "Static" Referral System - your customers are informed of your referral program and understand the "perks" they will receive from sharing information about your business with family, friends, associates and anyone they meet who shows an interest in your service. This system involves a concerted effort and approach in which you ask your happy clients or customers for referrals and gladly reward them for their efforts, yet you won't be directly moving the process forward.
- The "Proactive" Referral System - in this system you will be directing the entire process that gives you the power to reach potential customers who have been influenced by their friends or associates. They're prospects who, under normal circumstances would never have heard of you or your business.
You're motivating your customers to become "promoters" of your business or service by enticing them to share information about what you do with anyone and everyone they know.
So how do you take a basic referral program and turn it into a super-charged, systematic and much more powerful "Proactive" Referral System? Let me highlight several of my own experiences to illustrate both techniques.
I recently became aggravated by my chiropractor due to his lack of passion for his work. I decided it was time to find a new one for myself and my family. One morning I was outside picking up my newspaper and one of our neighbors was walking his dog. He asked me how I was doing so I shared with him my irritation with my current treatment from my Chiropractor.
The words were no more out of my mouth when he began praising his Chiropractor and explaining to me how caring and professional he was. His recommendation was so strong (people LOVE to share this kind of information with anyone who will listen), and he told me that at least four of our neighbors were using him as well. Needless to say, my whole family began seeing him and we've spent thousands of dollars on adjustments.
Now consider this. Did this Chiropractor have a referral system set up for his business? Not in the least. I later discovered he had no referral program in place whatsoever… just a Yellow Page ad and some local radio spots that were costing him huge amounts of money. If he were to do a minimum of research I'm sure he'd discover that many of his clients are referrals coming in from his client base.
His saving grace is his personality and expertise as a Chiropractor. His staff is considerate, concerned and treats each patient with kindness. You almost feel as if you're part of their family when you walk through the door.
Basically the Chiropractor gets referrals from this "static" method due to his superior service and his ability to build relationships with his patients. Unfortunately he lacks a true "static" referral system since his patients are NOT directly asked or actively give referrals. In many cases, they may not be referring him due to the fact they aren't aware of the scope of his business, the various treatment modalities he offers nor are they offered benefits or perks by referring him to their circle of influence.
If he created a formal system that rewarded referrals he could grow his client base enormously with no out of pocket expense and see his business grow much more rapidly.
The simple solution is to put into place a system where he trains his staff in the art of "asking" for referrals from every single patient… every time. His referral success would grow even more if he sent a follow-up letter to them highlighting the advantages and perks they could receive from each referral, such as discounts, complimentary treatments, etc. This would incentivize them to tell as many new people as possible. Now the doctor has his patients "marketing" on his behalf.
Now for the "Referral Goldmine" that can up the number of referral clients by an additional 200%-300%.
Let's turn the "static" system into a more powerful model that creates what we call the Proactive Referral System. The Chiropractor could provide his clients with a free trial coupon… complete with a complimentary x-ray and adjustment for one person. The other side of the coupon details all the benefits and perks with bullet points highlighting the advantages our Chiropractor provides over other Chiropractors in the area.
The second tier of the Proactive Referral System increases clients another 100% - 200%.
The Chiropractor obtains four or five written testimonials from other happy clients who live on my block. Then the Chiropractor (or someone in his office) creates a compelling letter mentioning those neighbors by name and includes their testimonials. This letter invites 50 + other neighbors to come in and accept a complimentary adjustment "on behalf" of the four or five original neighbors so they can experience what made their neighbors/friends so happy with the services they received.
How do you think those 50 neighbors would react, especially if some of them had been considering the use of a Chiropractor (most Americans have lower back pain) or perhaps they're not happy with their current Chiropractor? This is a powerful tool because the endorsement comes from their "circle of influence" coupled with the generous offer. Can you see the major impact of this approach when compared with receiving a generic promotional mailing, reading a standard Yellow Pages ad, a print ad or hearing a generic radio spot?
Additionally, consider the investment per targeted client in this "circle of influence group." Generally it would fall in the $50 range and that is incredibly inexpensive if you compare it to the kind of advertising most businesses use.
Are you recognizing the power in a Dynamic Referral System?
Since most of the basic elements of an average referral marketing system are so similar, let's begin by discussing the two different referral systems in detail… then you can move forward in developing and recognizing the variations that suit your own specific business model.
