Small business owners will tell you word of mouth or client referrals, is the best way to gain clients. Client referral systems are based on this very thought. Generally, when a customer refers you to someone, chances are the person will end up becoming your client. It is not guaranteed but these individuals are definitely an easier ‘sell’. You can not only depend on the whims of clients to refer you to their family and friends. To secure referrals you may have to offer your clients incentives. A lot of businesses successfully use an incentive based system to get more client referrals. The following are a five of the most recommended and used client referral incentive programs or techniques currently being used:
Dual Reward
Dual Reward is where a company rewards both the old and new client with either a credit or cash payout. When client referrals result in more business for you, you may reward the client who referred you. And in some instance companies will provide the new client as well with percentage of the cost of the service. Some organizations offer a flat discount to both. Such as 15% off the first purchase for the new client. And 15% off the next purchase for the referring client.
Single Reward
Rewarding just the client who refers you is referred to as Single Reward. When you obtain a new client thanks to a referral, you can reward your client with a small percentage of the business he has brought you. A flat rate discount, or you can offer them to ‘save’ the discounts towards a free product or service later. This might look like “Refer 10 and get one Free” to your referring client.
Referring Clients with Gift Certificates
With the ease of purchasing gift cards for restaurants, movie theatres and general merchandize. The “gift certificate” becomes an economical solution as well. This also provides the referring client to indulge or experience something they may otherwise not. Depending upon your business, you may ask your clients for contact information of friends interested in your services or products.
Loyalty Program
There is no questions the broad and massive impact the internet has on people and their purchasing habits. Offering referrals with customer loyalty programs such as giving customers extra points or credits when they bring in new customers has also works for many small businesses. Some companies who use a loyalty program, also tie it into furthering their client’s knowledge of their company. This helps reinforce the quality of their products or services to their currently client and customers.
Client Referrals & Cross Promoting
As a business you may want to consider strategic partnerships or cross promoting partnerships with other complementary businesses. When you promote your business it has the perceptions of advertising. However, when someone else promotes your business, people are likely to perceive it as genuine praise of your product or service. This is one of the reasons why cross promotion deals work. Also cross promoting gives businesses access to a larger database of customers.
Of course these techniques will only work if you keep your existing customers happy. Providing top quality products and services and putting in place an efficient post sales services system is therefore extremely important. Without it, the success of your customer referral system will be jeopardy. At the end of the day everyone wants to increase their profits. Sharing them with your customers may make your margins diminish initially. But in the long run, it will prove to be a win-win program for everyone.