I took a nugget of wisdom from a friend of mine, Caroline Cummings. She gave an entire presentation that was basically titled “Learn from my mistakes.” It consisted of 10 mistakes she made in trying to start a business. It was one of the best presentations on starting a new business I’ve seen.
After running several marketing departments, I will admit, each time, I failed to put the resources into developing the referral engine that I should have.
The art of asking for a referral and recommendation as part of the strategy and skill set within a marketing department needs to be developed. Recognizing your best customers, your early adopters, your super-users, and your best referrers with both official and unofficial rewards is really important and should be part of your marketing budget. With any good/robust marketing department, time and energy should be spent to develop a plan to ask for, and then reward for, referrals and recommendations.
How do you do it? Well, like I said, I’ve never pulled it off successfully, so I don’t have a really solid answer there, but I’ll throw out some thoughts I’ve been chewing on as I’m part of launching this new venture.
1. Have a budget and man-hours set aside for it. I would say as much as 10% of your marketing budget could be spent on a referral program and the ROI could be tracked easily. That budget should include give-aways of your product, gift certificates, and deep discounts on future purchases to people who give referrals and recommendations.
2. Get organized. This is where the man hours come in. Dealing one-on-one with customers is time-consuming and you can trip over each other if you don’t have a game plan set. Figure out where you want your referrals and recommendations to come in to. Do you post testimonials on your website? Have people sing your praises on your Facebook page or in your Amazon store? Do you want the recommendations on LinkedIn? Diagram out how you are going to ask, what form you want the referrals and recommendations to come in, where you want them to be publicized, and how you’ll drive traffic to make sure they are seen. Whew, then go get a maple bacon donut and a large banana foster milkshake for lunch, ‘cause you’ll be calorie deficient.
3. Make it barrier free and advertised. Captain Obvious says: “Tell people about your program and make it easy for them to participate.” Also though, do what you can to advertise that rewards were given. Post on your Facebook page that a customer just received a discount for referring a friend, or talk about the bulk number of rewards you’ve given in a blog post. See the next point for helping to make your rewards more newsworthy.
4. Don’t have super strict rules. I think this is a really important one. Don’t set up a big ol’ grid that includes a bunch of if/then statements. We’re dealing with humans here, so expect and embrace a lot of gray area. If one customer refers a friend and they buy, great, send them a $10 gift card. If another customer refers a friend but also has a cool, colorful business in a market that has a newspaper where your cousin’s, husband’s, nephew works, write up a press release and try to get a story about her and her friend and how your product helped them. See what I mean? Get a little creative and always consider what would be a REALLY great reward back to your customer. Also, remember to build on getting even more benefit for your business. Blogging about them with a link back to their business (have it open an new window) is another great “thank you.”
5. Track it. This kind of program can bleed resources, mostly man hours if not kept in check. Make sure that your efforts are paying for themselves. Give it time to work, but after 6 – 9 months, plan on making adjustments.
I am now raising my right hand and saying “I do solemnly swear to take my own advice and launch a screaming referral and recommendation program with my new business.”