As we were hanging out in my office chatting, I challenged this offer. Think about it: If people are willing to send 189 referrals for a trip nearly any of them could take on their own fairly easily, how many referrals would you get for a five-night, six-day trip for a family of four to Disney World?” I then asked him what would happen if he gave away two trips. Much of that is determined by the economics of your business, but start with how much you are willing to spend to get a new customer from cold traffic. If you’re willing to cheerfully give a marketing company $200 for a new customer, why wouldn’t you be willing to spend at least that amount on a referral? Referrals typically are better customers overall, and they also tend to refer other new business to you, increasing their own lifetime value. However, below is the inside baseball on our previous program, the marketing that went behind it and our cost estimates. Now, unlike my friend from earlier, our promo was not a contest; anyone who sent us a referral who became a customer got the trip. Once we added in the marketing and special surprises, we easily spent more per new customer than we typically do, but as I stated earlier, a referred customer is a better customer. As for promoting this program, this was a featured insert in our newsletter each month. Over the years, he and his team have found that referrals are the single best source of new business for them, outperforming all other customers generated from all other media.
I was sitting in my office, meeting with a friend of mine, and we were chatting about referrals. He had just killed it with a promo where he got 189 referrals over a three-month period. The promo was very simple: Give us a referral and get entered for a chance to win a trip. The trip was a three-day, two-night stay in beautiful McCall, Idaho. The total value of the trip was about $700.
Now, the trip itself was very nice and would have been fun to win, but it was also a trip that many living in the area would likely have taken before. That said, I was a bit surprised by the response — 189 referrals is huge.
As we were hanging out in my office chatting, I challenged this offer. I said, “What if you gave away a trip to Disney World next time and extended the contest to six months instead of three? Think about it: If people are willing to send 189 referrals for a trip nearly any of them could take on their own fairly easily, how many referrals would you get for a five-night, six-day trip for a family of four to Disney World?” I then asked him what would happen if he gave away two trips. One trip could be won instantly for referring 10 households, and the other would be a raffle.
I know a family that doesn’t live too far from his practice that has saved for over three years to take their dream Disney World trip. Is it possible that this family would have moved mountains to get 10 referrals? Unfortunately, I find that most business owners and marketers are far too cheap when it comes to what they’re willing to give up to get more referrals. We all feel that referrals should simply happen, but just like other marketing, you must make an investment if you really want to be successful.
Building a referral campaign
Coming up with a referral strategy can be challenging. How much do you spend? What do you offer? Is it a gift for all referrals or is it a raffle? Much of that is determined by the economics of your business, but start with how much you are…
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