advertising

Driven by Word of Mouth

A well-conceived referral program can help boost the effectiveness of your direct mail work and other marketing. Friends telling trusted friends, and business associates telling their contacts about your product or service, has the potential to:

• increase your sales;
• attract new, high-value customers;
• build positive brand awareness and strong “brand advocates”;
• promote ongoing dialogue with your best customers; and
• create a channel for testing and launching new products or services.

Ron Labrum and Robbie Gray, founders of fitness equipment sales firm Centurion Sales Co., in Mountain View, California, understand the clear power of referrals. The company, which recently won the AT&T “Lucky Advertiser Sweepstakes” contest, has been in existence since 1974. With a marketing budget of around $5,000 annually, Centurion relies on two key tactics: a print Yellow Pages ad and referrals.

“We’ve had a Yellow Pages print ad for about 35 years,” Gray says. “Initially, it was how most people found us, and it continues to be a cornerstone of our marketing. Over the years, we’ve tried a variety of things. We’ve done direct mail programs, been at trade shows and used search engine marketing, but the most powerful tool for us has been our Yellow Pages ad and, just as important, the referrals we get from our customers. We’ve also been able to create strong referral partnerships with personal trainers and our suppliers.”

You can tap the power of a referral program easily and inexpensively. “It’s really a nearly free, high-quality lead, which shortens the sales cycle,” says Luc Vezina, Director of Product Management at e-mail marketing firm Campaigner. “Keep it simple and start with a pilot. It can be as easy as asking customers with whom you have good relationships if they know anyone they might recommend. Once you’re comfortable with that, move into a more formal program.”

If you’re thinking of implementing a referral program, there are two fundamental issues worth considering: 1) the risk a customer is taking in making a referral (i.e., they’re putting their reputation on the line for you), and 2) offering a reward with true value.

“If it’s just more of your product or service, that may not be enough to tip the ‘risk vs. reward’ scale,” Vezina asserts. “But if you’re offering the latest iPod or cool gadget, it may have greater appeal. If you have a stationery store and you’re offering $1,000 in supplies, that may help your business customer. So you need to gauge your customer base and determine what will mean the most to them.”

No matter what you choose, Vezina concludes, start small and develop a prototype program. Test different rewards to determine the reaction you get and build on the positives. “There’s no real risk in testing,” he says, “and letting the program grow gradually. Once you know what works best, then you can invest more.” And be sure to bolster your program in the other marketing you do. Whether it’s your Web site, print ad, direct mail, video ad or other vehicle, all your efforts should tie together.

While Gray credits the power of referrals with helping Centurion remain in business for better than three decades, she adds that you need to follow any referral up with an ongoing, superior customer experience. “We focus on a high quality of customer service. We are professional; we keep our commitments and are honest with people,” she notes. “We differentiate ourselves by not acting like a ‘retailer.’ All of our employees have been here multiple years and customers develop deep relationships with our employees. We’ve also had to adapt our business to a much more competitive environment. Initially we were the only game in town for this type of equipment, now we have to deal with a lot of Internet suppliers. We win by being consistent in giving the same great service and attention to every customer, before, during and after the sale.”