If we go to the Internet seeking a product, as most of us do these days, we’re likely to find way too many choices. How do you get potential customers to pick your product or service out of a river – sometimes an ocean – of options? One way people choose is by reading reviews, which is why it’s important to keep an eye on yours and respond promptly to any that are negative. (See What Can You Do About Negative Reviews, here.)
However, we also ask our friends. In fact, studies have shown that as many as 83% of Americans are more interested in purchasing a product or service when they’ve received a verbal recommendation from a friend or family member. You can help people remember you by providing great service, but you can add to your edge by rewarding your customers for their referrals. Here are some ideas to get a reward and referral program started.
What’s It All About?
Reward and referral programs are a pretty simple idea. When customers send business your way, you reward them, usually with a discount, free services, or free products. The current customer doing the referring gets a small gift, and you get a new customer! It can be a great way to encourage people to do something many of us like to do anyway. We usually get good feelings from being helpful, and receiving a small additional reward from you, the business, only adds to those good feelings.
What Do You Sell?
Before you begin a rewards program, there are a few things to consider. First, what kind of program or service do you sell? If you offer products that last a long time, or that people buy infrequently – say, porch swings – discounts on future purchases won’t provide much incentive. A cash reward program might work better. Cash-back programs are immediate and easy to understand, in that they provide a specific dollar amount. That often means more to customers than a future discount, that will vary depending on their next purchase. They’ll often cost you less,too. (There’s a lot of evidence that people prefer cash-in-hand over potential future discounts, even if the discount might be larger.) In that case, a referring customer gets a check or PayPal deposit when their referral results in a purchase.
Maybe you offer a product that people buy more often (e.g., clothing or food), a frequently-used service, or a service that can be costly, such as car repair. In this case a discount on a future purchase – one they know they’ll eventually make – can be more meaningful.
How Do You Set It Up?
You can use various means to track customer referrals and deliver gifts – emails, texts, messages to potential customers sent from your website, even physical cards. Just remember that you’ll need a means of tracking three kinds of information:
- the fact that a referral was made;
- whether the referred customer makes a purchase; and
- whether the resulting gift was sent to the referring customer.
Depending on the sort of rewards you’re offering, you may need to collect phone numbers, emails, addresses, or other data. Remember that some names are very common, and won’t be enough, on their own, to track particular customers. It’s usually a good idea to maintain some sort of customer database for sending out information on sales and new or recurring services. You can add pertinent information about referrals to it, however you choose to collect it. Whatever form of rewards and referrals program you create, start small. Make sure that you can afford the incentives you offer, and base any incentives on actual sales resulting from referrals, not just referrals alone. But once you start rewarding your customers for sending others your way, you’re likely to find your overall sales on the increase!