The "Static" Referral System
Every business can thrive by creating ways to get referrals. Referrals come from happy, satisfied clients who let others know about your service or products. And when the system is working well, those satisfied clients tell others about your business. This typically happens by sheer luck if you don't have a systematic process in place. Your referrals will simply dribble in hit and miss. Even a static referral system is better than none. Otherwise you'd be missing out on many new customers and the additional cash flow they produce.
That "static" referral model calls for you and your employees to consistently ask for the names of all your clients friends, family, business associates and others who may need what you're offering. Naturally this can be done face-to-face, by email or letter.
The key is the follow-up. The "static" model is only successful if your employees continually follow through and never miss an opportunity to ask for referrals. The negative side of this referral program is the prospect feeling the introduction was a bit impersonal. An example would be if I received a telephone call from a realtor I didn't know telling me a friend of mine gave them my name and number. Since my information was given out without my permission I could be put off by that approach and my first inclination would be to get off the phone as quickly as possible.
"Super-charging" a Static Referral System is simple if you can get your clients to either personally contact 3 to 4 potential prospects and tell them about you and your business… how much they like you and the excellent service they can expect to receive from you. Do you see the difference between this and you or one of your employees picking up the phone and basically cold calling prospects using just a name and phone number?
The perfect scenario is for you to call them after your satisfied client has already opened the door for you to invite them in for a complimentary treatment, free meal or a free product sample. That person is now primed to hear from you and calling to offer them a "gift" now becomes your preferred sales process. Your client has pre-screened and qualified them for you. What could be better?
Approach your regular clients and getting them to agree to assist you by providing you with 3 to 4 names and numbers after they talk to them is a win-win scenario for everyone. Your regular client will be rewarded, your new prospect will receive a "freebie" and your client base will rapidly grow by the week.
Even better, what if you could get your regular clients to call you as soon as they talk to a new prospect and let you know they're open to speaking with you? Make sure you call them immediately and invite them to come to your office or place of business for their complimentary "gift." This is a very effective and powerful method even though it will take a bit of finesse' to make sure your regular client is up to taking action and making those contacts.
On the other hand, they're going to be rewarded for the few minutes it will take them to place a few calls or have a short conversation with a co-worker, friend or family member. Be sure you provide them with your business cards. Anyone carrying around business cards from someone whose business they frequent shows they're truly excited and happy about doing business with you, and the person receiving it will feel their commitment to sharing information about your business.
Here is an overview of a Static Referral System
- Ask for referrals from satisfied and happy customers on a consistent basis.
- Let your customers know about the rewards for your "new" referral system.
- Make sure your reward system is in place and make it as generous as you can, whether with cash or free services.
- Create a compelling referral incentive that excites the prospect enough to give your business a try.
- Follow up immediately with every new referral consistently and systematically.
Most businesses start a referral system and then gradually stop following up. This is typically the fault of the business owner. They become lax and fail to make sure their employees are using the system and following each and every step. Employees have a tendency to look for short cuts, and that often has a negative impact on the bottom-line.
Always remain vigilant and perform all the steps we're discussing on a daily basis. That small amount of effort done systematically and continually will have a major impact on your cash flow. When you allow those taking part in the system to become lax in their efforts, you will lose valuable referrals, and each lost referral is lost revenue.
The processes for creating a consistent flow of high quality referrals from your current client base are as follows:
- Use uniform methods for gleaning referrals
- Proper timing is key to producing referrals
The Best Approach for Producing Referrals
Compelling your clients to actively provide you with unlimited and quality referrals is the only way to build a successful referral system. Failing to get referrals is bad for any business, yet receiving a flood of the wrong kind of referrals can be devastating. Unqualified prospects will waste your time, effort, energy and money.
The "art" is in asking for referrals. Believe it or not, you can "train" your clients to ask for referrals. Your approach needs to be more focused on helping them understand the right way to ask for a referral and the perfect prospect to approach. You want to access the right "levers" that will automatically cause your referring client to know exactly who the right prospect is.
Five "levers" that can be "pulled" to start the flow of quality referrals
Lever # 1- The "Leading question" to ask your clients
With laser-like precision you can help identify the perfect prospect you're seeking. You may ask; "Do you know someone with lower back pain?" Or, "Who do you know who loves Italian food?"
