Business Referrals

Referral cards provide ammunition to your active promoters

You know those little cards that muddle up your wallet? The loyalty cards that rest in piles on the counter or coffee or sandwich shops.

At one time I probably had 10 different cards, each of them with a single over-inked stamp or moon-shaped punch hole. “Here you go, you’re only 14 stamps away from a free small coffee!”

Ernstos4110The next time I ever saw them was when I would survey the damage after leaving my wallet in my jeans on laundry day. In retrospect, they weren’t really that effective - at least in bringing me back to buy more.

Because let’s be honest - loyalty programs are created to, well, promote loyalty. Repeat customers. More revenue. But for many companies the punch card never finds its way back.

“But that’s not true, I use my Palmers partner card every week!” you say. Yes, so do I. But that's because they put a lot of meat on their club sandwich and the lady behind the counter has a nice smile - not because of the little yellow card slowly disintegrating next to my driver’s license.

My point? In order for a loyalty program to be effective it needs to have value. Enough value that it will inspire a customer to shop with you over a competitor.

Loyalty programs come in all kinds of shapes and sizes. Punch cards, plastic cards, cards you can attach to your keychain, cards on your smartphone, and so on. They are intended to reward the customer for repeat business. More advanced programs are also designed to track purchases and tailor marketing efforts.

Referral card

But there is one type of card I have yet to mention. The referral card. Whereas the focus of loyalty programs is on promoting repeat business; referral cards leverage existing customers to bring new blood in the door.

I am sure you have seen businesses hand out cards that promote an incentive-based referral program. On the card is nothing more than “refer a friend, get 10 bucks” or something of that nature. That is not a referral card.

What I am talking about is something that a business provides their customers that they can give to their friends and family that has exclusive value to the recipient.

For example, two golf lessons at a country club valid only for Bob’s friends and family. In order for the card to have value it must be an exclusive offer that is not promoted elsewhere. The only way for a new client to get this specific deal is via an existing client.

This way your client will feel they are giving something of actual value to their friend when they are referring you. If it is a coupon that you can find in the Sunday paper its value vanishes (and is embarrassing to give away).

You may also consider pairing the exclusive offer with an incentive for your client. For example, a card that will reward both the existing client and the new guy. This way way your clients will have more of a reason to hand them out, and the prospects will feel more obligated to use them.

Referralcard1By empowering your loyal customers to bring in their friends and family you are also facilitating conversation that strengthens your brand. Referral cards will get people giving the gift of your business - as long as you make it worth their while to do so.

Remember - make it exclusive, limited, and valuable.

We still laugh (and buy) for the same reasons

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Technology is changing culture - and culture is changing the way businesses are marketing their business. The internet, cell phones, and social media have completely transformed the way people are communicating today. As a result companies are also adapting by reaching their audiences in creative ways - through the new mediums.

BubbleboyConsider what would happen if a cell phone or the Internet was introduced into the 90’s sitcom Seinfeld. George Costanza would have never gotten lost on the way to the cabin to meet the Bubble Boy if he had MapQuest or in-car navigation.

Larry David would have simply found a new way to introduce the unlikely encounter. In both cases we would have laughed for the same underlying (albeit awkward) reasons.

Similarly, marketers are conforming to changes in culture in how they reach their audiences while not altering the core message or strategy. People still buy (or laugh) for the same reasons. It is only the delivery of the message that has changed.

Take for example Oreo’s Super Bowl tweet. Witty, creative, and timely. They captured the attention of millions of tweeters and lots of press to boot. And I am sure their sales benefited as a result - after all 3 out of 4 grocery purchase decisions are made in store. Creating a buzz that improves brand recognition is perfect for cookies. But what about more serious purchase decisions, like those in service-related industries?

With financial services for instance, 87 percent of buyers turn to friends or colleagues first for recommendations, while only about 1 out of every 10 shoppers start with independent research. The same holds true for most insurance, health care, veterinarians, salons, etc.

Due to change in culture, many referrals have shifted from direct personal contact to interactions over Facebook, Twitter, email, and even online reviews. Yet the underlying reasons why people choose one company over another remain. Personal recommendations are still king.

Therefore, it is important that companies that rely on trust pay close attention to how their customers are communicating with their friends and family. There are certainly ways to directly influence the propensity of loyal customers to actively give positive referrals.

My advice is to pay attention to how your customer base is making their purchase decisions and not simply conform to what’s popular in the marketing world. Yes, technology will certainly influence how you reach your customers, and how they communicate, but the core message should target the specific reasons they buy.

The truth about Facebook ads

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Like most entrepreneurs I am constantly looking for ways to reach new audiences. And, when growing our brand, my strategy needs to be very targeted and rather creative. Therefore, I try new approaches and measure the results. Recently I experimented with Facebook advertising. After all, everybody is doing it, right? Americans spend more time on social media than any other internet activity. So, how could it possibly go wrong?

Here’s how…

Screenshot 2014-07-13 23.55.07

Facebook allows businesses to pay to promote their page (obtain Likes) and boost their posts to expand their reach to new audiences. With 665 million active daily users it is an ocean of opportunity. But there is one very big problem - it is increasingly difficult to reach relevant audiences.

In return I got a $400 invoice, about 30 page Likes and 200 Likes of a sponsored post. At first I was smiling. But that didn’t last long. After scanning the people that “liked” my content I noticed that their demographics were nowhere near what I wanted. I targeted insurance agents and got forklift operators, nannies, and even a gumologist.

