Customer Referral Programs

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It's somewhat rare, but not unheard of, when we run across a client that doesn't want new customers.

Customer Referral Programs

With just a few exceptions, every business that we work with is happy to take on, regardless of their model:

  • New subscription customers (think of an annual lawn program for instance)
  • New transactional customers (a one-time purchase such as a sofa)
  • New repeat product users (while not quite subscription customers, these would fall into those categories as a building or raw materials buyer, a home consumer purchaser such as paper towel purchaser, etc…)
  • The once in a very long while customer who may not use your service often but will remember the experience such as a home or car buye

In some industries, there is such a high value placed on subscription customers that sales teams are compensated for a multiple of the customer’s subscription term. Unless there are concerns about the negative impact of serving existing customers (i.e due to materials, production, staffing, or other constraints that may or may not be easily addressed), it certainly seems to be illogical to not want to take on new customers.

In an actual real-life example, our team encountered a customer who felt that referrals wouldn’t be a good fit. Despite spending more budget on advertising and other marketing channels, they didn’t think that their healthy brand could benefit from satisfied past customers generating future customers for them. In fact, despite research showing that their past customers often shared social circles with similar buyer profiles, they still didn’t believe in the power of letting their own customer base become their best champions.

  • Make sure that there is a value proposition!

    If your customer is going to be a brand ambassador for you, make sure that you acknowledge them for putting a good word in for you. Better yet, reward both the referrer and the referred and remember that it doesn’t have to be one-sided. The best program can be one in which both your customer, the referred customer, and you win.

  • Add clear requirements, limits, or exceptions where appropriate.

    Depending on the industry, percentage and flat rate referral programs may or may not make sense. It’s important to ensure that business doesn’t suffer as a result of it (thinking of the infamous Hoover free flights promotion that resulted in significant financial losses and damage to its brand).

  • Make it easy to understand.

    Complex referral programs that are difficult to achieve or hard to understand sound more like an extension of outside sales efforts and make have limited impacts. A customer who might love to refer service or other potential customers could otherwise become very become disenchanted with your brand, product, or service if they struggle to figure out what they need to do to fulfill your offer.

  • Consider financial alternatives.

    Very often when consumers think of referral programs, they think of a cash inflow in the form of a check, cash, or a gift card. The bean counters shudder with thoughts of outflows. Think about non-cash referral value such as vouchers, credits, or points that can be redeemed for additional services but that may have very little actual cash value or that don’t have a material impact on financials.

  • Make it visible.

    The world is full of valuable nuggets in the form of referral and loyalty programs designed to influence consumer behavior or grow businesses. If these amazing initiatives aren’t easily visible to customers or require that the customer takes the first step to get information about them, they may not be able to achieve their full potential.

    Leverage your website, customer contacts (such as emails) and social media properties to promote your referral program.

Once in place, the temptation is to check this task off a list and not give it a second thought. A living plan needs checking up, reviewing results, and then adjusting sun exposure or watering to help it thrive. Your customer referral program does too. Need help modifying with St Louis web design to modify or add a new referral program to your website? You've come to the right place!

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