Why Referral Programs are Priceless

Posted by James Vumback on June 21, 2016

Why Referral Programs are Priceless

When it comes to sales and marketing, the two most expensive things a business can do is:

  1. Lose a good customer
  2. Find a good customer

A business can maximize its profits and cut its costs by making sure it keeps its good customers and by having new customers referred in by existing happy customers.

When you compare how potential customers actually make buying decisions, compared to how most businesses market to them, the inefficiency and expense look prohibitive. Having a new customer referred in saves time, effort and is cost-effective. On top of that, the person (or business) who does the referring feels good by doing good, and then feels even better by being rewarded. This creates a win-win-win situation.

  1. The business wins because they have a warm prospect, not a cold one
  2. The prospect wins because they can feel safe that someone they know, like and trust or respect has already done what they are about to do
  3. The person who referred them wins because they have helped a friend, it was an easy thing to do, and they get a tangible reward for doing it

Let us go back to how the business really wins, compared to traditional sales and marketing. Because the referred customer is so much further along in the buying process than a ‘cold’ potential new customer, it is easier for them to make a speedy 'decision to buy', so they become a real customer, not just a potential one. The business has achieved, quickly, easily, inexpensively what most businesses achieve the long and costly way.

Traditionally, businesses put a huge amount of time, effort and expense into hunting for new customers – they advertise their products, services and prices, they attempt to build a tribe with Facebook, LinkedIn and Instagram, etc. They make sales calls and they offer free stuff, all in an attempt to get someone they do not know to say, “Wow! I want one of what they’re selling, and I’m going to spend my money, now.”

Unfortunately, most people are not ready ‘now’ to spend their money. Most people go through a fairly lengthy decision-making process that goes like this:

  1. Notice the marketing piece
  2. Move from noticing it to being attracted by it to being interested in it (because they keep seeing it)
  3. Want to learn more about what they are seeing or hearing
  4. Develop a sort of relationship with the business, product or service, often because they keep seeing the marketing piece, or because there is something about it that really does attract them
  5. Decide to learn more, so they check it out on Google, Yelp, Better Business Bureau, etc.
  6. Ask people they know who have already bought, joined or used what they are now thinking about. They either ask people they actually know, or they check it out on Facebook, etc.
  7. Decide to contact the company that is advertising the product or service (perhaps more than once)
  8. Spend money

Traditional marketing, therefore, does all it can to take its prospective new customers from Step 1 to Step 8. The business that makes effective use of a powerful referral system, takes its prospective customers from Step 6 to Step 8.

And Step 7 is actually done for them!

That is why a great referral program is priceless. We would love to answer your questions, and to help you learn more about why GetTheReferral.com works so well, and why it will work well for you, so please just click here to contact us and we'll take it from there.