Naturally I was confused. I mean, what does Bubble Yum have to do with insurance? Why was I paying for random people to like my content? I did some research and discovered that this is a very widespread problem for Facebook.

Fake accounts

According to Facebook’s latest annual statement, they estimate up to 140 million fake accounts using their service. They break these accounts into three categories: duplicate accounts, misclassified accounts and "undesirable" accounts.

Yet there are two very relevant categories they fail to mention: bots and click farms.

In a nutshell, a Facebook bot is an automated software program that is designed to create and control a fake account. They mimic real people on Facebook to harvest private data from users, and expose them to other security risks.

A click farm, on the other hand, is a business that pays employees to click on website elements to artificially boost the status of a client's website or a product.

But I didn’t hire a click farm and I sure didn’t accept any friend requests from people I don’t know. So, why would they be clicking on my posts?

In response to the growing number of fake profiles Facebook has written an algorithm to weed them out. They are able to distinguish bogus activity from authentic engagement - at least to a point. To beat the algorithms, the fraudulent websites try cover their tracks by clicking the Like buttons on many honest pages as well. And because they have liked everything under the sun prior to me running my ad, they fall into my chosen demographic.

As a result I paid for fake Likes. They don’t really like me, after all. What’s worse is that my organic reach is significantly diluted as the content is spread across interested readers, and the fake profiles.

Ride the current

Which brings me to referral marketing. Perhaps a stretch, but this is just another example of how money could be much better spent to reach new audiences.

Recent studies show that people trust recommendations from close relations 7 times more than typical advertising or independent search. Even if your Facebook ads reach real people, they still don’t have the value of a referral. You need to win their trust first. With referrals, the trust transfers from existing clients. Moreover, your existing clients know your target market much better than Facebook does.

The catch - you must have loyal customers. But if you are a company that excels at making them happy there is significant opportunity.

Raise the blinds on your referral strategy

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Have you ever been in an argument with someone and, having summed up your concise and beautifully articulated point, only get the response “...yea, but it goes both ways you know”? Well, I have. Several times. And, as elementary as the rebuttal is, it surprisingly holds weight quite often. When it comes to referrals, the same holds true. So many companies become frustrated with the lack of referrals they receive - even after providing such stellar service. But as close-lipped as customers are about giving referrals, the companies are lackadaisical when discussing their importance.

AceSleeveIt seems that companies are not only uncomfortable asking for referrals but they feel awkward when discussing them all together with their clients. There is a big difference between directly asking a customer for their personal rolodex and telling them you want to help their friends and family.

Shot in the dark

I recently spoke with a client that shed some light as to why some companies balk at discussing referrals with their customers. It turns out that many of the employees either think some of their customers are unhappy with them, or just don’t know where they stand in regard to loyalty. This uncertainty fosters the anxiety of encountering a potentially awkward situation.

The solution is really quite simple. Find out what your customers think about you in regard to loyalty. Sending emails asking their likelihood to recommend and for testimonials will raise the blinds on your referral strategy. Here’s why:

  • You are introducing the concept of referrals to your customers. This is metaphorically warming the butter (I explain below).

  • You know who will respond positively when you bring up referrals. The ace up your sleeve. Seek out the promoters and those that give you raving testimonials. They are the ones that only need a little nudge to refer you.

  • Positive comments and testimonials boost office morale and confidence. Making your employees feel comfortable about discussing referrals with clients begins here. Enlighten them as to how much they are loved and they will enthusiastically bring up referrals more.

Begin by warming your customers and making them understand how much you value referrals. Next, empower your employees to feel comfortable about discussing referrals and sharpen their confidence. The end result is a referral strategy that is like a hot knife cutting through warm butter (excuse the metaphor).

What to say

Finally, I have written before about how directly asking for names is not an effective referral strategy. So, just how do you bring them up with clients? By making them feel like you want to take extra special care of their friends and family. Remember, it is about them. Below I have included some effective ways of communicating with your clients about referrals.

  • “Taking wonderful care of you, your family, and your friends is what we love to do, and helping you (insert service here) is what our office is all about.”

  • “We would like to help even more people in the community (insert service here) and the best way to do this is to get the word out. Please do not hesitate to share your experience with your loved ones. We love to help!”

  • “I truly enjoy sharing my experience and helping others. Therefore I want to extend my hand to your friends and family. If they ever have questions or need advice they can call me directly. I will be sure to take extra care.”

Consider referral marketing

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Before there were billboards, or neon signs, or quirky insurance commercials disrupting our TV shows, there was only word-of-mouth. Businesses thrived or collapsed base on their reputation. People relied on their family and neighbors to separate the trustworthy from the snake oil salesmen. But anymore, marketing has evolved into an overly complicated science propagated by new sources of media. Have companies forgotten the value of referrals?

SnakeoilThis may be the digital age, but humans still rely heavily on fellow humans for advice on how to spend their money. In fact, recent studies show that people trust recommendations from close relations seven times more than typical, traditional advertising. Yes, most trust their close friend over a lizard on where to shop for auto insurance. Interesting as this is, not much research has been conducted on referral marketing over the last century. The prevailing belief remains that referrals are important to increasing business - especially in those industries that offer services and ongoing relationships with clients. But the idea of fitting referrals into sphere of marketing seems to be uncharted territory.