Engage your client in a discussion and remind them of what you've done for them and share specific examples of how you've helped others. Telling a story is the most powerful tool in your arsenal. It will pull a lever on their memory that makes them think of and say something like; "Hey, I do know someone who could use your help." People love to help others and it makes them feel good when they do. You can also ask if they know someone with a certain health challenge or someone who needs your services.
Asking your customer how satisfied they are with your service is another approach to consider. Just ask! If their response is positive then ask them if they can think of anyone else with a similar desire, challenge or problem like theirs. It's also a great idea to get them thinking about specific locations. By asking them if they know of someone at their church, office or neighborhood, these specific locations often trigger them into remembering specific individuals that need what you sell.
Lever # 2- The referral sheet or "brain tickler" form
If you're looking for particular businesses to target, list them on your referral sheet with spaces for names, phone numbers, contacts and addresses.
To simplify, let's say you're targeting bookkeepers who work for those in your industry. Add "bookkeepers" to the list and this will "tickle" the brain of your client to hone in on certain people they know in that field.
If you want to get down to a particular demographic profile, then write a specific description on your sheet. For a daycare, put down "families I know with children under four who live in my neighborhood."
Lever # 3- Get the Rolodex
This requires a direct approach, but ask your clients to access their Rolodex or address book to find 5 to 10 names that suit your demographic profile. It takes some education on your part to make sure they understand exactly who you're looking for in a quality referral.
Lever # 4- Get to know who your clients know
Your client may be new in town and therefore hasn't had time to get to know many people. However, they may know a person in the perfect industry who in turn knows a lot of quality people who could use your service or product. That can double your referral team.
Lever # 5- Sending a self-mailer on a periodic basis
Use the mail to send a postcard to your clients asking them to write down 3 to 4 referrals. This can be a self-mailer with pre-paid postage. This can generate fresh new prospects while reminding your current clients that in may be time for them to come into see you.
You can also use a variety of methods. My Chiropractor can use a mailing piece to offer a coupon for a discount and to entice the client to send referrals. A "brain tickler" can also be included with information on the rewards they receive when participating in the referral program.
How to "time" the referral request
Many people cringe when they consider asking for referrals. There is often a fear of rejection, even from regular customers. Fear is something that must be overcome and dismissed if your business is going to thrive.
Just ask! If you have regular customers they obviously like you and your business and will more than likely be happy to help you grow your business. Planting "seeds" on a consistent basis will grow your garden of referrals and you will end up with a bountiful crop.
Educating your clients on the benefits they and those they refer will receive is a very strong tactic. Naturally you don't have to ask them for referrals every time they come into your business, yet you can visit with them, tell them a story of one of their referrals who came to you and thank them for taking the time to share your information.
This is also the perfect time to give them a thank-you gift, perhaps a free session, lunch on you or whatever freebie is appropriate.
Five major opportunities to "ask" for referrals
1. When they buy something
How often have you felt excited and happy about the service or products you received from a business and offered to write a referral letter or give a testimonial, yet never got around to it? No matter what marketing system you use, approaching each client at their highest state of satisfaction is the moment they will comply and give you whatever you ask for.
As an example, if your housekeeper makes your home shine, look great and smell wonderful, you would most certainly be at your highest state of satisfaction. This is the best time for the housekeeper to ask for and get referrals from you.
If the housekeeper just leaves and doesn't ask, you typically go on with your daily routine and don't think about her again until she comes back the next time. As time goes by, your enthusiasm wanes and the "glow" you initially felt is long forgotten. If you don't see her for a while (perhaps you go on vacation) you won't be nearly as likely to give her a referral if she suddenly calls and asks.
Let's say you bought a microwave, the salesman was very helpful and attentive and gave you all the time you needed to choose the right appliance. You brought it home, plugged it in and everything was fine. You received excellent service and got exactly what you wanted. But the salesman never asked for any referrals.
A few months down the road you put your food in the microwave, turn it on and it suddenly starts sparking and burns out. You call the store and the same salesman says he's sorry but you'll have to call the manufacturer. He couldn't help you and now it's going to be hours on the phone trying to get a new microwave. Are you feeling less satisfied about the salesman and the company? Of course you are. Would you give them any referrals? The answer is probably not.
How about this scenario? You visit a massage therapist. The massage was amazing, you feel great and she offers you a four massage package for the price of three. For 3 to 4 referrals she'll give you a discount on another massage. You just enjoyed an hour of complete bliss and know all your friends and associates would love to feel the same way. She has just hit your "hot button" so you gladly give her the referrals. You win, she wins and everyone you've recommended to her wins as well.
