Referral Programs Mean Business
If there is one thing you can do to create more business without spending any cash upfront then it has to be a referral program.
Hopefully you already generate business from referrals and word-of-mouth recommendations. That's brilliant. But a formal plan to help cultivate both the quality and quantity of referrals you receive can pay huge dividends.
Before you get started - or even if you already have - it's worth considering the types of referrals you want to receive - PASSIVE referrals and/or ACTIVE referrals.
PASSIVE REFERRALS come about when A asks B if they 'know a good place to get x'. This kind of referral is in response to an enquiry.
ex. Joe asks Bob if he knows a good accountant. Bob recommends speaking to you.
Or, Bob likes the look of Joe's sandwich and asks him where he got it.
The best way to generate passive referrals is to deliver a quality product and service. Of course, you can make it all the more likely by providing Bob and Joe with simple tools that make passing along your message all the easier (business cards, flyers etc...).
ACTIVE REFERRALS are slightly different. In this case Joe actively seeks out Bob to tell him about the great sandwich he had or Bob sends Joe an email about the new website he found. You can make this happen organically by providing a phenomenal product or service - compelling Bob and Joe to talk about it.
You can also make it much more likely by providing them with both the tools AND an incentive to talk. Active tools would include things like tell-a-friend buttons on your website, gift certificates designed to be given away or free samples to pass along.
The incentive can be anything from the sense of 'being in the know' and standing in the community that Bob will have (think Digg and del.icio.us), to financial rewards like competitions and discounts on future orders. To encourage someone to actively refer, they must believe that the information they are passing on will be of value to the person they speak to - you can help create that by rewarding both the 'referrer' and 'referred'.
Of course, every business should look to cultivate both passive and active referrals but it all starts with providing a genuinely great product and service. Fake word-of-mouth - i.e. that generated solely through incentives - has a funny way of coming back to haunt you.
Hopefully you already generate business from referrals and word-of-mouth recommendations. That's brilliant. But a formal plan to help cultivate both the quality and quantity of referrals you receive can pay huge dividends.
Before you get started - or even if you already have - it's worth considering the types of referrals you want to receive - PASSIVE referrals and/or ACTIVE referrals.
PASSIVE REFERRALS come about when A asks B if they 'know a good place to get x'. This kind of referral is in response to an enquiry.
ex. Joe asks Bob if he knows a good accountant. Bob recommends speaking to you.
Or, Bob likes the look of Joe's sandwich and asks him where he got it.
The best way to generate passive referrals is to deliver a quality product and service. Of course, you can make it all the more likely by providing Bob and Joe with simple tools that make passing along your message all the easier (business cards, flyers etc...).
ACTIVE REFERRALS are slightly different. In this case Joe actively seeks out Bob to tell him about the great sandwich he had or Bob sends Joe an email about the new website he found. You can make this happen organically by providing a phenomenal product or service - compelling Bob and Joe to talk about it.
You can also make it much more likely by providing them with both the tools AND an incentive to talk. Active tools would include things like tell-a-friend buttons on your website, gift certificates designed to be given away or free samples to pass along.
The incentive can be anything from the sense of 'being in the know' and standing in the community that Bob will have (think Digg and del.icio.us), to financial rewards like competitions and discounts on future orders. To encourage someone to actively refer, they must believe that the information they are passing on will be of value to the person they speak to - you can help create that by rewarding both the 'referrer' and 'referred'.
Of course, every business should look to cultivate both passive and active referrals but it all starts with providing a genuinely great product and service. Fake word-of-mouth - i.e. that generated solely through incentives - has a funny way of coming back to haunt you.
posted by Mark at Really Practical Marketing at 10:49 AM
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