Unfortunately, many people think that referrals are things that just happen. The problem with this belief is the error of doing nothing to obtain more. This results in missed opportunities. Referral marketing begins with the understanding that there are proactive approaches to capturing more referrals - by implementing a consistent and targeted plan.

Although referral marketing is still in its infancy, companies are beginning to take notice of its viability of realizing new business. There are two conflicting theories currently battling in the market: Those that believe in the tit-for-tat mentality, and those that are relationship driven.

Tit-for-tat

You-scratch-my-back-and-I'll-scratch-yours. Those businesses offering incentive-based referral programs that offer cash and prizes for recommending a friend. The idea here is founded on a business transaction opposed to a relationship. That if a business provides great service, an incentive will nudge their promoters just enough to get them to recommend their friends and family. The problem, however, is such incentives make the customer feel like a source of income for the business. Introducing money into the equation cheapens the relationship and shifts the customer away from social norms.

Relationship driven

This idea promotes establishing authentic relationships with clients. These companies believe relationships are key to successful branding and generating referral business. They understand that when a client refers them they are further investing themselves in the brand. Therefore, the company will find ways to build a sense of community with their clients. By bringing someone new in they are becoming part of the family and the incentive is based solely on the service they will receive. This is accomplished by establishing the referral mindset early on with clients and shying away from the monetary side of things. Creating a network of referrals is like building a community. Make people feel as if they are part of the team - that they are going to bat for you - and you for them.

Remember that referrals are not a knee-jerk reaction to great service and products. Leveraging loyal customers takes a proactive approach of incorporating referrals into the overall marketing strategy.

Loyalty! The new Customer Satisfaction

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

In business we are told that customer satisfaction is paramount to the success of a company. The customer is always right (within reason) and if they leave with a smile you have done your job. They will surely come back, and bring their friends with them, right? Sadly that is not the case - in fact, although customer satisfaction is important, it does not guarantee more sales. The truth is happy customers are merely precursors to what is really important - customer loyalty.

So what is customer loyalty, anyway? Harvard Business School defines it as customer behaviors, rather than attitudes. Collectively, it is interpreted as the three Rs: retention, repeat business, and referrals. In layman's terms– loyal customers make your company more money.

CustomerLoyaltySo what’s wrong with customer satisfaction?

Known loyalty expert Fred Reichheld reported in a Harvard Business Review article that between 65% and 85% of customers who defect said they were “satisfied or very satisfied” with their former supplier.

Don’t get me wrong: customer satisfaction is important. But it alone does not yield dollars. I like to think of it as a prerequisite to customer loyalty. Like your Philosophy 101 class in college. Whereas by achieving customer loyalty you have progressed through the 300 level courses and are well on your way to becoming the next Descartes.

I think, therefore I am

Unfortunately, in business, you cannot simply will your loyal customers into existence. In regard to referrals, studies show that the vast majority of “satisfied” customers reported a willingness to recommend services to others. But guess what? Most don’t. The responsibility lays on the company to make sure their customers refer them.

It starts by making your customers smile. Next is the proactive approach of converting those beaming comrades into devoted advocates.

Ask for testimonials

We all know that testimonials serve as written validations and promote social proof for a company. “Come on, everyone’s doing it!” But those testimonials you have scrolling on your website actually have quite the impact on the author as well. First, people like to stay consistent with what they have said. And by writing a testimonial for the world to see, they have formally stood behind your company. This promotes customer retention. It would seem pretty silly for someone to leave a great company based on a nominal price increase. Pretty shallow, wouldn’t you say?

Testimonials also serve as a rehearsal for verbal referrals. Get them used to talking good about your company - it doesn’t matter who sees it. Chances are they will recall their charming words during a fitting conversation.

Here’s how. Email your customers and ask that they provide you with a testimonial. Yes, it’s that easy. Increase response rates with a witty subject line. I’ve seen a 40% response rate with “John, we have 2 questions for you”. Timing is also important. Follow a positive experience, interaction, or ask new customers for best results.

Do something extra

Providing satisfactory service may yield customer satisfaction. Going beyond expectations will likely yield customer loyalty. Apple Inc. does this consistently by innovating products that wow their customers. A computer is supposed to compute. I can check email on a vintage PC in a small town library (you know, the ones with the old flip-down monitor protectors). I can leave feeling satisfied, but I am not going to rave about it to my friends. But when my MacBook allows me to sign a PDF document using my webcam? Now that’s cool.

It doesn’t matter if you offer designer jeans or insurance policies. Exceed expectations to the point that people can’t shut up about you. This requires doing the unexpected by offering surprises and service outside the scope of your product. It doesn’t take a big change. It could be as simple as writing a handwritten note saying thank you. The good news is that even the unexpected can be automated. At Rocket Referrals we developed realistic handwriting tech for this purpose. The point is, if they don’t see it coming it will have a memorable impact - such an effect that they tell others about it.

Develop relationships

Business with the customer extends past the transaction. Exchanging currency for products or services alone establishes a superficial relationship based on, well, money. Companies that stop here are easily forgotten. Create an ongoing relationship with the customer. By serving as a loyal provider to the customer you can expect the same in return.

This is accomplished by doing what you can to avoid offering monetary offers outside the initial sale. Enticing customers with coupons and incentives for referrals, for example, will make your customers feel like you are buying their love. Communicate with them as people, not dollar signs. Ask how you can help them - or their friends and family? Continue the relationship with followup communication. Touch them periodically and ask how you can help - not how you can profit from them.