When she asked for the referrals she hit your "hot button" by asking; "Who do you know who could use a relaxing massage to relieve stress?" Most people would admit that practically everyone they know is stressed out, so that's an easy one.
2. When you've had a client who has used your services or bought from you numerous times.
If you become too aggressive and "pounce" on your client too quickly they may feel pressured. Waiting until they have been to your place of business on several occasions gives you time to build a personal relationship and gain their trust. You'll feel when the moments right to ask. Then feel free to ask at the point of purchase. By then you can "move" them in the direction you want them to go without pressuring them to give you names of their friends and associates.
3. Asking within a few days of last seeing them
If you feel shy or hesitant about asking for referrals at the point of sale… or you feel the timing isn't right… or you just need more time to work up your courage, then consider mailing them a thank you letter or postcard within a few days of the transaction.
Your clients or customers don't carry around the contact information on everyone they know, and they certainly can't remember everyone's addresses and phone numbers. That's when a casual reminder asking for referrals that fit a specific category can deliver referrals you would have otherwise failed to receive. If you don't take action and ask, who will? Your employees do what you request of them… and as we all know, most "workers" really don't take on extra tasks unless you make it a part of their job. It's up to you to make this critical component a part of their everyday responsibilities.
4. Delay asking until you receive praise or a "thank you" from your client
Many people can be shy or feel awkward using the approaches we've discussed so far. People don't want to feel as though they're being to forward or pushy. But in reality you're doing your customers a favor. When your clients are praising your services or products they're in their "Peak Satisfaction" state.
5. Periodically in person or by mail
By asking for referrals every few months you won't wear out your welcome or make your clients feel pressured. Of course you can use trial and error to see how they respond, how often is too often to ask and monitor your results so you can perfect your timing. Never allow yourself to believe they just don't know anyone.
Everyone knows at least 10 to 20 people and many often know hundreds. But if they know 10, then those 10 also know 10… and so on. Do the math. In a very short time you could have hundreds of new prospects. And as happy and motivated customers they should be more than happy to refer you to others, especially when they receive something for their efforts.
Now that you've created your own "Static" referral system, you can take a step up by the implementation of the second tier of a phenomenal referral system.
System # 2- The Dynamic Referral Systems
We previously discussed how a Dynamic Referral System can move your Static system to a higher level of performance. You've "recruited" your customers to do a lot of PR for you by promoting your service or business to their friends, associates and family. And all you had to do was give them a few perks or free services.
The Dynamic Referral System allows you to move the process forward so you can gain access to quality prospects that would have never heard of you, your business or how you can help them improve their lives.
The TOP 3 Dynamic Referral Systems
1. The Customer or Client System for Personal Networking
This system actually helps you convert your happy and satisfied clients into major promoters. So how is this possible? With the "Static" system there must be more follow through with prospects that don't know who you are or may not think they have any use for your services or products. It takes discipline on your part to basically educate your customers on everything you offer that's of benefit to them and potentially to their circle of influence. This can be time consuming and you're often left with a list of unqualified prospects that end up going nowhere.
Let's go back to our Chiropractor. Because he spends a certain amount of time with his patients he develops personal relationships. He helps them by taking away their pain which is a huge benefit to him and his patients. He has time to educate them on his specific treatment modalities and can help them understand who would be the perfect referral candidate. Almost everyone has pain at one time or another so his prospect list can be easily targeted.
When we compare the "Static" Referral System to the Client System of Personal Networking, it covers both educating your clients on how you benefit them and how you can be of help to others. The details of how your Referral System works can be communicated so they understand the benefits you provide and the value of your incentive program.
So let's begin by looking at the 3 components of your Client System of Personal Networking and applying the principles to your client and potential prospects.
Your Personal Client Base
Make sure your customers or clients actively promote you and deliver quality referrals by educating them on the specific results you can produce, what makes your business different or unique from others and help them to understand your products, benefits and services. You want them to feel comfortable with the knowledge that you will treat them and their referrals well and they will get special benefits in return for their efforts.
Feature # 1 - What are the benefits you offer the referrals your clients provide you?
It's so vitally important that you're in a continual mode of educating your clients or customers on what you have to offer and what they will get from using your services. The more you "casually" go over how much you enjoy seeing happy customers and that "giving great service" is your major goal, the more your clients will remember you when the timing is right and they're recommending you to their friends, co-workers and family.
