Referral Marketing: Setting Up a Basic Referral Rewards System

Referral Rewards

93 Extraordinary Referral Systems

Looking for a basic referral rewards program that works?

This is a bare-bones template for new customer acquisition I used with some of the hardest hit restaurant owners in Post- 9/11 Downtown Manhattan.

I wish I could report that I rescued every client who was wise enough to retain me. That would be crazy though — just as crazy as starting a marketing consulting business in Post-9/11 New York.

I didn’t realize it at the time, but it would have been worth paying for the privilege to work in that time and place and under those conditions.

What I found out was there was a fair number of Uptown residents who felt an obligation to help their Downtown neighbors, so when these little referral invitations made their way into their hands, many Uptowners made the effort to take a bus or subway downtown to patronize these restaurants.

The business owner should not expect an overnight stampede.

What you’re doing is planting a lot of little seeds and waiting patiently for the harvest. The goal here is getting the recipients of the referral invitation to convert to returning customers.

I’ve found these programs work best with small business owners who have great rapport with their clientele because the law of reciprocity really gets engaged when the referrer knows and likes the operator, in this case, the restaurant owner. And their recommendation to the new customer is that much stronger.

As far as production values go, they should be commensurate with the business making the offer. Obviously, the coupon a hot dog stand would use needn’t be the high-end, glossy type a French restaurant would use. The main point is the referral template is the guts of the system. Feel free to cut-and-paste from these PDF templates to customize your own referral rewards offer, whether it’s a restaurant, dry cleaners or any other service type business.

Step 1) Place the offer along with the referral invitations in the checkbook for the existing customer when lunch/dinner is over.

Step 2) The existing customer hands out the referral invitations to her friends.

Step 3) After the referree/s respond to the offer, the business owner mails the reward (which is usually a certificate for a free widget) to the referrer. This is not only to inform them about having made a referral but is a chance to bond with the customer so the process can be repeated.

Advantages of this System:

  1. This is low budget, guerrilla marketing at its essence with almost no money out of pocket. The business owner uses his customer base as his marketing department. The 80/20 component is even more skewed here since there are usually a handful of evangelists who successfully do most of the referring. Ergo, good rapport with the clientele is essential.
  2. This system works because it engages that most powerful of interpersonal laws: the law of reciprocity.

Disadvantages of this System:

  1. It’s slow. It can take several weeks to see any results after the referral rewards system is put in place.
  2. It’s passive. The business owner can’t “force” his customers to take part in the program. Once again, good rapport helps grease the machinery here.

If you want to see how other businesses are practicing this today, get yourself into as many marketing and referral funnels as possible, then capture the steps from their campaigns. The successful ones are usually those with the most steps.

93 Extraordinary Referral Systems

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