Again, the goal is to establish ongoing relationships with your customers. They will reward you by sticking around and going to bat for you in the form of referrals.

Most turn to friends before Google for advice

When strategizing about how to acquire new customers businesses should pay close attention to the purchasing behavior of their target market. Where are they lurking? What influences their buying decisions?

As a business it is easy to assume that prospects opt for Google to guide their research. However, in service-related industries - those that operate on trust and relationships - prospects depend on positive recommendations to find their candidates.

In fact, according to a 2014 report by the Hinge Research Institute, 87 percent of buyers turn to friends or colleagues first for recommendations when shopping for financial services, while only about 1 out of every 10 shoppers start their research online. This may be the digital age, but humans still rely heavily on fellow humans for advice on how to spend their coin.

Although search engine optimization (SEO), inbound marketing, and AdWords are important to online and local retailers - service related businesses may be better off leveraging their existing loyal customers for growth.

LemonpicAlthough referrals are important they do not guarantee prospects will sign on the dotted line. The Hinge Research Institute also noted that 81 percent of referred buyers end up judging a business by researching its website. If the website is a lemon the referral dies on the vine.

Therefore a professional website goes a long way to closing the deal. Compare it to the days of old when companies were judged on the appearance of their storefront, cleanliness of their office, and credentials hanging on the walls. Sure, those are still important but today people nearly always begin their assessment online.

Having processes in place aimed directly at increasing referrals will get the ball rolling for service companies - buyers simply turn to friends and family first. But a professional and informational website is vital in converting those referrals into sales.

Referral marketing versus marketing automation

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

While exiting the Des Moines downtown YMCA last week, I caught glimpse of a lady searching through a phone book. I was flooded with nostalgia and left thinking of my childhood - the last time I remember using one of those (to look up a number anyway). It also left me considering the ways businesses are discovered by new customers. There are those that are searching for you, and those that are referred to you by others. In both cases businesses should consider ways in which they can improve their ability to be found (marketing automation) - and ways of encouraging referrals (referral marketing).

Marketing automation

Marketing automation platforms seek to streamline sales by replacing high-touch, repetitive manual processes with automated solutions. They accomplish this by taking advantage of the internet to reach new customers - or more specifically allow them to be discovered by qualified leads. In terms of the phone book, think of it as finding ways to be first in line for those people thumbing through the pages - only doing so on the internet.

 

But again, the days of Yellow Pages are limited so marketing automation uses search engine optimization (SEO), inbound marketing, drip marketing, and tracking/analytics to drive customers to your website and improve conversion rates. Google has some complicated algorithms which decide which website to be listed when someone searches for “car insurance” for example. Companies such as HubSpot, Marketo, Eloqua, and others specialize in ways of driving those prospects to your door and using email marketing to convert them into sales.

Referral marketing

Marketing automation is important to capture those prospects that are searching for you online. But what about those prospects that rely on recommendation from friends for services or are not yet searching for you? That is where referral marketing fits in.

PhonebookA referral is the bridge that connects a company to a new client by means of an existing customer. Because of this direct link between the company, customer, and prospect, trust transfers. Therefore the barriers that exist with a typical prospect and the company are broken down by way of the active promoter. As the trust transfers, the resistance is diminished, and sales are much easier to obtain.

Science in the field of social network theory describes the pre-existing connection between current customers (A), companies (B), and prospects (C) as triadic closure. According to sociologist Georg Simmel “if a strong tie exists between A-B and A-C, there is a weak or strong tie between B-C”. In other words, a link between a company and prospects already exists via current customers. Referral marketing aims at exploiting the relationship between your customers and prospects - as it yields a much higher conversion rate and research shows it brings better fitting and higher profitable customers.

Referral marketing is rapidly evolving online with some companies offering incentive based programs. I recommend choosing a referral strategy that is not based on monetary incentives (as I outline here). After all, people refer friends and family for many reasons (reciprocity, social status, obligation, homophily, exclusivity, etc.) but generally not for personal gain.

Again, both marketing automation and referral marketing are important strategies for businesses to effectively compete in today’s market. Optimizing your ability to be found and leveraging your current customer base are separate, but important components to any marketing plan.

 

Asking for referrals doesn't work

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Needless to say I discuss the topic of referrals on a daily basis. I meet with individuals working in service industries mainly- those where close relationships with clients is common and referrals are important to growing their business. And just as I sink into the adjacent chair and initiate conversation I am met with this: “You’re right, I need to be better about asking for them.” At first I wanted to stop the agents, lawyers, advisors, realtors, doctors, (you name it) in their tracks and shout “you don’t need to ask!” But anymore I don’t even wince at this widely held misconception. I simply lean back in my chair and explain that, not only is there no need to ask for referrals - but doing so is remarkably ineffective, and there is research to back it up.

Screen Shot 2014-04-11 at 3.25.06 PMWithout doubt this will turn the notion of referrals upside down for many people. But, the most effective referral strategies are proven to include tactics that do not include asking for referrals. A study by Advisor Impact, which focused on customer loyalty and referrals, surveyed over 1,000 clients and asked the reasons why they referred a service to others. An overwhelming 98% cited reasons that included helping their friends and family. Only 2% of the cases did clients say they referred because the business asked them for a name of a friend. This research proved that by not first identifying customers likely to refer, businesses were asking the wrong people to give a referral. Also, by asking for names, they were not effectively leveraging the reasons why people refer, and thus yielding scanty results.