Never become apathetic or believe you've told a customer all they need to know. You may even elect to open your business on days others are closed. In many towns, restaurants are closed on Sunday. What if you're a restaurant owner and decide to open on the days the others are not. Where do you think people will go to eat when they decide they don't want to cook on Sunday?
How about the fact that your staff is better trained than your competitions? When people continually compliment you on the caring and professionalism of your employees, that in itself is a huge plus for your business and you should share that information with your clients.
Education should be your primary focus when interacting with your customers. Say you own a hair salon and you've won many awards for hair design. Make sure you have your awards and trophies clearly visible where your customers can see them. They can brag to everyone they know that their hair stylist is an award winning stylist. Imagine how many new clients will be lining up to have you make them beautiful?
Feature # 2 - Will your clients know their referrals will be well-treated?
Making sure you offer every new referral the VIP treatment is like having an insurance policy that guarantees you more customers. Treat them like royalty and give them more than any other company in your industry and your loyalty quotient from clients will skyrocket.
Remember, they came to you from someone who is a loyal customer. Fail to deliver anything but exceptional service and your regular customer will hear about it. In fact, since they were the one who recommended you, you may lose them as a client as well. People do not like to be embarrassed or look bad to others they know. They will feel responsible and word will get around.
In addition, how do you respond to new customers who came to you through a referral? Let's say they have a coupon for a free treatment, haircut or meal. Occasionally employees dismiss someone because they're giving them something for free. The new customer picks up on their negativity and may even feel guilty for taking advantage of the free offer. If this happens, they won't come back again as a paying customer.
You need to make it absolutely clear to your employees that a referral (even though they are getting something free this time), is a PAYING client in the future. You've now wasted your time with your regular customer cultivating their referral as well as the new and potential full-time customer who now feels bad and unappreciated. This entire situation could have been avoided.
Treat a new referral as a VIP from the moment they walk in the door until the moment they leave. Give them a cheery welcome, a cup of coffee or other beverage and lead them to their seat… or depending upon your business, ask them what they're looking for. Kindness and a caring attitude goes a long way in creating happy and steady customers.
Here's another idea to cement the deal. Before your customer leaves give them a small gift that pertains to your specific business such as a sample of a pricey hair conditioner if you own a hair salon, or a yummy brownie or cookie if you own a bakery. That small initial investment versus the greater potential return is more than worth it and it can be a part of "branding" your business.
Feature # 3- Customer incentives
Most people truly want to know "what's in it for me?" Why should they refer you or your business to everyone they know? After all, they're risking their reputation by recommending you. What happens if something goes wrong and their referral isn't happy?
SIX motivational moves on your part to get your customer "on board"
How difficult is it to send a "Thank You" card when your regular client sends you a referral? You may feel there's no financial win for you, but the opposite is true. In these days of email and texting, communication has become very cold and distant. People love to get cards in the mail. They appreciate the human touch. It's worth a few minutes of your time to make your client feel important.
This system will naturally create a rather large stream of new referrals, yet there is another part to this equation. You need a very strong offer to entice prospects that are looking for a new business to give you a try. Understand they're also looking at other businesses (your competitors), so whatever you can do to motivate them to give your service or business a try will often results in a new customer for you and a new potential promoter for your business.
- Don't use the same marketing letter for your clients that you send to potential clients. They'll see that you're just sending them a form letter and it certainly won't make them feel special. Even a short, personal note on your business letterhead or on a special card you had printed for your business could make you look far superior than your competition.
2. Include A Little Goodie Showing How Much You Appreciate The Referral
Referrals are often a direct result of your excellent service to your client base. Many of them will refer you with no incentive or perks at all. But seriously, do you know many people who don't like "free stuff?" If you present the gift as more of a "thank you" than an incentive or even a bribe the customer will feel more compelled to refer you.
If you have a client that has sent you more referrals than anyone else, you may even consider sending flowers, candy or a gift basket if they're female, a bottle of wine or tickets to a sporting event if they're a male.
3. Allow your client to be the "Big Shot."
A truly powerful idea would involve giving a select number of your regular clients "coupons" to gift to the people they know inviting them to come to your business and receive a complimentary "whatever." Again, it could be a two for one meal, a haircut, flowers or whatever you're offering.
