Any retailer worth his salt chlorine generator knows that current customers can create future business.
But all referral strategies are not created equal.
Establishing an effective, sustainable referral marketing program takes planning and legwork. Most experts agree it begins with a conversation — not a traditional sales pitch — and that the talk needs to happen with the right people in the right way at the right time.
Here, small business consultants and owners offer tips and guidance.
When to ask
Timing is everything, and no more so than in sales. Consider the following points when seeking referrals:
Use emotion. The best time to ask for a referral is when the customer is happy, says Terri Murphy, author, speaker and president of WomensWisdomNetwork.com, Memphis, Tenn.
“You want to reach them at the height of their emotional place,” she says.
That “honeymoon period” may last 30- to 60 days after purchase. Handwritten thank-you notes or personalized e-mails during the first month or two can help you remain on the client’s radar post-sale.
Follow up. No referral program, regardless of how creative, will succeed without consistent, regular follow-up. In terms of frequency, try contacting your customers monthly, says David Carleton, president of Street Smart Sales and Marketing in Poway, Calif.
At least a third of those communications, he adds, should mention referrals.“It can be something subtle, like a P.S. at the end of an e-mail,” he says. “Or you can communicate through a newsletter, or post a click-through for referrals on your Website. Bottom line is, you want to always be communicating with the customer, and subtly let them know you appreciate referrals.” For example, Carleton says, you could end an e-mail with something as simple as, “We love referrals” or “If you like what we’re doing, tell a friend. They’ll appreciate it and so will we.”
Just don’t overdo it. “As long as you’re not consistently bugging them,” Carleton says, “you should be fine. Think of yourself — would you find these contacts annoying?”
The philosophy behind follow-up, according to one retailer, should be to encourage customer participation.
Whom to ask
Casting a wide net may work for commercial fishermen, but it’s not advisable for retailers. Especially when going after referrals.
The key is learning to effectively divide your prospects, and then tailoring your pitch appropriately. Most retailers will focus on three distinct groups: customers, strategic partners and nonprofits.
Current customers. Look at your customer base and figure out who is already referring business. The likely motivation for these customers is the fact that they like what you do so much they want to refer you. Your job, then, is simply to stay top-of-mind and make it easy for them to do so.
“You must be in constant contact with these customers, building relationships with them,” Carleton says. “These are people who already know, like and trust you.”
Give those customers — the ones who’ve devoted themselves to you and your store — the majority of your attention. Be a conversationalist. Find out where they work. What about their families? Do they have hobbies?
This can be done in the course of your regular, one-on-one communications. It may be in person — when they come into the store for equipment or supplies — or over the phone.
“Anytime you have contact with the customer, show genuine interest in them as a person, not just a dollar sign,” Carleton says. It all comes down to learning more about who they are and what they do.
“Your more outgoing customers are obviously going to be better surrogates, and anyone who is socially driven,” says Dan Hyatt, president and founder of Northwest Hot Spring Spas Inc. in Burlington, Wash. “But we also need to get better details about what makes that client tick. We need to develop better personal relationships. The more personal the better.”
Strategic networks. While current customers certainly pay dividends, your suppliers, vendors or support services can be equally valuable referral sources.
In fact, pool and spa retailers may consider any number of potential alliances. Local trade association members, builders and service technicians make natural partners. But don’t stop there. Your list also could include HVAC companies, as well as decking and remodeling firms, landscapers, even homeowners’ associations — as long as it has a logical connection to your business.
“Other referral sources could be a fence company, a patio business — anyone with similar but noncompeting products,” Carleton says. “Think about everyone who has people in the pipeline.”
Affiliated companies also present great opportunities for cross-merchandising and promotion. Carleton suggests proposing co-mailings to market both businesses. Or you might consider inviting a partner to co-host workshops, or backyard education classes.
Nonprofits. Last but not least are charities, religious groups and other nonprofits. On the surface these organizations may not seem like logical partners. But look deeper.
“Start by becoming familiar with their mission and events,” says John Jantsch, a Kansas City, Mo., small-business coach and author of Duct Tape Marketing (Thomas Nelson, 2007). “Then offer to hold an event at your store, where a certain percentage of sales goes to support those agencies.”
If hosting isn’t your thing, there’s still room to collaborate, says David Frey, president, Marketing Best Practices Inc. in Friendswood, Texas. For example, say you’ve discovered a local church with a robust membership. Approach the church leadership with a potential fund-raising opportunity: For every referral they send, you will donate a portion of the sale back to the church. In exchange, the church agrees to promote your company.
This technique can be used with youth sports teams, high school booster clubs, even local Boy Scout troops — anyone with an eye toward raising money.
How to ask
Your audience is set. And you’ve developed a schedule that includes frequent contacts and timely follow-ups. There’s just one piece left: what to say.
While there’s no silver-bullet dialogue guaranteed to bag your prey, some approaches have proven more effective than others. Consider the following:
Make it comfortable. There’s nearly universal agreement that referrals are handled differently than traditional sales. You don’t want to come on too strong.
Begin by stating your precise intent, and use words that carry purpose. Enlist the client’s support or help in some way. “People enjoy being part of someone’s success,” says Bob Burg, Jupitor, Fla.-based speaker and co-author of The Go-Giver (Penguin USA, 2007).
Also, assure them it won’t take long. And use qualifiers such as “might” or “can we” so they know you won’t push too hard when the referrals come in.
Remember, they’re one of your friends now, so ease off on the throttle. An example from Burg reads: “I’m in the process of expanding my referral business and find it’s helpful to partner with my friends, such as you. Can we take a few minutes and run past the names of some people I might be able to help?”
Motivate. There’s really no cut-and-dried solution, no way of telling what might motivate a particular client to refer business. This is where creativity comes in.
At Springs Spas in Colorado Springs, Colo., owner Robert Stuart gave away eight free iPods to those customers who referred the most business in a 30-day period. He updated participants via e-mail to keep them apprised of the progress.
Meanwhile, Hyatt has created for his customers an “Owner’s Club,” in which members receive a sort of business card to distribute among friends and family. If the referral buys a hot tub, the member earns $100 of in-store credit.
Incentives can take on many forms, but note that money isn’t necessarily the answer. It can change the dynamic and undermine the nature of your relationship.
“Do I really want someone motivated by money to refer me?” Jantsch says. “No, you want someone who’s going to refer a friend or someone they trust.”
Instead, show your appreciation another way. Send flowers, or offer to trade services, if appropriate. Jantsch recalls a tax accounting firm that offered “a 100 percent refund on your tax return fee.” For every referral the company received, it knocked 25 percent off the client’s bill.
“It’s amazing what people will do to win a game or competition,” he says.