Avoiding asking for referrals doesn’t mean you should let your referral strategy take care of itself. Doing nothing at all just as ineffective. Unfortunately, customer satisfaction alone doesn’t translate into referrals - it is merely a prerequisite. So, asking for referrals is a no-no, and sitting back relying on happy customers to speak up also doesn’t work. Here’s what you can do to increase referrals, and it doesn’t involve uncomfortably asking your clients for names.

Identify your most loyal & disgruntled clients

By finding your most loyal and engaged customers you are able to refine your communication - making your content more effective, personalized, and cost efficient. Also, by identifying your disgruntled clients will also not only increase customer retention, but converting frowns into smiles is a prime opportunity to capture referrals. For more info on how to gauge customer loyalty see the Net Promoter Score system.

Convey the importance of referrals

Let your clients know that you value referrals. Tell them that you would love to help their friends and family. This is accomplished by developing the referral mindset which I discuss in an earlier post. By doing so you will teach your clients that referring you is not only welcomed, but appreciated.

Coach your referral sources

Provide your most loyal customers with content that will encourage more referrals. In other words, enable your referral sources so that when they are motivated to refer you they know what to say, and to whom. Educate them on who your most ideal customers are. Inform them on the wide breadth of services you offer. Describe the triggers (life events) to look for that indicate a good person to refer. Make it easy to pass on your contact information. Tell stories that so that you are more easily introduced into conversation.

Touch your customers

I’m not asking that you invade their personal space here, just to make use of important touchpoints. Send loyalty cards, birthday cards, anniversary cards, National Pigs-In-A-Blanket Day cards (yes it’s real, and this month!). The goal is to keep you top-of-mind. The more personalized and special the better. I recommend sending handwritten cards. It is also a good idea to have an informative newsletter. Let your customers know that you are here for them and appreciate their loyalty! They will think more of you, and of you more often.

Now, I am glad we cleared up the subject of asking for referrals. Makes me feel warm and fuzzy knowing that perhaps less people will ask for names and start obtaining the referrals they deserve!

Improve content for better touch points

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People develop their perceptions of businesses based on the overall quality of touchpoints they encounter. As impressions can be both positive and negative - it is the responsibility of a business to consider how their intended message is perceived. After all, not all contact with prospects and clients is constructive. Continually finding ways to put yourself in front of your customers so that you are fresh in their mind is a good thing. But keep in mind this will only strengthen your relationship (and lead to referrals) if the message is well thought out and its delivery fitting.

Some businesses spend more energy on finding ways to reach their audience than the message they are conveying. The result is often communication that is ill-received and does more harm than good. To better illustrate this I have attached a letter a friend of mine received after purchasing a new vehicle. It is clear with the example what the salesman was trying to achieve and where he fell (considerably) short.

In an attempt to reach out to the new customer and potentially reel in some referral business the salesman chose to send a generic thank you message. The first mistake is that it does not reference anything personal but the name of the buyer pulled from a list. The actual content of the letter is confusing and is an obvious attempt at gaining more referrals.

The problem? This is obviously an email template printout sent to a list of people. Keep in mind this letter was received in the mail - not electronically. I don’t believe you can click on links printed on an 8.5 x 11 sheet of paper.

The salesman was thinking touchpoint and follow up. But the recipient was thinking mailmerge and cheap. You see this type of thing often. Newsletters with plastered with advertisements and flimsy content. Noisy pop ups on popular websites. The list goes on.

The alternative is to pay more attention to the content you are sending to your prospects and clients. At Rocket Referrals we believe in sending straightforward handwritten notes for example. People appreciate simplicity with communication. Keep it personal and classy, they will notice. Over time the positive touchpoints will serve as the foundation for your brand and sales will follow.

Inspire referrals with the rule of the few

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Extensive investigation into human psychology continues to shape the marketing strategies that we are faced with daily. Sure, technology and changing trends in social relationships change the ways in which the messages are spread - yet the same underlying elements in psychology have been used for decades. First published in 1984, Robert Cialdini outlined in his book Influence: The Psychology of Persuasion six principles of influence that are just as effective today. They have, however, been primarily used in traditional marketing tactics that have gradually lost their potency over time. Therefore, I continually think of ways Dr. Cialdini’s principles of influence could be incorporated into referral marketing - in attempt to spice things up a little bit. After all, recent studies show that today people trust recommendations from friends and family seven times more than traditional advertising.

GoldenticketScarcity

Today I am going to expand on Dr. Cialdini’s sixth principle of influence: scarcity. The idea behind this is that something is deemed more attractive when its availability is limited or when we stand to lose the opportunity to acquire it on favorable terms. In traditional marketing we see it daily with items offered in limited quantities or special offers that soon expire. Let’s not kid ourselves, it works. Not all the time, but the thought of losing an exclusive offer leads us to pull the emotional trigger more than you may realize.

As a business you can incorporate “the rule of the few” into your referral strategy with the help of your best clients. It starts by providing a unique offer that your current clients can give away to their friends and family. But here is the trick: it has to have exclusive value, and it must be for a limited time.

Exclusive value and limited time

For the offer to have value for your client to give away it must be exclusive to only one of their friends or family members. You want your client to feel like they are giving something special away - offering it out to all their buddies will belittle their social contribution. The offer must also have some actual value - such as a discount or extended service that they will not find elsewhere. If they can find the same coupon on your website it is not exclusive. Also, an offer for a free quote for a friend or family member is NOT a special offer. If you’re too frugal with the offer it will not be given away, let alone be redeemed by the referred individual. Finally, in honor of the principle of scarcity, the offer should have an expiration date. This will encourage the referred individual to take action.

