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. Β 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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