Want More Sales? Step 1: Referral Program

4 Feb

Encourage all your customers to spread the word

When I owned my first small business, I made the mistake of paying too much money for a yellow page advertisement–isn’t that what you’re supposed to do as a business owner? Advertise in the yellow pages….that’s what everyone does! Next, I made the mistake of advertising in the local newspaper: I really thought I was big time after I paid the paper $750 to place my business name and phone number in the sports section. I made lots of early marketing mistakes; however, I did something right: I tracked the source of every lead that contacted my office. My first question: How did you hear about us? The overwhelming response was “My friend told me I should give you a call.” 75% of my leads and new clients came from referrals.

So I pulled the yellow page ad when my contract expired. The yellow pages representative was shocked that I didn’t want to place an ad with him…his reasoning: “All your competitors are in the yellow pages.” That sealed the deal; not only would I not blend in with my competitors, but also I wouldn’t be wasting my hard earned money on an unsuccessful marketing channel. When I showed the yellow pages rep my “Source of Business” spreadsheet, he was speechless. I was armed with hard data, showing how ineffective the yellow page ad was for my business.

I immediately created a referral program for existing clients. The goal was to actively encourage my current clients to recommend my business.  If someone referred my business, the referrer received the following (regardless of whether I sold anything to the prospect):

1) $10.00 gift card to a local sandwich shop

2) Entered in monthly drawing for $25.00 Visa gift card

3) Entered in yearly drawing for 60″ flat screen TV

The message: The more people you refer, the better your chance of winning the TV. I printed the referral program on bright paper and included it in every piece of outgoing mail to my clients. I also attached the referral program on all outgoing emails. The results of my referral program were remarkable: My return on investment for the referral campaign was 4 to 1; meaning for every dollar I invested in the referral program, I got $4.00 back.

I learned two very important concepts:

1) Determine how people are finding your business, then actively promote that channel and eliminate the unprofitable marketing channels.

2) Create a reason for your clients to refer you. Reward them with small tokens of appreciation and make your business “top-of-mind” by promoting a fun referral program for your clients.

Create your own referral program TODAY, and watch your business grow!

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