I get this question a lot. Since there is no real direct answer, here are five main segments of an incentive program you need to consider before developing one that will work for your business.
- What are you giving away? In order for you to effectively drive referrals from current customers, you would need to determine first what you would be offering as an incentive. It may end up being something other than your product or services. A gas card, for example is a universal incentive that anyone can use. A VISA gift card is the same idea. Also, a gift certificate to a chain restaurant would be nice, since most people would be able to use it. You can change it up, too.
- How much are you willing to spend? Is your budget a one-time spend, or a percentage of all new business from the program? This is important because you don’t want this to become a marketing money pit.
- When will this incentive run? If this is a permanent part of your marketing, then budget some marketing dollars for it year round. If this incentive expires, make it clear to your customers it a limited time only offer. You could use this during your slower times of the year to boost a flat quarter, or to turn your busy season into a record breaker.
- How will this work? The thing that hangs up most people with an incentive program is the mechanics of the program. Not only how to tell people about it, but what it looks like. Meaning, will you require someone to notify you they have referred someone, or that they were referred by a current customer? Also, you will need to incorporate (if you don’t already) a new portion of your conversation with new clients as to why they chose your company. You can do that in person, or ask them when they make the appointment. Talk it through with your staff to get their input on what will work for them.
- Who gets the incentive? Will everyone be getting rewarded or will you do a monthly drawing from everyone who referred a new customer? Will you include new customers in the drawing? Announcing the winners in your newsletter will help drive attention to the referral program. It should go on your website and social media as well. You could even create a Hall of Fame in your office
So there is a lot to consider, and every business is different. Of course you can just ask your customers to refer their friends anyway and not offer an incentive.
One of our other clients (personal trainer) offers $100 to their customers for every new monthly paying customer they refer. He has given away quite a bit of money, but his program is gaining traction and more referrals are coming in. He takes a photo with the people receiving the $100 and sends out an email the same day to his entire customer base. Another client (jewelry store) offers $50 gift certificate when someone refers a sale of a wedding band or engagement ring. This particular incentive is only good during certain times, not year round.
Take the time to consider all these ideas to design an incentive program that will be effective, and easy to manage, and that will motivate your loyal fans to drive more business to your door.