The best source of new customers for your store is your existing customers. Unfortunately, many store owners are missing out on this bonanza of quality customers because they do not have a referral system in place. Instead, they are sitting back and waiting for some invisible hand to prompt their happy customers to send in their friends. In short - that's not going to happen all that often. Retailers that are making the most of their referrals are proactive. They have a referral system in place, and they follow through on all the steps in their program.
Why Go After Referrals?
People who have been referred to you will usually spend more money, will buy from you more often, and will become very loyal customers. Because they were referred by a friend, they are usually less demanding and are much easier to deal with. Sounds like the ideal customer to me! It gets better. Not only is referral business lucrative, it is also easy to target, has low marketing costs, and will produce a steady stream of new customers into your business.
Referral System Strategies That Work
The key concept behind a referral system is making the entire process a win/win/win for all involved. The referring customer receives a reward, the new customer being referred receives a reward, and your store earns a sale.
Ask the customer for a referral
Ask, and you shall receive. One of the big reasons most retailers don't get referrals is because they simply do not ask for them. At a minimum, you should have your staff always ask for a referral as they are finishing up the sale. Train them in what to say based on your business.
A sample talk track to ask for a referral is:
"Mrs. Customer, I'm so glad that you found this … that you like. I'm sure you'll really enjoy it. I'd like to ask you a favor. We're looking for more customers just like you. If you know of anyone who you think would enjoy shopping with us, can you please refer them? I'm enclosing in your bag some information about our Referral Rewards Program. Please take a look when you have a moment. Thanks again for your business!"
Your referral system will be more effective if you then follow up with a thank you letter within thirty days of purchase. Studies show that within the first thirty days after a purchase there is a moment of maximum satisfaction. This is the time when the customer is thinking about and is the happiest with the purchase.
In addition to thanking that customer for the business, include a referral card that the customer can give to a friend. The referral card should spell out that the friend being referred will receive a discount when they come in and buy, and that the customer doing the referring will receive in the mail a gift certificate good at your store as a thank you.
A very important final step in your referral program is to acknowledge and thank your customers who are referring potential customers to your store, whether they buy or not, by sending another thank you note (make sure you include another referral discount card).
If all this sounds easy, you're right. Putting a referral system in place takes a little time, but is worth your investment. Not only will you drive new customers into your store, but you'll also strengthen the relationship with your customer base and make it extremely difficult for your competition (whether they are smaller retailers, big box stores, or chain stores) to take away your customers.