Referrals are every entrepreneurs dream way of growing their business and you can get a steady stream of referrals if you have the right incentive programme in place. Right?
I was speaking at an event for entrepreneurs the other day when as part of the question and answer session one of the attendees asked me what I thought about offering incentives (money, discounts, vouchers etc) to contacts, customers or suppliers for referrals.
My answer was that unless you have set up a distributed sales force ie. you have many people selling your product or service for you on a commission basis, I don’t think this works as well as we might want it to, in my experience. The reason being is that often it can feel like mixing oil and water ie. do we talk to people about a great customer experience and refer people just to get ‘paid’.
The reason that I say this is that I believe that if you are building a business that delivers a great product or service then if it is good enough your customers will talk about your business. And, they will happily talk about you to people that they know and meet. Why?
Well there are many reasons why people refer us to other people, only some of which are financial. Seth Godin in a recent post I spread your idea because… shares with us 20 ideas for why people share things. Of his list only 2 have a financial benefit.
On this basis, all you have to do is:
- Make your customer experience so good that people want to share you with others; and
- Make it easy for your ‘advocates’ to share you with other people.
Going back to the event, the lady who asked the question then went to ask if I would suggest a different approach that would enhance her referral strategy and kick start her referrals. I suggested that a different way of going about it would be to work on delivering a great and complete customer experience. Something so great that it stood out against her competitors. Then, I suggested that she consider giving ‘gifts’ to her customers and those that referred others to her as a way of building that relationship and showing that you care and are grateful. When I say gifts I don’t mean just bunches of flowers or chocolates, although these can work as a starting point, but what I mean is gifts that have thought in them and are about your customers or those that are referring you and not about you. So, a promotional pen or a branded calendar is not enough.
These are my beliefs based on my experience.
Does your referral incentive programme work or do you too think it is like mixing oil with water?
Thanks to creativeFlutter AKA MazerDesign for the image.