 

Make it easy for your clients to refer you

MakeiteasyCarl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

The best type of referral is that which finds its way to your doorstep after being screened and prepped by an existing customer. Isn’t it every businesses’ dream to have their phones constantly ringing with prospects verbally nodding yes? If the phone isn’t ringing off the hook the problem may not be that you’re not getting referred - but that the referrals have become lost in transmission. Therefore, as a business, the responsibility ultimately rests on you to make it as easy as possible for your referred customers to contact you.

Referrals emerge from conversation between friends and family. They happen at birthday parties, in parks, coffee shops, ... well, anywhere people talk (perhaps not so much in libraries). After a recommendation for a product or service is made there is a period of time before the prospect will contact the business. After all, people decide to perform business on their own time. This is where many referrals die. There are a couple easy things that you can do to prevent missed opportunities.

Collect email addresses

Regardless of what you sell, you should treat your customers as if they are yours for the long haul. Like any continued service, communication is paramount. But for some reason even today most businesses are not proactive in collecting email addresses. It is the best way to reach your customers for ongoing communication, conduct brief surveys, collect testimonials, and so on. It will give you a direct link to your customers and allow you to perform this next step that simplifies the referral process.

Send an informative introductory email

Immediately after you make a sale or acquire a new customer, send them an introductory email. The content should have the following elements:

  • Briefly thank them for their business and let them know you appreciate them

  • List some of the main services and products you offer

  • Provide a link to your website with additional information regarding your business

  • Include a phone number and email address and encourage them to call

  • Encourage them to forward the email to others that are interested in learning more

  • Recommend that they don’t delete the email so they can reference it later

  • Make sure that the email is from you - so that if replied to you will be able to respond

Having this content residing in customer’s inbox will make it easy for your customers to pick up their smartphone and forward to those they refer to you. It provides all the basics on your products and services, links for those that like to dig deeper, and contact information to find you. What’s more, after it is forwarded it will be conveniently sitting in the prospect’s inbox as a reminder the next day when they are in purchasing mode. So, quit playing broken telephone with your prospects and start capturing some more referral business!

How to use Facebook to get more referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

Social media has become a generic topic. Everywhere you turn there are bits of information stressing the significance of these dynamic platforms to reach audiences and grow your business. OK, so having just written that last sentence I realize that this post also conveys that message, but I promise it isn’t generic. So let’s take a different look at social media, namely Facebook, and explore how it can be used get you more referrals for your business.

Referrals_buttonI am not the expert on all things social media. Hashtags are relatively new for me too (yet I feel compelled to use them). But, I am knowledgeable on #referrals and I understand what type of content resonates with people. According to a study published last December, 71% of adults are using Facebook. People are spending time there, too. And because so many eyes are glued to the website, businesses are fervently combating for the coveted spot on the News Feed. But there is a problem. So many businesses are so fixed on being in the spotlight that they forget to consider how well the actual message will be received by their audience. There is an opportunity for businesses to leverage the obvious connections between their vocal ambassadors and their friends and they #fail to capture it.

People #dislike being sold to

Let’s take a step back and think about why people are on Facebook in the first place. A study by the Pew Research Center published this month lists the top reasons users log onto Facebook. A couple of these include receiving updates and comments and sharing experiences with friends and family. Getting advertised to didn’t make the list. An obvious observation, yet so many companies continue to flood the News Feed with unwanted (and ignored) content. OK, so people don’t drive on the interstate to read billboards or watch TV programs to see commercials (outside of the Super Bowl) either. The point is, whenever a person can easily #ignore an advertisement, they will, and this holds true for misplaced advertisements (sponsored posts) in a user’s Facebook timeline.

This way is much better

Rather than spending time and money advertising on Facebook, find creative ways of getting your vocal promoters to say good things about you via comments. Sure, when people like your Facebook page it is #cool but it doesn’t go very far with the people who have never heard of you. Positive comments, however, reach new audiences with a message that is as close to a positive referral that you will get on social media. It means so much more when a prospect hears how great you are from someone they know. It will significantly dilute the feeling of being advertised to online and transfer trust from your ambassadors directly to their friends and family. Also, considering that half of all Facebook users have more than 200 online friends, the reach of the message has quite the potential.

Ask to be shared and recommended 

An easy way to get started is to add a Share button or Recommend button to your website and ask your happiest customers to provide you with a quick comment online. This allows people to add a personalized message to a link to your website before sharing it on their timeline. An added bonus with the recommend button is every time a user clicks on it you will gain a Facebook like for your page. Just think how much better this message will be received by its intended audience - and unlike sponsored posts coming from you, it’s free! Also, it doesn’t work to simply repost testimonials that you gather from other sources to your personal Facebook page. That comes across as bragging and is #lame. If you are interested in learning more, at Rocket Referrals we have a unique approach to gathering more Facebook likes and comments.

Building referrals begins with developing the right state-of-mind

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.


