It happens here
almost every day. Someone calls up and says they heard about us from
a friend or colleague and they want to find out more about our
custom printed labels. These referrals are becoming a bigger and
bigger part of our business – and so I have been doing some thinking
lately about referral marketing.
Many businesses are
built on referrals. Professionals such as lawyers, accountants, and
realtors typically grow their business in this way. But there are
also several high profile businesses that have grown their business
primarily through referral marketing.
Fortune 500
Success Stories
Google has become
one of the most successful companies in history without doing much
advertising or marketing at all. This is a classic case of a company
growing by referral marketing. Before they were in the news on a
regular basis Google relied on referrals to grow their business. I
first found out about Google in this way – a friend suggested I give
them a try because he thought they were much better than Altavista &
Yahoo – the two search leaders at the time. I, in turn, told several
people and so it went. Google built up what was to become the most
successful internet business ever by relying on the referrals of
others.
Another successful
company that has grown in a similar way but in a very different
industry is Starbucks. Can you recall seeing an ad for Starbucks on
TV? Starbucks spent just $95 million on advertising last year; by
comparison Coke spent $2.5 billion. Starbucks has passionate
customers. Before there was a Starbucks on almost every corner,
before nearly everyone had tried their coffee, they grew their
business through referrals. Their customers raved about the coffee
and told their friends how good it was. So, even though it was very
expensive people kept trying their coffee and loving it and telling
more people. This is how Starbucks has grown to over 13,000
locations worldwide, which is about 25 times as large as its closest
competitor, Gloria Jean’s with around 500 locations.
The Three Key
Ingredients
Both Google and
Starbucks have grown their business very quickly without the use of
much traditional advertising. There is a lot we can learn from two
of the most successful companies in history. How did they do it?
Well it is not the only factor but an important factor in their
success was referral marketing. The way I see it there are three
essential factors that have to be in place if you are going to
generate a lot of referrals:
1. Exceed
Expectations
In today’s world consumers have
high expectations, but in some ways this can work for you. If you
can exceed these already high expectations then you can easily
become memorable in the eye of your customer. Before Google came
along, searching on the internet was a hit or miss endeavor.
Suddenly with Google you would most likely find
what you were
looking for, they exceeded the expectations of their customers. You
can exceed expectations with the quality of your product, with your
customer service, or preferably both. Do that and you will very
likely be able to build your business through referrals.
2. Consistently
Execute Well
Starbucks is the
king of execution. You can go into any one of their over 13,000
stores anywhere in the world and get the same triple grande sugar
free vanilla latte. They have somewhere around 20,000 possible drink
combinations, so you can get your coffee exactly the way you like
it. You couldn’t possibly have that many drink combinations across
13,000 stores without executing well. Starbucks executes well over
and over again, so their customers develop a very strong brand
loyalty, and they feel confident telling their friends about it.
3. Make it Easy
to do Business
Even if you have
consistently great customer service and a product that exceeds
everyone’s expectation you are not going to get many referrals if
you don’t make it easy to do business with you. If your online
ordering process takes 15 minutes, or if when people phone your
business they have to go through several levels of phone menus
before speaking to a live person, it doesn’t matter how great your
product or service is. People are not going to want to subject their
friends to that kind of frustration, and so there will be few
referrals. Make it easy for your customers to do business with you
and you will increase the number of referrals you receive.
The beautiful part
of today’s high tech world is that giving referrals is easier than
ever. Just send a quick email with a link and you have given a
referral. And it is almost as easy to refer 20 people as it is to
refer one person, so today information (and referrals) can spread
very rapidly. So the opportunity is definitely there for any
business to build their customer base through referral marketing.
A Referral
Marketing Program
Ok, if you have
mastered the three ingredients that will maximize your referrals
what next? You can just sit back and wait for the referrals to come
in or you can help the process along by creating a formal referral
marketing program.
In my last company
we encouraged people to give referrals by offering a free gift (to
the person giving the referral) every time someone provided us with
a referral. We generated a large number of referrals in this way,
even though only a small percentage ever ordered. But the program
still paid for itself which is the main thing.
One the best
referral marketing programs I have heard of was created by a wedding
photographer. When she shoots a wedding, she makes sure she takes
photos of the cake, flowers, dresses, hair dos, and reception rooms.
Then she visits the vendors involved with the wedding and presents
them with a framed photograph (with her logo and web site displayed)
showing off their services.
The Lightning
Labels Referral Program
Here at Lightning
Labels we have our own referral program. We have always tried to
exceed your expectations with every label job, that is why we have
invested in today’s most advanced digital label printing presses.
This gives you the highest quality digital printing in the industry
and we strive to make our customer service the best in the business.
Our Referral Program works like this: we pay a commission on all
orders for the first 90 days after a new customer begins doing
business with us. All the details are on our web site at:
www.lightninglabels.com/referral.htm.
We appreciate the
confidence you place in us by giving us referrals, and we want to
reward you for referring customers to us. When you do so, just make
sure that the person you are referring mentions your name – that way
you can get credit for the business you generate. And from all of us
at Lightning Labels, thank you for the referrals.
If you are serious
about creating your own referral program here are a couple of
resources that will help you. John Jantsch, one the nation’s leading
small business marketing experts, in his book Duct Tape Marketing
devotes an entire 30 page chapter to creating a referral program.
There are plenty of great examples (including the photographer one I
mentioned here) and ideas for generating referrals.
Referral marketing
is a subset of Word of Mouth marketing which is becoming a marketing
discipline in its own right. If you want to get people talking about
your company then I encourage your to read Word of Mouth Marketing
by Andy Sernovitz. He is one of the leading authorities on this
topic and this book is an easy and enjoyable read.