For example, a massage therapist offers one free massage in exchange for referrals during a visit to her office. She also offers the same "freebie" to each referral or prospect from the coupons she gave to her client on their last visit. What is her reward? Since over 30% of her business could come from referrals she also makes up to 2 ½ times more money than she normally gets from her regular advertising campaign.
4. The "Big Bang" Offer
Once a client has truly impressed you with lots of high-quality referrals, consider offering them a "Big Bang" reward that's tied to what you sell.
- A weekend at a nice hotel
- The most expensive dinner at the restaurant of your choice
The more over the top the prize the better since it activates the reciprocity factor. This will motivate them to talk about you to even more people in hopes of getting the "Big Bang" again!
5. Bonuses are GREAT!
If not the "Big Bang," how about a bonus for each and every new referral they deliver? Again, this could be discounted services or anything that would impress them as an important and valuable bonus for just telling people about you.
Let's say a major department store has a cosmetics department that gives away free makeup sessions. How about offering a free facial AND a makeup session for each referral that purchases product after the free makeup session they receive? Typically each customer spends approximately $80 every two to three months, which is over $300 per year. They should have no problem doing the facials and makeup since they make far more in income than the time it takes to give the free sessions.
You can also offer different levels of bonuses for the real "heavy hitter" clients that promote you.
6. Who doesn't like discounts or refunds?
Consider offering refunds or apply the amount of refunds to clients who buy from you in the near future… or refund a certain dollar amount if they purchase within a 60 day time frame when one of their referrals purchases from you or uses your services.
7. "Show Me the Money"
Money is generally the most powerful inducement to motivate people to do things for you… but it's the most costly of any of the choices we've mentioned. The actual cost to you is the dollar value of the gift or reward. Think about printing your own "fake" money with a picture of your office or establishment on it… or print something humorous on it and call these pretend dollars "Bucks for Business." The pretend money can be exchanged for goods or services at your place of business. This also forces them to come to you to redeem them and the opportunity is there to sell them more and earning you more cash.
How to Handle "Referrals" from your Clients
We've covered how to recruit and reward your regular customers. Now we can create a plan for your Referral Prospects.
Part 1- What special "benefits" can they expect?
This is your opportunity to share what's so special about you and your business with your potential new customer who came to you as a referral. Share the advantages of doing business with you, how they should expect to be treated as clients or customers and tell them exactly what you will do to incentivize their continued patronage. Tell them how you will serve and benefit them.
- What will they get from you? Can you save them effort, money or time? Will you provide more valuable perks like convenience, special delivery or payment terms other companies don't provide?
- Are you open on days other businesses are closed to make it more convenient for them to eat, shop or use other services?
- How specialized are your skills and those of your employees?
Part 2- Will they be treated "special?"
Put yourself in their place. What would you like to receive from a business like yours? What could you do for them or offer them that would elevate you far above your competition?
This information is the same you share with your regular customers. But this is new ground since they don't know you. They need to believe in you and be convinced you're different and your business is far above all others.
- What kind of guarantee or warranty do you provide?
- Do you include any specialized products or services?
- What can you do to make your first meeting and their first impression memorable?
Part 3- Here's the incentive again
Naturally you don't have to offer incentives. Your service may be so great and your client satisfaction so huge you may attract leads from them without any inducement at all. However, if you would like to create a large group of loyal and lifetime clients you can greatly increase and keep the numbers up by offering a good incentive program.
Controlling the referrals who receive your incentive offers by pre-qualifying them could be very valuable and save time. Qualifying questions can be very helpful and insightful. Again, using our Chiropractor as an example, he or she could ask their clients if they know anyone with lower back or knee pain who has had trouble finding the right practitioner that can help alleviate their pain.
Some incentive ideas
Make a free trial offer
Again, who doesn't like to "try before you buy?" Most people don't get that opportunity so an offer like this can be quite compelling. You do however need to consider if the free trial idea is a proper one for your business.
Determining factors to consider before offering something on a free trial basis
1. Do the math and figure out if the lifetime profits you could glean from one customer is worthy of giving away free items.
- You're a restaurant owner and your lifetime income per customer is $1,700. You elect to give away one free meal per month that costs you $20. If one of five referrals becomes a regular customer, your profit is around $1,600 per new customer. Is that worth the giveaway? Of course it is.
A free incentive program is easy to test since you can do it on a small scale, so your risk is minimal.
