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Last Update: Friday October 20, 2017

Key Idea: Establish A Customer Referral Program

John Wargo suggests that you motivate current customers to lead you to new ones.

Key Question:

A: 

First, you have to  figure out who you customer is.  And, the starting point to achieve this  is to develop a database of customers. A customer's name, title, complete address, phone number adn email  in a computerized file is essential. You should keep records of who buys what and when. With this information you can better offer your customers what they need when they need it.

One of the most successful catalog retailers we know, Bob Orenstein, says that knowing your customer means you know much more than their name, address, phone number and email.  He says knowing means understanding them. In Bob's case, he is personally part of his customer base which makes it easier for him to get inside the minds of his customers. But you have to remember that you are only one person and you have to listen to others even if you are part of your audience.

Bob is a member of the Direct Marketing Association which is good place to learn about demographics and how to reach a specific target of people. Also see www.demographics.com, and www.fedstats.gov.

Second, John is suggesting that you can ask those current customers to refer you to their friends and family.  A referral program is fun but it takes discipline as does all marketing. 

Step one of a referral program is to ask your current customers to send you new customers.  We are convinced that many owners are afraid to do this because what if the current customer says that they aren't comfortable referring?   What has the owner just discovered?  That there is a problem with that particular customer relationship.  Oops.  The good news is the owner can work to solve that problem and the referral program has already paid off as it helped to convert a luke-warm customer to a hot customer.

Step two is contacting the referrals.

Step three is tracking the referrals.

Step four is rewarding the customer who made the referral.

We know a hairdresser who gives a 20% discount off a customer's next visit when that customer has brought in a new customer.  This is perfect.  Everybody wins and the happy process repeats itself.

Think about it

How much does a good customer spend with you in a year? Should you start a referral program?  What would it look like?  Who would run it?  How will you track it?  Could you reward customers uniquely or with a generic gift?    

Clip from: Boston Duck Tours: The Money is Out There

Boston: Meet Andy Wilson, founder of Boston Duck Tours. A Massachusetts Small Business Person of the Year, he turned three passions into a single business – his love of Boston, his respect for early American history, and the Charles River.

First, he wants us all to know the history of this country's early struggles for religious toleration, freedom, equality, liberty, and the pursuit of happiness. Learn how such passion moved him to quit his job and raise over $1M to launch this dream -- an 80-minute, historically-narrated tour from an authentic World War II amphibious landing craft.

Take the tour now as we wander the narrow streets of Boston and splash down onto the Charles River for the grande tour Boston.

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Boston Duck Tours

Cindy Brown, CEO (Andy Wilson, founder)

3 Copely Place
Suite 310
Boston, MA 02116
6172673825

Visit our web site: http://bostonducktours.com

Office: 6172673825

Business Classification:
Entertainment / education

Year Founded: 1994

Establish A Customer Referral Program

HATTIE:  Our marketing expert, John Wargo, tells us how to get more good customers just like the good customers we already have.

JOHN WARGO (Marketing Expert): Do a profile of your existing customers and your best customers and determine the demographics and the psychographics, if possible, to determine why and how they purchase. And then there are lists available in the marketplace that could match that profile. There are list brokers that are available that will help you find a list of people who look like your best customers. Then what you want to do is to take that list and mail to them because they're similar to the customers that are buying from you. That's one way. The second way that is really unique is, a creative way to get new customers is go to your existing customers and develop a referral program. Ask them if they have five people that they know who might enjoy the same services, the same products that they are. And then provide them an incentive and let them send those names in to you. And then you can send them a letter and say, `You've been referred by one of your friends as somebody that might be interested in this.' So the friend of a friend referral program is a very creative way to have your best customers help you find customers who act and behave like them. It really works.

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