How your customers can add extra profits to your bottom line
A number of years ago, I was the marketing manager for a well-known book club. Twice a year the direct marketing department met with the president to review accomplishments and plans for the next marketing season. During this meeting, we shared the results of our programs and campaigns—direct mail, magazine advertising, package insert and member-referral.
He looked at the line-by-line profit-per-customer acquired of each marketing initiative and declared, “Let’s do more of the member-referral program.”
Those of us in the direct marketing division chuckled to ourselves. There were, after all, only so many members to whom we could offer a referral-bonus program. We’d done everything to generate results from our member-get-a-member referral program, and we had the profits to prove it. These profits became very important to the overall bottom line.
But the president’s point has never been lost on me: Referral, or member-get-a-member programs, likely will be the most profitable program you’ll ever create. So why aren’t more companies engaging in referral programs?
A referral program can become quite involved if you give a gift or other incentive to the customer who referred a new customer to you. Complications can occur due to multiple layers of tracking. For instance, if you treat a referral as nothing more than adding a name to a mailing list, but you have promised a reward to the referring customer if the referral makes a purchase, you’ll need to track the referral name to see if he or she converts from a prospect to a sale. That might be one reason you don’t see referral programs more often.
Erroneously, too many marketers think that to make a referral program work it must be complicated. That usually is not the case. You don’t necessarily have to give a gift to the referring customer. The book club I managed didn’t offer an incentive to customers. We simply asked them to pass along a flier to friends who might be interested in our products. We relied on engaging customers with emotion over our product and pointing out in our message the goodwill in sharing our product with their friends.
How you position your referral program—that is, why it’s in the customer’s interest to promote your product for you—and the creative developed for the program is essential. Success is most influenced by two elements:
1. The positioning of the emotional benefits—with or without compensation to your customer.
2. Copy, graphics and the production format used to promote your product.
There are more places in your direct marketing efforts to promote a referral program than you think. Here are a few ideas:
• Product shipments. The most obvious way to promote a referral program is to insert a flier or a mini-catalog in outgoing product shipments. Consider inserting two fliers or catalogs—one with copy that reads: “Use this if you want to order again” and a second flier that reads: “Give this flier to a friend.” This is a low-cost method to reach customers and engage them at a time when they are delighted to receive a shipment from you.
• Pass-along brochures. Test the inclusion of a brochure in your existing direct mail package urging customers to pass it along. It might be the same flier you use in outgoing product shipments. The key here is testing the additional piece in your direct mail package to make sure you’re not suppressing response by adding the referral program.
• Order form on brochure. For the book club, I included an extra order form in a corner of the large four-color brochure with a headline that encouraged the prospect to clip the order form and pass it along to a friend. Testing revealed that this extra order form lifted overall response by about 15 percent. Again, test this idea to make sure it doesn’t suppress response.
• Gift recipients. If you send gift orders, your customer already has initiated a referral for you. Once you send the gift, mail the recipient a special offer that might convert him or her to a customer. You’ll probably want to test mailing recipients over a multi-season period and not limit your effort to a one-time mailing. Don’t forget to include a brochure in the gift shipment; recipients may want to order for themselves or send a gift before you can get the follow-up mailing out.
• E-mail. If you have an opt-in list of customers and you send e-mail promotions, one of the easiest things a customer can do is forward your message to a friend. The term “viral marketing” has been coined by e-mail marketers to describe how one customer recommends a product to a friend. If you hope to have customers forward your message, the emotional motivations you need to convey may be different than in print. Successful e-mail tends to be highly offer driven, and you have a short span of words and seconds to communicate your message. There should also be a reason provided for why e-mail was used to convey the message, such as a time-sensitive offer or making it easy to click through to a Web site. Consider, too, the demographics of your typical customer (who provided you with an e-mail address and gave you permission to contact him by e-mail) as you craft your message.
If you launch a referral program, fulfill it. If you plan to give your customer an incentive for making the referral, capture the data and fulfill the gift. Even if you don’t give a gift, a highly appreciated gesture might be simply to send a letter of thanks.
You may not have to give an incentive to customers to encourage them to refer your company to a friend. Rather, the position of the “ask” for the referral and how you convey the message to evoke the emotional feel-good may be enough.
When you encourage customers to make a referral for you, they must feel as if they’ve done a favor for their friends. Not for you. Sometimes a referral program is as simple as that.
Gary Hennerberg has been a direct marketing professional for more than 25 years, and a direct marketing consultant and copywriter for the past 11 years. He can be reached at (817) 481-8644 or by e-mail at email@example.com.
Reinventing Direct is for the direct marketer seeking guidance in the evolving world of online marketing. Gary Hennerberg is a mind code marketing strategist, based on the template from his new book, "Crack the Customer Mind Code." He is recognized as a leading direct marketing consultant and copywriter. He weaves in how to identify a unique selling proposition to position, or reposition, products and services using online and offline marketing approaches, and copywriting sales techniques. He is sought-after for his integration of direct mail, catalogs, email marketing, websites, content marketing, search marketing, retargeting and more. His identification of USPs and copywriting for clients has resulted in sales increases of 15 percent, 35 percent, and even as high as 60 percent. Today he integrates both online and offline media strategies, and proven copywriting techniques, to get clients results. Email him or follow Gary on LinkedIn. Co-authoring this blog is Perry Alexander of ACM Initiatives. Follow Perry on LinkedIn.