If you have a high delivery cost service like window washing, you can offer 50% off on a trial basis which is truly outstanding. You want to wow them to make yourself irresistible and invaluable.
2. Is your service or product superior or better than others in your industry or so unique that people would flock to your business? A free trial for a referral or prospect can turn on the power switch and bring in loads of new clients.
How can a business apply the free services angle?
We'll use a Financial Planner as an example. He or she may write a referral letter for his regular clients personalized for the reader throughout the mailing piece.
- They receive an invitation for a Free Estate Planning session as an incentive.
- They then mention their other products such as investment vehicles, insurance and any other products they offer.
- At the end of the letter, they ask them to "help them out" by giving them some referrals of people they may know who could use their help in this chaotic economic environment. They can tell them their goal is to assist people through very careful financial planning to make it through the economic meltdown and come out financially stable on the other side.
Incentive # 2- Offer bonuses
Bonuses give you the ability to offer the prospect something with a high perceived value but with little out of pocket cost.
These bonuses can be directly related to your services or your product line. If an Optometrist offers a free eye exam, the value is perceived to be their listed retail price of $90, yet if the doctor has extra time there is actually no real cost incurred. Once the patient knows the Doctor and has used their services they will more than likely come back and purchase contact lenses, glasses or other eye ware.
You can also offer bonuses that have nothing to do in relation to your business. How about movie tickets or discount coupons for a popular local restaurant? You can often acquire these items for much less than full price and use them to attract a steady stream of paying customers.
Preparing Your Client Base
Now that you've created your system and have the model in place for how to respond to, motivate, treat and benefit the referral prospect, what's the process for taking this information and converting the prospect into a paying customer?
By preparing your customers to become YOUR promoters you will have an army of personal PR representatives on the streets marketing for you. Of course the easiest and best way to convert a prospect to a customer is by personal communication with you.
Arming your "promoters" with written material they can share with others gives you the opportunity to make sure your message is consistent each time someone else reads your marketing information. A brochure or a few written pages done professionally and created by a printer that contains all the details of your product or service is invaluable. This is your moment to shine by detailing all the advantages and benefits they'll receive from you and your business along with the ways you differ from your competition.
A single page letter should be included with the marketing material that includes the following information:
- How the person they referred will be welcomed and treated by you and your staff.
- The incentives the referral prospect will receive on behalf of your regular client.
- A description of the ideal prospect most qualified for what you sell. This provides guidance to your current client so they don't waste their time (and yours) giving you dozens of names of people who don't fit your demographic profile.
- What you're offering your customers that will benefit them.
Be sure you provide a brochure to the referral outlining the benefits they can expect to receive. Additionally, create a simple "Referral Coupon" in the form of a postcard. If possible use the largest card available. This can also be used as a direct mail piece.
The Referral Coupon must consist of at least 7 components:
- If the mailing piece is positioned as a gift from a regular customer, make sure there's a place on the card for their name; "A Very Special Gift from Sue Adams." In lieu of a name, you can assign a "customer code" to that client so they get credit for all referrals.
- Have the incentive or gift in large bold type with an assigned value.
- Make sure there's an expiration date. That creates a compelling call to action and a fear of loss if they don't act immediately.
- State the motivation behind the gift. Say something along the lines that your regular client believed their friend or whomever would benefit from your service or products. Let them know that you're seeking out a certain clientele; they fit your profile of the perfect prospect and your confident they will become a regular customer after the free trial.
- Include the 3 or 4 most important advantages they will get from using your services.
- Give specific instructions and a call to action so they know how to take advantage of your offer.
- Include the name of your business, address, phone number, directions, hours of operation and contact person.
So you've probably gotten the picture of the value of "recruiting" customer promoters, but may not have the complete picture on how to educate them to promote and communicate the exact message you'd like the public to see.
The Client System of Personal Networking is extremely powerful and energetic when you have personal clients promoting for you, yet this system gives you no insurance that 100% of those valuable referrals are followed up with.
Plan to Work and Work Your Plan
We've gone over several of the Referral program possibilities and worked over the basic steps for making it work. Let's move forward with the process, shall we?
Pick ONE Referral System
Hone down the various referral systems to one that will carry you over the next few months.
Put Your Offer and Script Together
You have the basics. We've put together the many components to your referral system, so pick one and apply it over the next month or so and decide what you will specifically do and say to motivate your customers and prospects.
Before you consider any offer you put together it should contain all the components required when creating a dynamic offer. Use the Compelling Message Template in the resources section to help you do this properly.