Referralmindset (1)Just do it. Who can forget Nike’s wildly popular ad campaign created in the late 1980s? Such a simple, yet compelling statement. But in order to ‘do’ there needs to be knowhow - a starting point, a calculated plan. This is especially true in regard to building your business through referrals. At Rocket Referrals I speak with businesses daily that have made the decision to get serious about a referral strategy - but to many, it is just a black hole. Therefore, I felt it appropriate to share a very simple concept that is essentially the starting point to any strategy to gaining more referrals. It begins with a mindset for you - the business - and that of your customers.

The Approach

Finding the right approach to gaining referrals as a business means understanding why it is that your customers refer you to their friends and family. I get it; businesses want more referrals for several reasons - to help others, and to drop more coins in their piggy bank. But customers really do not care about adding mass to your bottom line. They do care, however, about improving the lives of their loved ones. Therefore, as a business, it is paramount that communication with customers regarding referrals focuses on the reason why they refer. In other words, don’t make it sound like they are doing you a favor - rather that you want to do them a favor by providing awe-inspiring service. This is the referral mindset for you, the business.

The Tactics

A quick tip on how to put a positive spin on the language: make your customers feel like they are part of a growing community or family. Keeping it personal and exclusive will ignite their emotional spark plugs and motivate them to actively refer you. An example would be to send a welcome card with a message including “would love to grow our family” and “extend our hand to your friends and family, we will take extra care”.

The next step is to actively develop a referral mindset in the heads of your customers - right from the get go. Using language that conveys the significance of referrals for your business, subtly, yet consistently, will ensure that you are referred when the time is right. In this approach it is very important to do so by only playing on the emotional reasons why people refer (to help others) that I highlighted above. There are a several ways you can engage your customers that will be effective - and it starts right after they sign up.

Send a welcome email with a couple sentences explaining how your business values referrals and that they are important in growth. Emphasize that this growth is important because you love to extend your service to their trusted ones, to extend your family. This will convey the message that you are referred often and therefore must be doing something right. Follow it up by saying you trust they will find reason to refer you in the near future, because you care that much about what they think of you.

Find a reason to follow up with your customers as often as possible. Each time, give them thanks and let them know you are here to help with anything they need. Remind them that you are interested in extending your service to their loved ones. Over time, referring you will become second nature to your best clients.

Great stories make even better referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

People love stories. Okay, not all stories, but the fun, exciting, intriguing, inspiring, or otherwise entertaining variety. Because of the delight people find in passing information to others, storytime happens everywhere. Around water coolers, in barber shops, saunas, bar mitzvahs, you name it. As a business, you want to find yourself slipping into as many of these situations as possible. This happens by having an interesting story yourself. One about you or your business that is worth talking about - something memorable that your promoters will not feel awkward plugging into a conversation.

We already know that superb customer service and excellent products are essential to landing positive referrals. Nobody, in their right mind at least, would recommend a bad experience to others. We got that. But more often than not, your customers’ friends and family are not always in need of your products or services. Therefore, it is important to find a way of popping up in as many conversations as possible with a story that is remembered, so that when the time is right, your phone rings.

Find an interesting aspect about your business or yourself that is worth sharing and reserve it for your customers. Tell it as a story - a narrative with an intriguing plot. This will provide your promoters with more beef when they recommend you to others. Rather than just telling their friends “I have a really good agent, he takes care of me” - how boring - they could boast “My agent really takes care of me, you know, he used to be a pitcher for the Iowa Cubs and chose writing premiums over the big leagues”. With stories told by your promoters, you become memorable and are recalled when your services are needed. You will also pave the way to many more conversations because you are no longer colorless to talk about and linked to different areas of discussion.

For those of you who don’t have a nasty curveball, it’s OK. There are many ways you can tell your story that is noteworthy, you just need to find a creative slant. The truth is, people love doing business with actual humans rather than companies anyway. All great businesses have an interesting history of how they began, so start there.

Another approach could be to create unique experiences for your customers that are not advertised. I remember doing business with an auto shop that specialized in rebuilding transmissions. The owner stood behind his work to the extent of actually signing his name on the transmission itself before handing the keys back to the owner. This was never advertised, just disclosed to the client after the work was finished. This type of behavior is subtle, yet interesting enough to pass on to others. These experiences will fuel your promoters with stories to pass on to their friends and family. After all, you are doing them a favor by giving them something fun to talk about as they refer you to others.

Use the element of surprise to drive referrals

The best companies use surprises as a method of promoting their brand and inspiring customer loyalty. After all, it is hardwired in all of us to pick up on change– and as such, experiencing the unexpected conjures up emotions. Ka-Wham! A ramshackle car just backfired and you feel your ears move slightly and heart rate elevate. If not to startle per se, the most successful companies have discovered ways to invoke the same primal instincts in their customers– but have done so, delightfully. It does seem, however, that the ‘element of surprise’ has been used primarily by retail companies as a way to inspire repeat business. But for companies looking to use this powerful marketing tactic directly to increase referrals, and thus new business, keep reading.

First I would like to explore, just a little deeper, how surprises have such a positive impact on people. Scientists have recently used magnetic resonance imaging to determine that the part of the brain associated with pleasure really cares when you get something unexpected. Positive surprises provide a rush of dopamine and cause the happy center to light up like a Christmas tree. According to the study, Dr. Gregory Berns, professor of psychiatry at Emory University, stated: “If you get a present for your birthday, that’s nice. But you’ll like it a lot more if you get a present and it’s not your birthday.”

