How to Get More Customer Referrals
In last week’s blog, I made a distinction between “likely to recommend” and “actually recommend.” I also suggested that from my vantage point the Net Promoter Score® (which is calculated using a single question about likelihood to recommend) has greater predictive value for customer loyalty (return business and future spend) than it does about advocacy (referrals).
Also in last week’s blog, I indicated that customers have a variety of reasons why they don’t recommend brands even though they are otherwise loyal (e.g. wanting not to have their favorite places overrun with new customers). Finally, I promised this week I would offer tips on how to convert loyal customers into referral sources.
So without further ado, here are some broad approaches to activating promoter behavior in your loyal customer base:
1. Remind them you operate from referrals. This may seem obvious but few businesses formalize this utterance. Any time you determine a customer is highly satisfied or strongly emotionally engaged with your brand (e.g. direct feedback from them, a 9 or 10 on the NPS®, or you receive stellar results on a satisfaction inventory), you have an opportunity to let your customer know that your ability to serve them is fueled by their referrals.
2. Thank those that make referrals. By asking customers how they heard about your business you can track how much of your new customer acquisition comes from “word of mouth.” This calculation is not only an important KPI of customer experience excellence (happy customers sending their friends) but also it is foundational to an important follow-up question, “Who may I thank for referring you?” A personal thank you note or small unexpected thank you gift goes a long way to sustaining referral behavior.
3. Make it easy to make referrals. One of the great things about social media is the ease with which customers can make what I refer to as “passive” referrals through the power of “social shares” or “likes.” Making it easy to socially share their positive moments with your brand allows customers to gently let their community of friends know that they are brand advocates.
In addition to social sharing strategies, consider providing other collateral materials to loyal customers. For example, a marketing collateral that thanks loyal customers for their business can give them a discount for a future purchase based on their loyalty and it can also be constructed to allow them to “gift” a discount to a friend that they want to introduce to your brand.
4. Assure existing customers that you have a long-term commitment to their personal care. Every time a customer refers someone to your business they run the risk that the person they referred will get their needs met instead of the customer making the referral. Subtly, great brands signal an enduring commitment to personal care for loyal customers which implies that as your business grows, you will respond in ways that don’t exploit loyalty. If that message isn’t communicated or if actions don’t support that communication, loyal customers will not only stop referring; worse yet, they will abandon you.
5. Don’t forget the WIIFM. Customer’s need to know “what’s in it for me” when they make a referral. That has to be more than the, “Don’t worry no matter how much we grow, we will take care of you.” message recommended above.
You have to answer the question, “What does a person get for putting their reputation out on behalf of your brand’s reputation?” Often companies take a very instrumental or mercenary approach to this question and reflexively create a “referral incentive.” While monetary referral rewards can be appropriate in certain situations, they can also backfire. Many customers want to refer you because they have strong intrinsic connections to their friends and to your brand. They want to connect the people they care about with the brands that care about them. Being a resource and networker of people and experiences is an intrinsic “what’s in it for me.”
Often by creating incentive programs for referrals, you get people seeking extrinsic incentives (e.g. money) by sending people who may not be closely similar to the very people who are likely to be loyal to you. Inadvertently, you can acquire commodity buyers by attempting to purchase referrals.
Ultimately, your loyal customers want you to be around to serve them. They appreciate the way your business meets their needs, engages them emotionally, and fits their lifestyle. Most of those customers want to share your name with friends but often they need just a little reassurance, a gentle reminder, and an invitation to make referrals a reality.
Most Read IRIS Articles of the Week: April 17-21
Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, April 17-21, 2017
Click the headline to read the full article. Enjoy!
Like so many others in the industry, I was wrong. For years, I was certain that the bull market was nearing its end. I thought the market was over-extended, and that, surely, the wild equities run was coming to an end. But everyone else was bullish, and perhaps rightfully so. And while I’ve watched equities continue on their spectacular rise, I do think now is the time (really!) to put a hedge in place. Here’s why. Here’s how. — Adam Patti
The realities for fixed income investors have changed. How is this being reflected in markets? Bond investing has become increasingly difficult over the past decade. Markets have been heavily distorted by ultra-low interest rates and quantitative easing, as well as by extreme risk aversion in response to the global economic crisis and the eurozone debt crisis. — Nick Gartside
Is being a financial advisor worth it? I am an optimistic person and I encourage other people to keep a positive mental attitude (shout-out to Napoleon Hill and W. Clement Stone). However, by taking a good, hard look at the negatives in life, we can successfully pivot towards the positive aspects that will help us achieve our goals. — James Pollard
How do you treat one of your most valued, existing clients? Here’s a list of some things that come to mind. — Andrew Sobel
According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home. — Julie Littlechild
I was talking with an advisor last week about how to get into conversations about what he does. He was relaying the story of going jogging with a friend who could be a good client but is, more importantly, connected to a large network of people who fit this advisors ideal client description. — Stephen Wershing
Big picture thinkers are not unicorns - rare and mystical. And they were not born with the innate ability to think big. They do, however, pay attention to the broader landscape and take the time to think, analyze and evaluate. — Jill Houtman and Danny Domenighini
Your reputation is who you are and how you show up, Monday to Monday®. Many of us take our image and reputation for granted. Give careful thought to the kind of reputation that you would be proud of Monday to Monday® and that would resonate with your purpose and priorities. — Stacey Hanke
The generational changing of the guard is a fact of life as old as time. Young replaces old in responsibility, importance, control and culture. Outside of the family, the workplace is perhaps where this is seen most regularly by most people. — Shirley Engelmeier
Next time you hear your prospects give you price objections, it’s not because of the price. The give price objections because they don’t know the full value proposition that they’d be paying for. And it’s not based on their need, or your features and functions. It’s based on the buying criteria they want to meet internally. — Sofia Carter
Last week we wrote about the economic rationale behind going independent vs. moving to another major firm as an employee. As a follow-up topic, we thought it prudent to analyze transition packages attached to big firm moves and peel back the layers of the onion to show the components of these deals. — Louis Diamond
- 1 of 1119