"The WIN is in the Follow-up."
To move the system forward rapidly and build your referral system quickly you will need a good follow-up system for both customers and referrals.
It's vital to build a database of customers and their purchases. This is probably the most valuable component to your system.
Referral Prospect Follow-Up… The Two MOST Vital Components
1. Timely Follow-Up
Most businesses succeed or fail when it comes to following up in a timely manner on their referral lists. You must have an on-going and automated system that immediately follows up without fail. If you need to, assign one of your office employees to this important task and hold them accountable for executing it consistently.
Everything can be easily tracked in a separate file on your computer or in a file box using 3 x 5 cards. Have a system whereby you or that person is reminded when to send a letter or make a follow-up call.
2. The POWER is in the Persistence
Don't become lax and ignore calling someone just because they didn't purchase immediately. That doesn't mean they won't buy in the near future if you stay in their minds by sending them an occasional "special offer" card or giving them a short call every few months.
I'm sure you've looked at furniture before and just couldn't make up your mind at the time, yet six months or even a year later you went back and purchased something you had been thinking about. Perhaps the timing was now better or your financial situation had improved. Never attempt to "out-guess" your prospects buying patterns.
Always add any referrals to your customer database and market to them whenever you send a card or letter to your regular clients. This increases the chances they will eventually become clients in the near future… especially if they've become unhappy with another business they've been frequenting.
You may be wondering how to test your referral system.
Test it Yourself and Make Modifications
Always keep in mind that if you want that major impact to occur you will have to conduct a "trial and error" test and spend some time working out all the little challenges that may turn up. Continually revise your script until it's perfect.
You're the boss, so you or one of your top management team members should personally test the referral system until you're satisfied that it's seamless. Consider the fact that you're working with your customers and they're a precious commodity.
Validate that Your Staff is On Board
Employees don't care as much about your business as you do. That's simply a fact. There are amazing employees that give 150% and others that are simply there for a paycheck. Make sure you train your staff how to use the program and track the results.
Be open that you'll be watching over the process until they have it engrained in their daily routine and performing it perfectly before you allow them to take over this very important role. Invite them to be involved in the process and ask for their feedback on the referral system. If they interact directly with your clients, ask their opinion on the referral process you've put in place. It's critical they're totally on board.
Monitoring and Tracking Systems
Figure out a way to track your referrals that come in and how many convert to clients. Track the ones who return and become regular customers. Statistics determine your baseline. Now is the time to use and test different scripts and special offers to determine the effectiveness of your program. Make sure to monitor your employees to ensure they are following the program to the letter as you've created it.
Staff Incentives and Rewards Make a Successful Program
Consistency is the key to success and if your staff is not working the system correctly the whole program can break down.
- When you turn over such an important part of your business to your staff to perform all tasks including the referral request and/or the mailing pieces that are sent out to your clients and referrals, you will need to continually verify that everything is being done in a timely manner.
You can easily create an incentive program for your staff based on how many referrals convert into clients. (This system will be even more successful if you have an enthusiastic group of employees vying for the "perks.)
By now your referral system should be "Dynamic."
The financial windfall of using this Referral Strategy
As an example, let's use our Dentist again. If they converted four families that live in a neighborhood the potential client base is astounding.
Consider the potential cash flow from just a single neighborhood.
- Let's assume the Dentist's lifetime value for the average patient is around $6,000.
- Say the Dentist has 500 patients and they "calculate" that 20% will give them a testimonial or write an endorsement letter to send to their neighbors.
- Of those 100 patients willing to take part, 50% live in the same neighborhoods so they won't be counted multiple times. Now we have about 50 neighborhoods to target for the program.
- Assume the neighborhood has 49 homes and out of that 44 are non-patient neighbors.
- Assume only three give the Dentist a try and two actually become paying clients. (It's well within reason they can reach 15 to 20 of the families in each neighborhood).
- They've added $12,000 in lifetime value from just those TWO clients.
Once they expand their reach to the other 50 neighborhoods in the area they can service the dentist could literally generate over $600,000 in income and profit over the next five years!
So what was his cost per neighborhood? It would be somewhere in the range of $100 for mailing letters or postcards and a few additional costs for doing the free exams.
As you can see, a dynamic referral program can easily double or triple a business's current revenue and profitability. Consider implementing your own immediately and watch your cash flow soar.