Now, it is crystal clear that by offering positive surprises to customers it will make them smile. Here is how it can be used to directly increase referrals. Send an unexpected and shareable gift to your best customers and ask that it is enjoyed with a friend or family member. The positive experience will resonate with your customers and transcend directly to their closest companions. The goal here is to make your already satisfied customers extra happy, and do so in a way that physically brings them in contact with people that trust them. “Oh, and by the way, where did you get that gift card?”

Starbucks_thanks1First identify who your best customers are. In an earlier post I mentioned the effectiveness of the Net Promoter Score survey in discovering your loyal customers. If you have not implemented the NPS you could also target customers that have given you a referral in the past, provided a testimonial, or openly expressed their gratitude for your service. Sending gifts only to those customers likely to refer will yield the highest ROI with this strategy.

So, what do you give them? At Rocket Referrals we have had great success when our clients give away gift cards to coffee shops. Again, the gift needs to be something that can be shared with others. This is the only way to encourage your happy customers to gather with your new potential clients. Besides, the caffeine might induce a little extra feel good– as long as it isn’t enjoyed on a Monday, right?

Even your best customers may not be referring you

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers.

There is a prevailing theory among businesses that referrals are a natural byproduct of a superior product or service. That by exceeding expectations alone, referrals will make their way to their doorstep in the form of new business. It is true (as common sense would tell us) that positive word of mouth is abundant amid the best companies -- but research tells us that most of your best customers are not referring you. The problem unfortunately rests on the shoulders of the businesses themselves. The majority do not know the best way to turn their happy customers into referral sources. But thankfully there are a couple things you can do right away to start encouraging your best customers to refer you.

Understand the gap

Chances are, if you are a great company, then you are already gaining referrals via your best customers. But the gap between your referral sources and happy customers could be larger than you expected. A 2010 Economics of Loyalty study performed by Advisor Impact and Vanguard found that in the financial services industry 83% of satisfied customers reported a willingness to recommend services to others, but only 29% of customers actually do so. The best place to start in achieving more referrals is understanding that this gap exists, and that there are things you can do to convert the remaining 54% into active spokespeople.

Identify them

Fig1_NPSThe best way to get started is by identifying your best customers -- those that are willing to recommend you. When outlining a referral strategy, these are the people you will be reaching out to, so get to know them. We recommend performing the Net Promoter Score survey. It is easy to implement and from our experience, has a very high response rate. This quick metric is used by many of the nation's top companies including Southwest Airlines, Progressive, and Apple to name a few. It will give you an instant picture of who your promoters are and how you compare as a company to the rest of the industry in customer loyalty.

Make them feel good

Now that you know which customers are willing to recommend you, make an effort to communicate with them. Keep in touch with them in a way that makes them feel good. This can be accomplished as easily as making a phone call telling them you value their business. You could also write a personalized card telling them that you appreciate their loyalty and it has been a pleasure serving them over the years. The goal here is to keep your company in the front of their mind and synonymous with a good feeling, so that when the time comes to recommend you have given them every reason to do so.

Track them

Finally, it is important to stay on top of your referral sources and progress. Like any other area in a business, a referral strategy should be consistent and tracked over time. Keep a list of your customers that are willing to recommend and what efforts you have taken to communicate with them. You will be able to log the success of your strategy and adjust it over time. Most of all, make sure you are recording which customers are sending business your way. Thank your referral sources personally with a personalized card or phone call --they are much more likely to do so again! The best way to ascertain who is referring is by asking all new prospects “who referred you to us?” This alone will greatly enhance your long term strategy of gaining more referrals!

Leverage existing customers for referrals

Carl Maerz is a co-founder of Rocket Referrals, a startup company focused on helping businesses gain referrals from customers. This is his first blog on IowaBiz.

Having spent a considerable amount of time working in 10 different states and across three continents, I realized that Iowa offers something truly remarkable -- a sense of community like nowhere else. Here, relationships are king.

The heartland ideology is woven into the threads of business as companies understand that in Iowa, perhaps more than anywhere else, the customer matters.

As a consequence, many local businesses excel in customer satisfaction. We get it here. But what most businesses have yet to understand is that for this very reason there is a substantial opportunity for new business via referrals. Therefore, my goal is as an IowaBiz blogger is to explore the topic of referral business for local Iowa companies. I am here to provide some useful information in the topic and to investigate the reasons why people refer, and strategies businesses can implement to actively increase their referral equity.

RR8I am a native of Iowa myself. Growing up in a small town, I began experiencing business through the eyes of a child observing my father’s local retail business. Even at such a young age I was able to understand the importance of word of mouth for a company’s growth. Following my education at Creighton University, I was the head of North American sales for a software company based out of Frankfurt, Germany. My early career took me all over Europe and North America.

At this point, I had a firm grasp of business from a sales and marketing perspective, but I was still missing part of the human aspect that I gained in the military. After several years in software, I served as intelligence officer in Afghanistan for the US Army. It was here that I really began to understand more of the psychology behind people and grasped social network theory. After my term ended in the Army I returned to Iowa to lead Rocket Referrals with my brother and cofounder Torey. We have developed software that automates many of the strategies I will talk through in later posts.

Most of the topics I discuss will be tactics that businesses can apply right away that will lead to an increase in referrals. I will reference personal experiences and research while tying each post into an overall strategy and investigating current trends in referral business.

This site is intended for informational and conversational purposes, not to provide specific legal, investment, or tax advice.  Articles and opinions posted here are those of the author(s). Links to and from other sites are for informational purposes and are not an endorsement by this site’s sponsor.